Peter and Kelly are happily married with 3 young children. They own a farm in Tharwa in the south of Canberra. Peter is clever with his hands. He developed a new attachment for his olive trees which makes it much easier to harvest olives. It has a wide variety of applications for other agriculture products, including nut and some fruit trees. He reckons he could sell these for a profit. 1.Peter is thinking about turning this into a business. What business structure would you recommend Peter adopt for this business? In your advice, please: a.Compare the various business structures available and be clear about why you might recommend one particular structure. b.Discuss who should manage this business and any obligations that might apply under the law? c.Set out any options available for raising capital? 2.If the business started generating $100 million per year in revenue, would this change your recommendation? Kelly and Peter keep 200 beehives on the farm. Each beehive will produce about 30kg of honey each year. Natural honey like this sells for about $20 per kg. 3.They like the idea of running this business together. Would you recommend that they operate this business as a partnership or a company? Please advise Peter and Kelly as requested. As part of your advice, please discuss which business structures might be available and make a recommendation (you do NOT need to consider trusts or joint ventures).

Question 1 (20 Marks) Mfundo recently graduated with a MSc in plant and soil science from the University of Venda. Upon completion of his studies, he is finding it difficult to get a job. He decided to approach local farmers to seek advice on how to start a small business to generate some income for his family needs. He intends to open a small shop selling organic potatoes. His main challenge is he has a limited understanding on how to start a small business and the legalities involved.

Peter and Yan are good friends and after losing their jobs during the Covid shutdowns have decided to go into business together.Their business involves both retail and wholesale of imported artisan or bespoke items. Their expectation is that approximately 60% of their turnover will be online sales. They will require a warehouse with a small shop front and will employ 1 full-time and 2 part-time employees plus themselves.Both Peter and Yan are married. Peter and his partner own their home (no mortgage) while Yan and his partner are renting. Neither have any children. Peter will contribute $20,000 to start the business.Peter and Yan have made an appointment to discuss what is the appropriate business structure for their new business.Prior to this meeting, your manager, Danny, has asked you to list some of the advantages and disadvantages of the different business structures that would be appropriate for the proposed business. He has also asked you to list questions to be asked of both Peter and Yan at the meeting.Required:Review the list of the advantages and disadvantages of each relevant business structure;Provide your recommendation of a business structure with reasons; andList questions you would ask in the meeting to support your proposed structure.Consider the following:Notes:Refer to business.gov.auLinks to an external site. for the registration requirements – business name, ABN, GST etc.Choice of business structure – partnership, company or trust? Why can’t the business be a sole trader?Consider advantages and disadvantages of all three (3).Discuss issue of partners with different financial positions.Students to consider need for partnership agreement? Registration of company? Trust structure?

Bill and Ben want to open a business selling flower pots. They have indicated that a Trust is not appropriate at this time and ask for your recommendation.Bill is married and owns his house with his partner. Ben is single and has very little assets.Your recommended business structure would be:-

Case Study:A local family business is facing a dilemma. Dottie’s Grocery has been a landmark company in a small city located in the United States. Over the past 45 years, what began as a single fresh fruit and vegetable store, has now become a full-service grocery store chain with many stores throughout the city. Dottie’s is incorporated with only 7 shareholders, which are all family members. They are faced with a decision on how to raise much needed capital to maintain its current business operations and to allow the possibility of growth in the future. The family believes it needs an additional $23 million dollars. This sum is too large for a bank line of credit and no one in the family has additional funding to invest into the company. The family is considering other alternatives.One alternative is to publicly issue debt (corporate bonds), the other alternative is to issue common stock to the public. Using your expertise in financial management, you have been asked by the management team of Dottie’s Grocery to conduct an analysis of the current situation and provide a summary of your recommendations. In your summary you must:Describe the process (in detail) of how a public offering occurs.A chronological account of how most public offerings would be an appropriate format, although not required.Discuss the impact and implications of each alternative.Explain how each alternative affects control over the company.As a small family business, the internal affairs and finances of the company were well guarded from the public view by the family.As a new IPO, how would the guarding of their finance change?What are the financial reporting effects of this decision?How will additional debt impact future earnings? How will new stockholders change the management of the company?Superior papers will explain the following elements: Provide a narrative about the impact of issuing stock to the public. The narrative will include the topics of loss of control of the company and the requirements that future financial statements will be available to the public.Provide a narrative about the impact of issuing debt to the public. The narrative will include the topics of a potential loss of the company if debt covenants are breached and the requirements that future financial statements will be available to the public.Provide a narrative on the initial public offering (IPO) process using at least four research sources in addition to the textbook material. The narrative of the IPO process steps should include the:role of an investment bankerdeal negotiationpreparation and submission to the SEC of the registration statementSEC approvalsetting an issue datesetting an issue price

What type of entrepreneurial business sells products directly to the people?*ManufacturingRetailingWholesalingService