Reference no: EM1320839

You have decided to open a gift basket business, and you hope to make lots of money. You elect to buy a small, inexpensive warehouse where you will store your inventory. You will then set up a website at which customers will place orders for various kinds of gift baskets. For example, a customer might order your "Chocolate Lover's" basket, which contains an assortment of chocolate items. You guarantee delivery anywhere in North America within three days, based on your contract with a reputable courier company.

You want to run the business independently, but your brother, George, and his best friend, Tina, are going to be contributing some money. You want their money, but you don't want to lose control of your business. Nevertheless, George might be helpful to you because he has had lots of business experience.

You are also thinking about hiring a couple of employees, but you want to make sure they won't do your venture more harm than good. For instance, you'll want to keep an eye on their use of your computer equipment and ensure that they follow proper hygienic procedures when filling the gift basket orders.

Finally, you would like a bank loan to help you get started. You are richer in ideas than assets! You have a nice car (two years old, worth $28,000), but you are still making payments on it. You also have $20,000 in savings and a small retirement nest egg of $10,000. You are hoping to use no more than half of your savings to get the gift basket business going.

Questions

1. What form of business organization would you choose for this venture, and why? Outline the advantages and disadvantages of each of the three major types of business in this particular context.

2. Additional facts: You've found a great little warehouse to purchase for your venture. It's on the outskirts of town, right next to an old industrial complex. The building is a little old and shabby, but the price is right. Also, there's some equipment on the premises you might be able to use. Of course, you'll have to see if Uncle Len will loan you the money to buy the place.

The only real problem, as you see it, is the loading dock. The access to it is rather narrow for large trucks. They would have to drive over about 20 feet of your neighbour's property to properly access the loading dock.

List four (4) conditions that you will want to be sure you include in your offer to purchase, and explain why it's important to include each of them.