Sole Proprietorships


Sole proprietorships, businesses owned and operated by one individual, are the most common form of business organization. Sole proprietorships are generally managed by their owners. Because of this simple management structure, the owner/manager can make decisions quickly. This is just one of many advantages of the sole proprietorship form of business.

Ease and Cost of Formation: Forming a sole proprietorship in relatively easy and inexpensive. In some countries, creating a sole proprietorship involves merely announcing the new business in the local newspaper. Other proprietorships, such as barber shops and restaurants, may require state and local licenses and permits because of the nature of the business. No lawyer is needed to create such enterprises, and the owner can usually take care of the required paperwork.

An entrepreneur starting a new sole proprietorship must find a suitable site from which to operate the business. Some sole proprietors look no farther than their garage or a spare bedroom that they can convert into a workshop or office. Computers, personal copiers, fax machines, and other high-tech gadgets have been a boon for home-based businesses, permitting them to interact quickly with customers, suppliers, and others. Many independent salespersons and contractors can perform their work using a notebook computer as they travel. E-mail and cell phones have made it possible for many proprietorships to develop in the service area.

Secrecy: Sole proprietorships make possible the greatest degree of secrecy. The proprietor, unlike the owners of a partnership or corporation, does not have to discuss publicly his or her operating plans, minimizing the possibility that competitors can obtain trade secrets. Financial reports need not be disclosed.

Distribution and Use of Profits: All profits from a sole proprietorship belong exclusively to the owner. He or she does not have to share them with any partners or stockholders. The owner decides how to use the profits.

Flexibility and Control of the Business: The sole proprietor has complete control over the business and can make decisions on the spot without anyone else’s approval. This control allows the owner to respond quickly or competitive business conditions or to changes in the economy.

Government Regulation: Sole proprietorships have the most freedom from government regulation. Most government regulations apply only to businesses that a certain number of employees, and securities laws apply only to corporations that issue stock. Nonetheless, sole proprietors must ensure that they follow all laws that do apply to their business.

Taxation: Profits from the business are considered personal income to the sole proprietor and are taxed at individual tax rates. The owner pays one income tax.

Closing the Business: A sole proprietorship can be dissolved easily. No approval of co-owners or partners is necessary. The only legal condition is that all loans must be paid off.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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Intellectual Property


The most valuable resource in the modern economy is the human mind. The ideas, concepts, and other symbolic creations of the human mind are referred to as intellectual property. Intellectual property is protected through a number of special laws and public policies including copyright, patent, and trademark laws. These laws rest on two essential premises:

  • The creator, be it a person or an organization, of an idea or invention should be entitled to the benefits that flow from that original creation if it can be proved that the creation came from that person or organization.
  • The right to get special economic advantage from such inventions should not exist forever. At some point, ideas enter the public domain and can be used by others.

In today’s global economy, many temptations can arise for businesses and individuals to use other people’s ideas without permission. Patents, copyrights, and other intellectual property are sometimes infringed, or wrongfully used, by those who see an opportunity for quick profit, a practice known as commercial piracy.

A great deal of pirating occurs in industries such as computer software and hardware, industrial machinery, printing and publishing, and designer clothing. Because some governments do not curb such practices, businesses that create ideas are injured.

In coming decades, many new ideas will be developed and commercially exploited in such fields as bioengineering, computer software, fiber optics, and medicine, to name a few. In a global economy, these forms of intellectual property are economically valuable. A society that is scientifically and artistically creative has a big stake in laws that protect the companies that create new ideas. The employees who work for those companies have an important stake in the fair use of intellectual property, as do customers who license the technology or buy the products. A growing challenge for public policy and international trade negotiations is how to coordinate national laws protecting intellectual property rights.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Everything is Tentative


It’s easy to imagine that building a new product is like building a house—first the foundation, then the frame, then the first floor, and so on. Unfortunately, product aspects are rarely locked in that way. Occasionally they are, as when a technical process dominates development, or when a semifinished product is acquired from someone else, or when legal or industry requirements exist.

We usually assume everything is tentative, even up through marketing. Form can usually be changed, and so can costs, packaging, positioning, and service contracts. So can the marketing date and the reactions of government regulators. So can customer attitudes, as companies with long development times have discovered.

This means two long-held beliefs in new product work are actually untrue. One is that everything should be keyed to a single Go/No Go decision. Granted, one decision can be

Decisive—at times, for example, when a firm must invest millions of dollars in one large facility or when a firm acquires a license that commits it to major financial outlays. But many firms are finding ways to avoid such commitments, for example, by having another supplier produce the product for a while before making a facilities commitment, or by negotiating a tentative license, or by asking probable customers to join a consortium to ensure the volume needed to build the facility.

The other untrue truism is that financial analysis should be done as early as possible to avoid wasting money on poor projects. This philosophy leads firms to make complex financial analyses shortly after early concept testing, although the numbers are inadequate.

Still another tentative matter is the marketing date. Marketing actually begins very early in the development process—for example, when purchasing agents are asked in a concept test whether they think their firm would be interested in a new item. Rollouts are now so common it is hard to tell when all-out marketing begins.

Often no one pulls a switch and marketing instantly begins. We more often sneak up on it, which clearly affects the evaluation system.

What results in some cases is a sort of a rolling evaluation. The project is being assessed continuously, figures are penciled in, premature closure is avoided, and participants avoid mind-sets of good and bad.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Why I wouldn’t buy from me


Part of knowing your product is knowing all the reasons someone might not want to buy it. Anticipate the reasons. State them clearly in your mind, spell them out on paper if necessary—and have an answer ready for each of them.

 

A good portion of almost any sales effort is spent overcoming objections. Don’t try to convince a buyer that his objections aren’t valid. Concentrate instead on altering his frame of reference.

 

In anticipating and overcoming objections a salesman has to practice a kind of theory of relativity. He has to ask himself, “Compared to what?” Think about a major purchase you have made—buying a house, for instance—and the mental gyrations you went through to get there. At some point you were making comparisons. Compared to another house that interested you, but in a slightly less desirable neighborhood, it seemed expensive. Compared to what you could have bought it for ten years ago, it seemed outrageous. But compared to its resale value, compared to what someone else might have been ready to offer, compared to what you deserve, you were able to justify the price.

 

In licensing the name of an athlete, I know the two objections we are most likely to encounter are the price—the size of the guarantees—and the athlete’s lack of availability to the licensors.

 

By helping the buyer see a different frame of reference, by altering his perceptions, we are able to finalize a licensee deal that has resulted in the company’s most successful line of apparel and in several million dollars of income to our client.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight