N210 Foundation of Business - Ownership Structure

1. Describe your business idea covering its operations, management processes, business ethics and the role of business in society

2. Describe the ownership structure you will choose.  Explain your reasoning for your choice (e.g. partnership or company), outlining the pros and cons.

3. Explain the process you will go through to raise money to start the business.  Do this on the assumption that you have your own house.

4. Explain the purpose of obtaining an ABN and the steps you need to go through to get one.

5. Predict the economic state of the Australian market you will sell into.  For example, if you will be selling to Australian factories, do you predict that you will be selling to a manufacturing industry that is expanding and full of opportunities, or selling to a tightening and shrinking market?  Use Australian government statistics on the Australian economy to help justify your reasoning.

Answer

Business Plan to establish a Small unit of Bar Fabrication in Australia

Introduction

Steels Bars an important ingredient of any real estate operation as they forms the foundation of the walls and roofs. After the construction boom in the Australian market most of the big construction houses are seeking for “Turnkey Projects” and this where they need pre-fabricated bars that can be installed in the buildings and other establishments.

Operational Requirements 

We can use more than 13 types of bars in construction activities. Each bar is different from the other due to its shape, size and density. In order to deliver pre-fabricated steel bar solutions we need to have following operational departments working in a unit.

• Marketing Department: For the purpose of showcasing our services in the industry and fetching in orders.
• Engineering Department: For drawing the layout plan of manufacturing and preparing them for the delivery.
• Packaging & Transportation Department: Packaging department will ensure temper free packaging of final products and delivery.
• Inventory Department: Inventory Department will look after the needs of the manufacturing department.
• HR Department: To look after the process of recruitment and keep a check on the efficiency of employees and the production units.
• Quality Management team and Administration: Quality management team will collect feedbacks from the clients and administration will look after the accounting and other organizational functions.

Ownership Structure

Installation of the fabrication machinery and wages of the various teams along with the rentals for the place of the units are some initial investments. In order to meet out these demands, we will prefer to form a company where we will act as the venture capitalists and invite investors to invest in the business and become a partner with us. We can also form a team of technicians on a profit sharing basis and cut down the costs.

Pros of forming a Company

• During the initial run we can share burdens easily and sustain during the initial dull weathers.
• Australia is a mix economy; we can invite talents and technical expert to become a partner with us. It will bring down the costs.
• Company formation allows us to move in a group, we can get the benefit of the credibility of every member while presenting ourselves in the markets for seeking loans.
• Tax burdens and other expenses can be accommodated well.

Cons of forming a Company

• Selection of wrong partners can force us to share profits with inactive parities in the group.

The process to raise the money

I have a house with additional land attached to it, we will form a office and use this land as the seed investment where we can install the machinery. Since we are forming a company, during the initial run we will form a team of technicians and the seed money investors.  We will register a company and take an ABN. After it we will submit a loan application in the bank and search for other institutional investors that are keen in investing in businesses like us. We can also use the experience and expertise of our team mates as a capital while winning the assurance for future orders from construction companies and add it in our loan application.

The purpose of Obtaining ABN

Australian Business Number acts as an identifier for the business fraternity of Australia. This number is a token that connect us to a set of mercantile laws and other laws pertaining to the business ethics. We can also term it as an entry card in an exclusive club of business fraternity. ABN serves as a base identity for your business. It also gives us a unique identity in the taxation related matters as well.

The industry reports connected to the corresponding markets

The Australian Bureau of statics has announced that the number of the residential building approval applications has jumped significantly in the beginning of the 2018. Trade experts believe that a sharp fall in the real estate sector created a backlog in this industry. Now it is the time where they want to clear this backlog and a boom in the construction industry is on the cards. Overall a healthy growth of 18 per cent has been registered. This is a good sign for the engineering solutions based unit that are operating or planning to start operations to cater to the construction sector (Scutt, 2018).

Prediction for the future

Construction industry in Australia has a bright future ahead of it, in the past the real estate sector of Australia overpriced certain areas. Due to which inflation in the rates forced a recession. Demand was existing in the market but the rates of the land were serving as the barrier. Now they are in the state of the bust construction is emerging as the market that has the power to support the sinking real estate and this is why we can predict a huge demand for fabricated steel solutions in the market (Wadlow, 2018).

Bibliography

Scutt, D. (2018). Australian building approvals rebound sharply after an ugly plunge in December. Business Insider Australia , https://www.businessinsider.com.au/australian-building-approvals-rebound-led-by-apartments-2018-3.

Wadlow, T. (2018). Australia’s construction industry set for $35bn renovation boom. Global Construction , https://www.constructionglobal.com/major-projects/australias-construction-industry-set-35bn-renovation-boom.