Starting and running a small business is a daunting task which requires a businessman or a businesswoman to prepare and to be equipped adequately with the right expertise for it to be successful. Mastering all the aspects of how to run a business is crucial and paramount for a smooth navigation of the turbulent marketplace. Possessing all the relevant knowledge and skills is prerequisite for a small business, for instance, having the technical skills and lacking the managerial or the operation know-how can have a far-fetching consequences. On the other hand, understanding the legal aspect of any business is vital, including having a well-defined buyout agreement.
Transferring of ownership needs to be undertaken with utmost precaution more so to an employee. A legal document like a buyout agreement is very important to prepare any business in case of any unforeseen events or situations. The owner also has to know the expertise or capacity to which the business is transferred to. This helps in terms of the short and long term business view.
The Business Ownership
Bill Hudson has displayed entrepreneurial skills through years of experience in craftsmanship. By producing high quality products which have earned the small business a reputation over the years coupled by working for Mr. Hugo Huffman for 12 years means that Bill is very good at what he does. He has perfected his trade over the years and in addition, his determination for perfection shows the depth of his character.
However, one of the characteristics which Bill Hudson lacks and which is chief in running any business is proficiency in the managerial, operational functions or division of the business. This might have devastating effect to the business. It may significantly affect the bottom line and the reputation of the business which took him, Bill Hudson, Mr. Hugo Huffman and his wife Hilda a lot of hard work and time to build.
The best way for Bill Hudson to avoid pitfalls in his business, is to seek for expertise and wisdom of either a lawyer or a business consultant, he may argue that it is an additional cost but it’s nothing compared to the various business function risks he is exposing himself to. Seeking for a professional second opinion or expertise will pay off greatly and safeguard him and Mr. Hugo Huffman from risks. Mr. Hugo Huffman is not aware of how detrimental is the decision to sell the business to Bill Hudson. Mr. Huffman should have followed business and legal process in selling the business to Mr. Hudson who possesses only the technical know-how and not the basic, the day-to-day managing of the business, since he doesn’t even possess any academic background in business. Mr. Huffman should have sought for the professional advice before opting to sell the business.
Undercapitalization or lack of capital is one of the hindering factors to starting a business. However, difficult times, such as those that occurred in 2008-2010 can cause even the biggest and apparently most established firms to hit the buffer. After all, Lehman Brothers survived the 1929 depression and Woolworth had put in some time on almost every in the UK, yet both were swept away in the recent downturn (Barrow, 2011, p. 349). Despite the availability of capital, learning from the history suggests that starting a business during very turbulent economic times can be disastrous. Any small business which is courage enough to launch should consider its exit strategy in terms of the legal aspect of every form of ownership together with the ramifications.