Answer to Question #263853 in Economics of Enterprise for Maphula

Question

Ben and Jerry decided to go into selling their farm produce. The live-in Marble Hall, 

—an Agricultural college town —and completed a R500 correspondence course 

from Tompi Seleka on basic agriculture. With their life savings of R8,000 and R4,000 

of borrowed funds, they set up an informal market on a busy street corner in Marble 

hall.

Ben and Jerry want to formalize their business. Their next big decision is ‘’which form 

of business ownership is the best for them. Considering their case study and 

evaluating all the business ownership thoroughly, advise them on a type of business 

ownership they can venture into. 

Answer 1

Solution:

The type of business ownership that Ben and Jerry should venture into is a partnership.

A partnership is well suited for a small informal business and has many advantages, which include the following:

·        It is easy to set up since it is less formal and has fewer legal obligations.

·        Ownership and control are combined between them.

·        Sharing of burdens, each partner with his own duties and responsibilities.

·        It offers more privacy since only the two members are the ones who carry out significant business decisions.

·        It has more expansion scope through partners' contributions and borrowings.

·        Easier dissolution since a partnership does not require any legal procedure to be dissolved.