Analysis of UK Business Structures, Finance, HR and Sectors

This report provides a comprehensive analysis of various aspects crucial for establishing and managing a business in the UK. It begins by examining different legal structures, including public limited companies, private limited companies, and registered charities, detailing their respective benefits and drawbacks. The report then delves into the sources of finance available to startups, categorizing them into short-term, medium-term, and long-term options. It explores cash credit, customer advances, debentures, bank borrowings, equity shares, and retained earnings, assessing their advantages and shortcomings. Furthermore, the report identifies three key sectors within the UK economy where a business can operate. Finally, it addresses the importance of Human Resource (HR) policies within a business context. The report is structured to provide practical insights for entrepreneurs and business managers, offering a solid understanding of the key elements for business success, using a bakery startup as a case study.

Structure of Business

Contents
INTRODUCTION......................................................................................................................3
Main body..................................................................................................................................3
A- Different legal statuses of business with its benefits and drawbacks....................3
B- Three sources of finance with advantages and shortcomings...............................5
C- Identify three sectors within the UK economy in which a business can operate.8
D- HR Policies and importance.....................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

INTRODUCTION
The startup company is taken by the entrepreneur who has innovative ideas to seek,
develop and validate the business model. The startup defines the new business that has
intention to grow beyond the sole originator. In the startup the individual has uncertainty and
risk but leads to success and some startup is privately held companies. The resources have
optimum utilization to achieve the economy objectives by making contributions. The Startup
business are initiated by businesspersons who want to produce a product or facility for which
they reflect their positions demand (Brenkert, G.G., 2018). The companies generally begin
through massive finances and restricted revenue, because of that they aspect for investment
from a numerous of sources such as venture capitalists. In the direction of startup, the
corporate several possessions are documented together with the legal business structure,
sources of finance and human resources with policies. In emerging the business tactics, the
monetary obligation is determined through the subdivision of the corporate into legal
structures and executing the appropriate strategies in directive to produce the uniqueness of
the corporate in the marketplace. In the learning the wide-ranging material is providing on
many legal structures of the companies in UK with its benefits and drawbacks that were
accepted. It likewise states knowledge about the varied sources of finance to origination the
corporate with its advantages and shortcoming and three dissimilar sectors of the UK
economy and their variances. In learning it has been also precise reformed human resources
policies and their significance in the office. The chosen startup business is bakery providing
baked products to the customers such as biscuits, cakes, pastries and many more. The quality
products can be provided to the customers by having the good knowledge of the recipes and
moulds. As various corporate companies order from bakeries for small meeting or parties
which is arranged by them. It is a good startup business idea to gain returns it can be private
or public working for profit or not. It leads to improve in standard and provides customer
satisfaction (Chim-Miki, A.F and et.al., 2017).
Main body
A- Different legal statuses of business with its benefits and drawbacks
The lawful position of the association designates the civil rights and obligations of the
workforces in the rapports of the corporate proprietorship control, personal accountability
and monetary structure. Through this it likewise regulates businesses and proprietor

lawful liabilities. These are principally alienated into diverse commercial segments such
as public limited company, private Limited company and registered charity.
 Public limited company- In this company minimum number of members is 7 and no
limit in case of maximum members prescribing a minimal paid-up capital. The financial
assistance is offered by the public company inside the agreed limits. The shares are
delivered and freely traded in the public by the company members. The company deposits
are accepted and invited from the public (Falkner, R., 2017).
Strength- The wealth is raised up effortlessly in the public company over public deposits, for
the growth and progress. The company estimation is premeditated effortlessly as the
businesses are obligatory to file the financial reports which stretches the stakeholders,
depositors, financial forecasters to get admittance concerning the company information.
Weakness- The Public companies are vulnerable to augmented investigation after the
government, controlling agencies, and the public. The business inevitability encounters
several obligatory reporting standards that are recognized by government entities. The
proprietor misses the control over diverse business. It needs the lawful and monitoring
necessities to protect the stakeholders. The mandatory level of the transparency was high for
the public companies.
 Private limited company- It is considered lawfully with restricted liability or legal
security for its shareholders that spots restrictions on proprietorship. The members
accountability is restricted to the shares held by them and cannot be dealt publicly. In the
company the minimum figure of associates is 2 with the maximum limit number of 200
members. The deposits are not accepted and invited from the public.
Strength- In the company the funds are raised through Venture capitalist and angel investors
and does not require minimum capital due to separate legal entity. The shares of the company
are freely transferrable by the shareholders to another person (Kim, H. and et.al.,2017).
Weakness- The private limited company limits the transmission capability of the shares by
its articles and does not entail to issue prospectus to public. The stocks cannot be quoted in
stock exchange. The officer of the businesses is detained responsible for the bankruptcy of
the corporate.
 Registered charity- It is a charitable association whose main purpose is to carry societal
welfare. The registered charity is recognized and functioned for charitable purposes by

utilizing resources for charitable activities. The funds are used for the society benefit. The
registered charity is incorporated and administered by the permissible article known as
trust and constitution which describes the organization purposes and structure.
Strength- The charitable organization gains big relaxation from the excises and acquires the
public acknowledgement and belief as predominant for societal moral which likewise
benefits in supporting with fundraising. The possessions of the charity are castoff for only
charitable purposes and cannot be cast-off for personal benefit. For the charitable position the
bases of the grant capital are exposed to the organization (Kobersy, I.S and et.al.,2017).
Weakness- The drawback of the charitable organization is it faces the restrictions to convey
out several activities and mandatory to achieve by monitoring necessities charted by the UK
government. The wealth cannot be raised up after equity funds. The compensation to the
representative is aimed at the supply of the competent service is prohibited deprived of the
structure of charity and commission charity authorizations to recompense with this dictate
feature explanation.
B- Three sources of finance with advantages and shortcomings
The finance sources are discovered by the businessperson for startup new business. In the
framework to the bakery, it is crucial for the finance manager to select the correct source and
combination of money by profound examination of each source and considerate the features
of funding sources. The source of finance is divided on the base of time period encompassing
of short-term, medium-term, and long-term.
Short term sources of finance
The funding is obtainable for an interval of one year or less is acknowledged as short-
term finance and cast-off to finance the working capital and current assets such as raw
material, inventory.
 Cash credit- The prearrangement is created through the bank intended for the borrower is
permitted to extract reserves from the bank up to the authorized credit edge. The credit
can be inhibited occasionally in the amount to the necessities and reimbursed by
depositing excess reserves in the cash credit account (Kranich, P and et.al., 2018).
Strengths- The benefits to bakery are it takes a lesser amount of time in favorable the
credit and distributes flexibility as the time period can be stretched rendering to the
purchaser needs. It too achieves the present liabilities of the enterprise.

Weakness- The availing capability of cash credit necessitates further safety in cash
acceptance and takes huge rate of interest. The allowance of the credit sum and time limit
is hinge on the bank agreement.
 Customer advances- It is described as the payment part made in advance to the
consumer in the procurement of the goods and service in forthcoming. It is also known as
cash before delivery. The customers are required to pay advance while making ordering
for the required goods and services. Customer advances permit clients to submit their
imbursement for about time and achieve their further requirement on urgency (Mollanger,
T., 2018).
Strength- The advantage of the customer advance to the bakery is it is free from the
burden of the interest and no kind of security is required to raise the advance. With this
there is no repayment obligation and the organization is free to refund money if order is
cancelled by the customers.
Weakness- The limitation is it is avail to limited enterprises which has a good reputation
in the market. The customer advance is offered for the limited period of time and which is
fixed cannot be extended. The amount of advance is also limited vary from product to
product value.
Medium term sources of finance
The bankrolling of the finance is providing for the motives when the long-term wealth
is not obtainable and deferred incomes expenses are created such as advertisements. The
financing time period is for 3 to 5 years. The sources in which finance is availed are-
 Issues of debentures- It is valuable source of funding for the bakery as when the
business choose to increase credits from the public the finance amount is separated into
equivalent worth units which is known as debentures. The debenture holders are the
creditors of the business who creates financing.
Strength- It is inexpensive source of finance because interest rate is short than the rate of
the earnings on stocks. The reserves are elevated by issuance the debentures to receive the
high degree of return for the corporate.
Weakness- The issue of debentures is not appropriate for all the businesses through the
changing revenue and places the load on the corporations to reimbursement the interest
whether revenue or loss suffered (Myers, M.D., 2019).

 Borrowing from banks- The Borrowing from the bank profits to allocate monetary
resolution to commercial for both medium- and short-term sources of finance. Where,
bakery earnings the financial financing from different financial institutions for the period
of 3 to 7 years which is likewise called as term loan or demand loans. The financial
institution in UK transmits the monetary provision offers the advance to the corporate
through or deprived of any security.
Strengths: The interest on obligation is tax deducted and creditors are remunerated
principal and interest amount. It is a phenomenal means of meeting the financial
requirements of the businesses (Quashie, M and et.al.,2017).
Weaknesses: The organization is obligated to repayment secure interest and principal
amount which can peaks to insolvency. It upsurges the financial leverage which growths
the rate of equity to the firm. It is an exclusive technique for the loan amount.
Long term sources of finance
It contributes a remarkable share in the financial supervision of the company telling
the credit capacity provided that for more than five years. This substance of funding is
obligatory to accomplish the long-term accountabilities encompass of protected wealth
compulsory for investment in fixed assets. The sources are-
 Equity-shares- It is also called as ordinary shares representing the ownership capital in
the company. The shares hold by the person is the legal owner having unrestricted claim
on income and assets of the business possessing all the voting rights. The aim is to
maximize the equity shares values by bearing the risk of proprietorship. The dividend rate
is not fixed and entitled to have after paying to preference shareholders dividend (Raut,
R.D and et.al.,2019).
Strength- The advantage in the context to the bakery is it is a permanent source of funds
available for the long term continues of the company. The borrowing capacity is
increased of the shareholders funds providing high safety. The rate of dividend is
increased if there are higher profits.
Weakness- The drawback is it has high cost of funds as dividend are not deducted from
the company’s revenues while calculating taxes. The equity shares have high flotation
cost in respect to underwriting, brokerage etc. the company shares are purchased and sold
in the stock market which can be manipulated by groups of shareholders as they have
control on purchasing shares of the company (Ray, S and et.al.,2018).

 Retained earnings- Retained earnings are called as privileged bases of funding for the
business activities. It is a portion of the proprietary of the capital of the corporate. The
company withstands the resources recognized out afterward the profits castoff for the
business development. Bakery types the usage of this way by recalling the proceeds in the
relative of the capitals in petition to meeting the additional business requirements.
Strengths: It is a cheap basis of money underprivileged of involving any attainment cost.
The retained earnings distribute the strong point to the company in financial position and
constancy which upsurges the market price of the stocks.
Weaknesses: There is an unsuitable process of the assets if properly not definite reserved
incomes which peaks the reduction in the business efficiency and proficiency. The
stakeholders of the corporate are not satisfactory to pleasure the complete benefit of
actual profits of the corporate (Rupasingha, A., 2017).
C- Identify three sectors within the UK economy in which a business can operate
In the economy there are three sector model comprising of primary, secondary and
tertiary sectors for the economic development. The activities are processed from primary to
secondary and to the ultimate tertiary sector. The varied corporate sectors fetch input and
output to improve the value in the economy.
In the primary sector the countries have the low per capita income in the earlier state
of development and national income is attained by the production. The sector is concerned
with the extraction of the raw material and harvesting of natural products such as agriculture,
finishing and mining. The resources can be renewed and can be used for non-renewable
resources. The obtaining of raw materials includes metals, coals, farmed foods etc. it too
includes the corporate that approved out for the mining activities and income is received by
the selling to other corporate initiatives (Schaltegger, S and et.al.,2018).
In the secondary sector the countries are advanced with the state development with a
medium national income achieved. This sector is concerned with the manufacturing and
production activities. The activities are taken from the primary products and produce
something for the society benefit and delivering high value-added finished product. The
shifting of the raw material benefits the corporate in receiving profits by contributing finished
good to retailer and suppliers. It enhances the value in the natural resources by generating
valuable products.

In the tertiary sector the highly developed countries have high income and total output in
the economy. The immaterial assets and services distributed to the clients. The services are
rendered like retail, financial services etc. It is an intangible aspect offering services to the
customers and business. The sector involves the labor productivity. These corporate produces
revenue on the basis of the services reachable by the business in the marketplace. The
business startup of bakery in the tertiary sectors carries the profitable services by distributing
several food items to its consumers over UK. The product identity is established by
presenting quality services and returns is engendered by attaining out to great number of
customers (Sewpersadh, N.S., 2019).
D- HR Policies and importance
The HR policies is a overall supervision that postulates the extensive constraints
within which the association members are anticipated to function in chase of corporate goals.
The program delivers advance material and predicable choices for circumstances. The HR
policies are declarations of individual purposes for an association which puts down the
standards for decision making in ground of workers management. The policies classify the
meaning of business in the matters of employment, selection, placements and expansions. In
the context to the bakery the HR policies are expressed by the HR manager to reserve the
expectant corporate atmosphere in the organization and satisfying government dealings
(Shakeel, J and et.al.,2020).
Importance of HR policies
The HR policies are significant for the association as corporate is directed in the
decent means which benefits in supervision the commercial activities and personnel. The
policies offer the sense of the safety by the workers as they recognize what measures is
mandatory to be engaged in a specific condition. The manger likewise profited by the HR
polices in deputation of command to dependents who are eager to take the accountability.
The consequence of the HR policies highpoints to the employee motivation and authenticity
by introduction sensible values and equality so that development can be enhanced. The
definite HR policies supports in encouragement decision making on repetitive and
monotonous problems which avoids the wastage of time and energy.
HR policies
 Health and safety policies- This policy describes the sequence of action that encourages
the decision making in the organization and leads the activities. It is body of guidelines

defined at government level and realized at labor force by the persons. It delivers the job
safety to the workers in the employed atmosphere to kind them sense relaxed. These
health and safety evaluate incorporate the considerate leaves of the personnel such as
paternity leave, maternity leave, leaves for accidents and others. In the framework to the
bakery the manager of human resource delivers the job safekeeping to the workforces and
does not establish the physical infrastructure which might harm the workers. It is an
obligation in upholding the harmless and vigorous working environment. The health and
safety policy of manager transmission this safety responsibility and obligation to
respectively individual member. The executive's health and safety strategy hinge on the
opportunity and wants of the detailed association. The competence and capability are
amplified in the personnel by this policy (Waluszewski, A and et.al.,2017).
 Equality and diversity policies- It is the policy of easy inscribed contract for the
collection maintaining the escaping of the discrimination in combination of persons and
makes safe, wide-ranging environment for the members and service workers. The
equality describes contravention over barriers, eliminating discrimination and
preservation correspondent opportunities by retrieving all groups impartially in
employment, and to goods and services conversely variety means enjoying adjustment
and growing everyone. In context to the bakery the policies by the human resources
manager supports to enhancement equality and correct management of the human capital
in the association. While, a place of work requires of people temporarily dissimilar
backgrounds, cultures thus its efforts out to be important to approval the shared and
cultural beliefs of the persons. The human resource manager in bakery evolutions rules in
direction to sustenance the workplace diversity and that respectively and all personnel
feel comfortable and allocates equality of equal opportunities in the workplace.
Conclusion
From the above study it is being concluded that to start the any new business in the
economy the possessions are selfsame significant in directive to encounter the necessities in
greatest moral and lawful way. In the opening the corporate it must be deliberate the different
legal structure framed by the government and complying with the rules to have recognition.
The business also evaluates the various sources of fund to finance the business.

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