The success of a new business is conditional upon a variety of factors, which should be carefully examined. They include the selection of an approach for market entry, applicable business structures, and the consideration of alternatives to these aspects of the matter alongside their advantages and disadvantages. Therefore, the evaluation of these conditions for the prospective initiative should be conducted to ensure its profitability in the long run.
A Brief Description of the Business
The proposed business is hotshot trucking, and this field is very competitive, which means the need for assessing its details. Thus, this model of provision of services is characterized by smaller sizes of cargo and their time-sensitive nature (“Starting hot shot trucking company – Profitable business plan,” 2020). Hence, the company will be performing shipments within the country while owning several trucks with licenses and insurances, and the customers will be both individuals and businesses in need of fast delivery of small parcels.
The Best Approach and Business Entity
The best approach in terms of a business structure is selecting a limited liability company (LLC), and this solution is conditional upon several reasons. First, it is the easiest form from the point of view of management (“What is the best business structure for a trucking company?,” 2020). Second, LLCs imply a limited number of regulations for their owners, which means their higher flexibility in the decision-making process (“What is the best business structure for a trucking company?,” 2020). In addition, LLCs allow protecting personal assets due to the separation of one’s property from profits. From this perspective, this type of business is also advantageous for hotshot trucking.
Alternative Business Entity
The choice of LLC as a preferable business entity seems optimal in terms of initial costs and the simplicity of its procedures. Meanwhile, it is not the only suitable option, and the best alternative to it is a partnership. The consideration of this structure for the suggested hotshot trucking company is explained by its relative simplicity complemented by the possibility of investor involvement (Macmillan, 2020). Moreover, it is also beneficial for protecting personal assets, but the shared responsibility, in this case, correlates with greater chances for disagreement between the partners (Macmillan, 2020). Therefore, it is the second-best alternative, whereas LLCs are optimal.
Advantages and Disadvantages of Business Structures: A Chart
Evaluation of The Various Choices and Critique of the Selected Structure
As can be seen from the chart above, the most critical considerations when choosing sole-proprietorships are easier control over trucking operations and flexibility complicated by personal responsibility. In turn, partnerships imply simple taxing and starting procedures, which are crucial for the proposed business. As for corporations, they are better for separating liability and exercising individual control over finances. Nevertheless, LLCs remain the best option since initial costs and the lack of clarity regarding the number of employees are the most significant considerations. When applied to hotshot trucking, it can evoke concerns regarding taxing and shared ownership, but it is still more advantageous as it is easier to establish for this type of initiative.
Conclusion
To conclude, the examination of business structures for the hotshot trucking company revealed the suitability of LLC for it. This decision is conditional upon its combination of low costs and flexibility. The second-best solution is partnerships, but they are less advantageous due to the greater possibility of conflicts. In turn, corporations are not applicable since they are difficult to manage, and sole-proprietorships do not provide for shared responsibility, which is critical for the planned operations. Thus, for protecting personal assets and gaining substantial profits, LLC is the best option.
References
Macmillan, C. (2020). Types of business ownership – A practical guide for owner operators. Smart Trucking.
Starting hot shot trucking company – Profitable business plan. (2020). Make In Business Magazine.
What is the best business structure for a trucking company? (2020). Motor Carrier HQ.