Business & Finance BUSINESS FORMATION ASSIGNMENT
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Four friends went into business together operating a night market, holding big events in a local
city every two weeks. Each of the friends contributed $2,000 in cash for start-up capital, expecting a 25% interest in the company.
– Adam had the business idea and asked Betty, Camala, and Duane to be part of the business. Adam was unemployed at the time and was available to work on the events 100% of the time.
– Betty had a part-time job, but quickly decided to quit and work for the company full time.
– Camala was 6 months pregnant and was available to help when the company started but soon had the baby and plans eventually to go back to her job as an independent contractor.
– Duane had a full-time job and would only be able to provide limited support, mostly in marketing the events.
The friends used a generic online legal form to create an LLC as equal members but did not create an operating agreement because the state didn’t require one.
By the third event the markets had already become popular and were bringing in a lot of money.
Adam and Betty started to push “buyouts” on Camala and Duane, suggesting that Camala and
Duane were somehow bad friends to expect 25% of a company they were not going to work at.
Adam and Betty have now basically hijacked control of the company, blocked access to bank
accounts, business documents, accounting, and funds to anyone but themselves. Camala and
Duane have not seen a dime of the profits. Adam and Betty seem to only want to talk about their
original buyout offers of $5,000 for Camala, and $8,000 for Duane, with no ongoing ownership.
While the facts may vary, such casual business startups among friends or family are common.
This scenario demonstrates all the things that can go wrong without proper planning.
Question:
If these friends had come to you before starting the business, how would you have advised them?
Include in your analysis:
– What steps should have been taken before money changed hands?
– Is an LLC the best option? Some form of partnership? Other options? Explain your choice thoroughly.
– While the friends each initially contributed cash, how should they value the non-cash contributions of time and labor in determining ownership shares, distribution of profits, etc.?
– Was an operating or partnership agreement necessary? What should have been included?
Support your analysis with at least 3 scholarly sources other than the course materials, cited in-text and in a reference list. You must also integrate Biblical worldview analysis.
This paper must contain at least 800 words and follow current APA format but does not require an abstract. The title page, abstract (if you include one), and reference list do not count towards the length requirement.
Criteria Ratings Points
Content/
Analysis
56 to >51 pts
Advanced
All issues are addressed
and questions answered.
Major points are supported
by all of the following:
• Pertinent, conceptual, or
personal examples;
• Thoughtful analysis
(considering assumptions,
analyzing implications, and
comparing/contrasting
concepts);
• At least 3 scholarly
sources, in addition to the
course materials, cited in
current APA format; and
• Integration of at least 2
biblical principles with
citations.
51 to >46 pts
Proficient
Most issues are
addressed and
questions answered.
Major points are
supported by most of
the following:
• Pertinent,
conceptual, or
personal examples;
• Thoughtful analysis
(considering
assumptions,
analyzing
implications, and
comparing/contrasting
concepts);
• At least 3 scholarly
sources, in addition to
the course materials,
cited in current APA
format; and
• Integration of at
least 2 biblical
principles with
citations.
46 to >0 pts
Developing
Some issues are
addressed and
questions answered.
Major points are
supported by some of
the following:
• Pertinent,
conceptual, or
personal examples;
• Thoughtful analysis
(considering
assumptions,
analyzing
implications, and
comparing/contrasting
concepts);
• At least 3 scholarly
sources, in addition to
the course materials,
cited in current APA
format; and
• Integration of at
least 2 biblical
principles with
citations.
0 pts
Not Present
Few issues are
addressed and
questions
answered.
Little or no
analysis of key
issues.
Or paper is not
submitted.
56 pts
Grammar/
Spelling
10 to >9 pts
Advanced
Correct spelling and
grammar are used
throughout the thread.
There are 0–2 errors in
grammar or spelling that
distract the reader from
the content.
9 to >7 pts
Proficient
There are 3–5 errors
in grammar or spelling
that distract the
reader from the
content.
7 to >0 pts
Developing
There are 6–10 errors
in grammar or spelling
that distract the
reader from the
content.
0 pts
Not Present
There are more
than 10 errors in
the grammar or
spelling that
distract the
reader from the
content
OR
there is evidence
of a complete
lack of
spell-checking
and
proofreading.
10 pts
Paper Grading Rubric | BUSI561_B02_202340
Criteria Ratings Points
APA
Citation
Compliance
10 to >9 pts
Advanced
References are cited both
in-text and in a reference
list. There are 0–2 minor
errors in APA format in the
required citations.
9 to >7 pts
Proficient
References are cited
both in-text and in a
reference list. There
are 3-5 minor errors in
APA format in the
required citations.
7 to >0 pts
Developing
There are more than
5 errors in APA format
in the required items
and/or required
citations are missing.
0 pts
Not Present
Required
citations do not
exist, or
demonstrate no
APA formatting
or structure.
10 pts
Word Count 4 to >3 pts
Advanced
The minimum word count
of 800 words of
substantive content is met
or exceeded.
3 to >2 pts
Proficient
Substantive word
count is between 600
and 800 words.
2 to >0 pts
Developing
Substantive word
count is between 400
and 600 words.
0 pts
Not Present
There are fewer
than 400 words
of substantive
content.
4 pts
Total Points: 80
Paper Grading Rubric | BUSI561_B02_202340
BUSI 561
PAPER: BUSINESS FORMATION ASSIGNMENT INSTRUCTIONS
Four friends went into business together operating a night market, holding big events in a local city every two weeks. Each of the friends contributed $2,000 in cash for start-up capital, expecting a 25% interest in the company.
· Adam had the business idea and asked Betty, Camala, and Duane to be part of the business. Adam was unemployed at the time and was available to work on the events 100% of the time.
· Betty had a part-time job, but quickly decided to quit and work for the company full time.
· Camala was 6 months pregnant and was available to help when the company started but soon had the baby and plans eventually to go back to her job as an independent contractor.
· Duane had a full-time job and would only be able to provide limited support, mostly in marketing the events.
The friends used a generic online legal form to create an LLC as equal members but did not create an operating agreement because the state didn’t require one.
By the third event the markets had already become popular and were bringing in a lot of money. Adam and Betty started to push “buyouts” on Camala and Duane, suggesting that Camala and Duane were somehow bad friends to expect 25% of a company they were not going to work at.
Adam and Betty have now basically hijacked control of the company, blocked access to bank accounts, business documents, accounting, and funds to anyone but themselves. Camala and Duane have not seen a dime of the profits. Adam and Betty seem to only want to talk about their original buyout offers of $5,000 for Camala, and $8,000 for Duane, with no ongoing ownership.
While the facts may vary, such casual business startups among friends or family are common. This scenario demonstrates all the things that can go wrong without proper planning.
Question:
If these friends had come to you before starting the business, how would you have advised them?
Include in your analysis:
· What steps should have been taken before money changed hands?
· Is an LLC the best option? Some form of partnership? Other options? Explain your choice thoroughly.
· While the friends each initially contributed cash, how should they value the non-cash contributions of time and labor in determining ownership shares, distribution of profits, etc.?
· Was an operating or partnership agreement necessary? What should have been included?
Support your analysis with at least 3 scholarly sources other than the course materials, cited in-
text and in a reference list. You must also integrate Biblical worldview analysis.
This paper must contain at least 800 words and follow current APA format but does not require
an abstract. The title page, abstract (if you include one), and reference list do not count towards
the length requirement. Submit your paper as a Word document.
Submit your paper by 11:59 p.m. (ET) on Sunday of Module/Week 7.
Note: Your assignment will be checked for originality via the Turnitin plagiarism tool.
Page 2 of 2
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