When someone has plans for starting a new business, one of the central decisions is which business trading structure will work best for their venture.

The general problem however can be that there are both pros and cons with the main options available, so considerations need to be given with regard to the overall situation as well as the specific conditions presented with any business venture. To explain the options, it can be educational to look at one example that has typical conditions found in many businesses.

Take for example the case of Carlos and Yvonne, who want to purchase an existing food catering business together. They are considering the best business structure that should result in the best conditions for success.

Carlos is a nutritionist and has expertise creating customised nutritionally balanced meals for a variety of customer needs. He is also a qualified chef and has management experience having worked as an executive chef in a major hotel chain in Singapore. However, he does not have any experience in Australia. Even though he has the right skills set to operate a catering company, he’ll need help from someone who is familiar with the local food industry to help him build his business.

Yvonne, on the other hand, has more than 20 years’ experience in the Australian food industry, having worked in and managed various sized retail food outlets and also at a central kitchen facility for a franchisor.  She has the relevant contacts to enable the business to grow after its acquisition. She intends to continue with her current consulting role for her private company.

Purpose of the acquisition 
Both Carlos and Yvonne want to expand on the business that they are acquiring, which at that time only had a very small commercial kitchen preparing pre-packaged (nutrition/calorie controlled) meals for fitness centres. The business is mainly wholesale but they are planning to cater for retail customers as well and eventually have a retail store selling not just pre-packaged meals but fresh, healthy food and beverages on site. They will need funding for the proposed expansion very soon after the acquisition of the business.

The trading vehicle Rearmore