Forms of Business Organisation | ISC Class 12 Business Studies Notes

This note covers sole proprietorship, partnership, private limited companies, public limited companies, ownership and management, liability, continuity, capital, legal foundations, distinctions between business entities, and the choice of an appropriate form of business organisation.

What does the form of a business organisation determine?

A form of business organisation describes how a business is owned and managed. Choosing a form involves comparing its advantages and disadvantages with the requirements of the business. The same choice need not suit every scale or nature of activity.

Incorporation means the legal creation of a company through registration. Shares are the smaller parts into which a company's capital is divided. Capital is the money contributed or raised for business; securities include financial instruments such as shares.

Public subscription means members of the public taking up securities offered by a company. Profit is the excess of business revenue over expenses; revenue is income earned through business operations. Business risk involves the possibility of loss or failure.

What are the four forms being compared?

• Sole proprietorship: one individual owns, manages and controls the business, receives all its profits and bears all its risks.
• Partnership: persons agree to share the profits of a business conducted by all of them or by any one acting for all.
• Private limited company: an incorporated company that restricts share transfers and does not invite the public to subscribe to its securities.
• Public limited company: a company which is not a private company, with no restriction on transfer of its securities and no prohibition on inviting public subscription.

Which terms help explain the differences?

Assets are resources or property belonging to the business. Liabilities are its financial obligations, including debts owed to creditors. A creditor is a person or organisation to whom money is owed. Liability determines how far owners must meet those obligations.

Continuity concerns whether the business continues when the position of its owners changes. Control concerns who makes decisions. Ownership, control, liability and continuity must be distinguished: owning part of a company does not give a shareholder responsibility for its everyday management.

Limited liability, for a shareholder in a company limited by shares, confines further responsibility for company debts to the unpaid amount on those shares. Unlimited liability can extend to the owner's personal property when business assets are insufficient.

Money amounts below are expressed in rupees (₹), unless dollars or cents are specified. Comparing the amount of money invested with the amount still payable is particularly important when examining a shareholder's limited liability.

How does a sole proprietorship operate?

Definition: A sole proprietorship is a business owned, managed and controlled by one individual, who receives all the profits and bears all the risks.

“Sole” means only, and “proprietor” means owner. This form is particularly common in personalised services such as beauty parlours and hair salons, and in small activities such as a local retail shop. It is the most suitable form for small businesses, especially in their initial years of operation.

What are its main features?

Formation and closure involve minimal legal formalities. No separate law governs this form as such, although some activities may require a licence. Ease of starting the business should therefore not be confused with freedom from every legal requirement.

The proprietor has unlimited liability: if business assets cannot pay the debts, personal property may also be used. There is no separate legal identity between the owner and business. The owner is responsible for the business's activities.

The proprietor alone takes decisions, bears the risk of failure and receives the profits. Death, insanity, imprisonment, physical illness or bankruptcy of the proprietor can harm the business and may even cause closure. Bankruptcy is a legal status associated with inability to pay debts.

What are its merits and limitations?

Banks and other lenders may hesitate to provide long-term loans. It is also rare for one individual to excel in purchasing, selling, financing and every other managerial function. Decisions may not be balanced in all cases, and limited funds may prevent the employment of talented staff.

Worked example 1. At dissolution, meaning closure of the business, XYZ dry cleaner has outside liabilities of ₹80,000 and business assets of ₹60,000. It is a sole proprietorship. What must the proprietor provide personally?

Answer: ₹80,000 − ₹60,000 = ₹20,000. The proprietor must provide ₹20,000 from personal sources, even if personal property has to be sold. Business assets do not set a ceiling on a sole proprietor's liability.

What makes a partnership different from individual ownership?

The Indian Partnership Act, 1932 governs partnership. Its central idea is an agreement to share the profits of a business carried on by all the partners or any one acting for all. The business must be lawful and conducted for profit.

People joining together purely for charitable purposes do not thereby constitute a partnership. The Indian Contract Act, 1872 also provides a definition centred on combining property, labour or skill in business and sharing its profits.

How are responsibility and risk shared?

Partners agree on the terms of their relationship, the conduct of business and the sharing of profits and losses. They generally take decisions with mutual consent. Their combined work can provide more capital and a wider range of skills than individual ownership.

In a general partnership, partners have unlimited liability. They are liable jointly and individually, also called jointly and severally. A creditor may recover a debt from an individual partner if necessary; that partner can subsequently recover the agreed shares from the others.

Mutual agency means that each partner is both an agent and a principal. As an agent, a partner represents the others and can bind them through business acts. As a principal, that partner can also be bound by the other partners' acts.

Note: Sharing risk does not mean limiting liability. A partner may have to repay the entire debt if the other partners cannot pay. An agreed sharing ratio does not remove the firm's responsibility to its creditors.

How many partners are permitted, and what affects continuity?

A partnership requires at least two partners. Section 464 of the Companies Act, 2013 allows a ceiling of 100, subject to the number prescribed by government. Rule 10 of the Companies (Miscellaneous) Rules, 2014 prescribes a maximum of 50.

Death, retirement, insolvency or insanity of a partner can bring the business to an end. Insolvency means inability to pay debts. The remaining partners may, if they wish, continue the business through a new agreement. It is therefore inaccurate to say that continued business is impossible.

A partnership offers relatively easy formation, more funds, balanced decisions, shared risks and secrecy. Its limitations include unlimited liability, restricted resources, possible disagreements, uncertain continuity and generally low public confidence because financial reports need not be published.

How do agreements and partners' roles explain partnership?

A partnership deed is the written agreement setting out the terms and conditions governing a partnership. An agreement may be oral or written, but a written record is advisable because it supplies evidence of the conditions accepted by the partners.

What does the deed generally cover?

• The firm's name, nature and location of business, and duration.
• Each partner's investment and the distribution of profits and losses.
• Partners' duties, obligations, salaries and withdrawals.
• Terms for admission, retirement and expulsion of a partner.
• Interest on capital and on drawings, meaning money withdrawn by partners.
• Dissolution, preparation and auditing of accounts, and settlement of disputes. Auditing means examination of the accounts.

Sonam and Sameer plan a food-processing business in District Kangra, Himachal Pradesh. A deed covering these matters can help them avoid later disputes. Their capital amounts and profit-sharing ratio must be agreed; those details cannot be inferred simply from their decision to start together.

Must every partner manage the business?

An active partner contributes capital, helps manage the firm, shares profits and losses, and has unlimited liability. A sleeping partner contributes capital and shares profits and losses without taking part in everyday management, but still has unlimited liability.

A secret partner participates in the business but has an association unknown to the public. A nominal partner lends their name without contributing capital or actively managing the firm; this can still create liability to outside parties.

A partner by estoppel creates, through conduct, the impression of being a partner. Rani accompanies Seema, a partner in Simplex Solutions, to negotiations with Mohan Softwares. Rani actively participates and gives the impression that she is also a partner.

If Mohan Softwares extends credit on the basis of those negotiations, Rani is liable for repayment as if she were a partner. The condition about credit being extended on that representation is essential; merely knowing Seema is not the basis of the liability.

A partner by holding out knowingly allows representation as a partner. Liability arises for debts extended on that basis. These roles show why participation, public appearance and responsibility for debts must be examined separately.

What does registration mean?

Registration of a firm means recording its name and prescribed particulars with the Registrar of Firms, the official maintaining that register. Registration of a general partnership is optional, unlike company incorporation. The deed records the agreement; registration records the firm's prescribed particulars.

Why is a joint stock company a separate legal person?

A joint stock company is an association formed for business with a legal status independent of its members. It is an artificial person, meaning a person created by law rather than a human being. It can own property, borrow, contract, sue and be sued.

Separate legal entity means that the company's identity, assets and liabilities are distinct from those of its owners. Shareholders own shares in the company; this does not make the company's debts their unlimited personal debts.

What is the legal foundation?

The Companies Act, 2013 governs the company form. Section 2(20) defines a company through incorporation under that Act or an earlier company law. Incorporation is compulsory, and formation involves documents, legal requirements, time and expense.

Earlier company laws include the Indian Companies Act, 1866, the Indian Companies Act, 1882, the Indian Companies Act, 1913 and the Companies Act, 1956. The historical list also includes company laws preceding 1866 and the Registration of Transferred Companies Ordinance, 1942.

These earlier enactments explain the reference to previous company law in the definition. They should not be confused with the present Act named above. An ordinance is a form of legal enactment.

How are ownership, management and continuity organised?

Shareholders are the owners. They elect the Board of Directors, the chief managing body, which appoints senior management to run the business. Directors are accountable to shareholders, but shareholders do not have the right to take part in everyday management merely as shareholders.

Perpetual succession means continued legal existence despite changes in membership. Death, retirement, resignation, insolvency or insanity of members does not end the company. A legal closure procedure, called winding up, is needed to bring its existence to an end.

Members of a company limited by shares can be required to meet debts only up to the unpaid amount on their shares. Creditors claim against company assets. Distinguish money already invested from the additional unpaid amount that can still be called for.

Worked example 2. Akshay owns 2,000 shares of ₹10 each and has paid ₹7 per share. How much further can he be required to contribute if the company cannot pay its debts?

Answer: The unpaid amount is ₹10 − ₹7 = ₹3 per share. His remaining liability is 2,000 × ₹3 = ₹6,000. He cannot be required to pay more towards those company debts beyond this unpaid share amount.

What are the merits and limitations of the company form?

Which merits support investment and expansion?

Limited liability reduces the investor's exposure because liability is confined to the unpaid share amount. Perpetual existence gives the business stability independent of changes among its members. These features distinguish the company from an individual business and a general partnership.

In a public limited company, shares can be transferred and sold in the market, allowing investment to be converted into cash. This advantage needs the public-company qualification because a private company restricts transfers.

Companies have greater scope for raising finance and expanding than sole proprietorships or partnerships. A public company can attract capital from the public. Companies can also obtain loans from banks and financial institutions; limited liability and the possibility of high returns can attract investors.

Professional management becomes possible because a company can afford specialists and divide work into departments. Experts handling particular activities can improve efficiency and balance decisions. This advantage is especially relevant where operations become complex.

Which limitations can reduce these advantages?

Oligarchic management means rule by a few. In most large organisations with many shareholders, owners have minimal influence over everyday control. Directors sometimes use their considerable freedom contrary to shareholder interests. This is a possible limitation of practice, not the definition of every company.

Stakeholders are groups with an interest in the business. Employees may seek higher salaries, consumers better quality at lower prices, and shareholders higher returns. Dividends are returns distributed to shareholders. It often becomes difficult to satisfy these diverse interests together.

How do private and public limited companies differ?

A private limited company restricts members' rights to transfer shares and cannot invite the public to subscribe to its securities. To subscribe is to apply for or take up securities offered by the company. Its name must include “Private Limited”.

A public limited company is not a private company. It has no restriction on transfer of securities and is not prohibited from inviting public subscription. Permission to invite the public should not be confused with a requirement that every company do so.

Which distinctions identify the two types?

The minimum number of members is not the minimum number of directors. Members hold ownership interests; directors manage through the board. The numerical requirements must therefore be compared under the correct heading.

Which features remain common?

Both types are incorporated companies with separate legal identity and perpetual succession. Both separate ownership from management. For the companies limited by shares considered here, members' further liability is the unpaid amount on their shares, rather than unlimited personal responsibility for company debts.

A private company need not issue a prospectus, a document inviting public subscription, because it does not invite the public to subscribe to its shares. This is a consequence of its private character, rather than evidence that it has no legal formalities.

Note: A private company that is a subsidiary of a public company is also treated as a public company. A subsidiary is a company controlled by another company. Keep this qualification when applying the distinction.

Free transferability is an investment advantage specifically associated with the public company. Restricted transfer in a private company does not remove its separate legal identity or make it a partnership. Company status and transfer rules answer different questions.

How can the four business entities be compared systematically?

A sound comparison uses the same basis for every form. Comparing one entity's membership with another's liability does not establish a distinction. Start with ownership and formation, then consider liability, control, continuity and finance.

Why do these differences matter together?

The proprietor gains direct control and keeps profits, but also carries the personal burden of debts. Partners combine resources and skills, but sharing ownership introduces mutual agency and the possibility of disagreement. More owners do not automatically mean limited liability.

A company offers a distinct legal identity and continuity, but requires a more complex formation process. Its owners usually control it indirectly through the board. Its stability must therefore be weighed against the costs and obligations associated with incorporation.

The private-public distinction adds another layer. Both are companies, but the rules about member numbers, transfer and public invitation differ. A company can therefore offer limited liability without offering unrestricted transfer of ownership.

Capital, managerial skill and continuity help explain expansion potential. Confidentiality, simplicity and direct customer contact help explain why smaller forms remain attractive. The appropriate form follows the business's requirements rather than a universal ranking from best to worst.

Which factors guide the choice of business organisation?

The factors influencing choice are interrelated. Capital needs and risk vary with the size and nature of a business. A form suitable for a small operation may become less suitable when that operation expands, so all relevant considerations need attention.

How should the main factors be weighed?

1. Cost and ease of formation: sole proprietorship involves the least initial expense and minimal formalities. Partnership also has relatively simple formation. A company requires a longer, more expensive legal process.
2. Liability: sole proprietors and general partners face unlimited liability. A company offers limited shareholder liability, which reduces personal exposure to business debts.
3. Continuity: where a permanent structure is needed, a company is more suitable. For short-term ventures, proprietorship or partnership may be preferred.
4. Management ability: complex operations requiring specialists favour a company. Simpler operations may be manageable through proprietorship or partnership. Shared management can also produce disagreements.
5. Capital requirements: a company can collect larger amounts of capital. Partners combine resources, whereas a proprietor's funds are limited. Large-scale expansion may therefore favour a company.
6. Degree of control: proprietorship may be preferred where direct control and absolute decision-making power are wanted. Partnership or company ownership involves sharing control.
7. Nature of business: direct customer contact, such as in a grocery store, may favour proprietorship. Professional services suit partnership, while large manufacturing operations may adopt the company form.

How does Neha's pottery business illustrate the choice?

Worked example 3. Neha paints clay pots and bowls at home, saves rent and gains customers through word of mouth. She earns ₹2,500 during the summer. She wants to expand but needs more money. Her father suggests partnership with her cousin and possibly a company as the business grows. Explain the choice.

Answer: The ₹2,500 profit shows her initial success but does not state how much capital expansion requires. Partnership can bring additional funds and shared responsibilities and risks. If operations grow further and need more finance, she should consider a company. Expansion is a reason to reassess the form, not proof that incorporation is immediately necessary.

The case connects finance with management and risk. Remaining a proprietor preserves direct control; bringing in a partner changes how control and profits are shared. A larger future business may justify the company's greater resources and more complex organisation.

How do the business cases clarify liability and growth?

What happens when debts exceed business assets?

Worked example 4. A business has assets of ₹50,000 and unpaid debts of ₹80,000. Compare creditors' recovery if it is a sole proprietorship and if it is a general partnership with Anthony and Akbar as partners.

Answer: The shortfall is ₹80,000 − ₹50,000 = ₹30,000. A sole proprietor must meet it from personal resources. For the partnership, creditors can approach Anthony or Akbar because liability is joint and individual. If there is no contrary agreement, partners share losses equally. This internal rule does not limit either partner's liability to creditors to ₹15,000.

What does Kiran's expansion require her to consider?

Kiran has developed an accessories shop into a retail chain with three branches over a decade. She manages the varied functions herself and wants branches across the country. The growing demands on her funds and managerial capacity matter to the choice of form.

Remaining a proprietor preserves quick decisions and the incentive of retaining profits. Conversion into a company offers greater scope for finance and professional management. Nationwide expansion strengthens these considerations, while compulsory incorporation adds legal procedures and expense.

How did the Coca-Cola business change its form?

On 8 May 1886, pharmacist Dr John Stith Pemberton produced Coca-Cola syrup in Atlanta, Georgia. It was taken to Jacobs' Pharmacy and sold as a soda-fountain drink for five cents a glass. Pemberton gradually sold interests to partners.

Before his death in 1888, he sold his remaining interest to Asa G. Candler. Candler advertised his business as sole proprietor of Coca-Cola on 1 May 1889, but achieved sole ownership only in 1891, with an investment of 2,300 dollars.

Candler formed The Coca-Cola Corporation in 1892. The dates distinguish the advertisement, actual sole ownership and subsequent company formation. A business's product can remain recognisable while the ownership form changes.

How does the Price Waterhouse history illustrate partnership growth?

Samuel Lowell Price began his accounting business in London in 1850. William H. Holyland and Edwin Waterhouse joined him in partnership in 1865. Qualified members of the professional staff were admitted as the firm grew.

Price Waterhouse had gained significant recognition by the late 1800s. Price Waterhouse Coopers was created in 1998 through the merger of Price Waterhouse and Coopers and Lybrand. A merger is the combination of businesses. This history illustrates growth through combining professional skills and business interests.

Glossary

• Sole proprietorship — A business owned, managed and controlled by one individual who receives profits and bears risks.
• Partnership — A relationship arising from agreement to share business profits through all partners or one acting for all.
• Partnership deed — The written agreement recording the terms and conditions governing the relationship between business partners.
• Mutual agency — Each partner represents the others and can also be bound by their business acts.
• Unlimited liability — Responsibility for business debts that can extend beyond business assets to the owner's personal property.
• Limited liability — A shareholder's further responsibility for company debts is restricted to the unpaid amount on shares.
• Incorporation — The legal creation of a company through compulsory registration under the applicable company law.
• Separate legal entity — A company's identity, assets and liabilities are distinct from those of its members.
• Artificial person — An entity created by law that can hold property and enter legal relationships.
• Perpetual succession — A company's continued existence despite death, retirement or other changes affecting its members.
• Shareholder — A person holding shares that represent parts of the capital of a company.
• Board of Directors — The chief managing body elected by shareholders to oversee the affairs of a company.
• Private limited company — An incorporated company restricting share transfers and prohibiting invitations to public subscription of its securities.
• Public limited company — A company that permits transfer of securities and can invite public subscription to them.
• Winding up — The legal procedure through which a company's existence is brought to an end.

Common errors and misconceptions

• Misconception: Sole proprietorship involves no legal requirements. Correct: Formalities are minimal, but some activities may require a licence.
• Misconception: A partner pays only the agreed share of every debt to creditors. Correct: General partners are jointly and individually liable; one may have to meet the entire debt.
• Misconception: A sleeping partner has limited liability because they do not manage. Correct: A sleeping partner still has unlimited liability.
• Misconception: Partnership can never continue after a partner dies. Correct: Remaining partners may continue through a new agreement.
• Misconception: Every shareholder manages the company each day. Correct: Shareholders elect the board, while directors and appointed management conduct company affairs.
• Misconception: Limited liability means a shareholder can never lose money. Correct: Investment is at risk, and unpaid amounts on shares can still be demanded.
• Misconception: Every company freely transfers shares and invites the public. Correct: Private companies restrict transfers and cannot invite public subscription.
• Misconception: The maximum number of general partners is simply 100. Correct: The statutory ceiling is subject to government prescription; the prescribed maximum is 50.

Exam-style questions with model answers

Q1. Explain the two sides of mutual agency in a partnership. [2 marks]

1. Each partner is an agent who represents the others and can bind them through business acts.
2. Each partner is also a principal who can be bound by the business acts of the other partners.

Q2. XYZ dry cleaner is a sole proprietorship with liabilities of ₹80,000 and business assets of ₹60,000 at dissolution. Calculate the shortfall and explain how it is met. [2 marks]

1. The shortfall is ₹80,000 − ₹60,000 = ₹20,000 after applying the business assets towards the debts.
2. The proprietor must provide ₹20,000 personally because liability is unlimited; personal property may have to be sold.

Q3. Akshay holds 2,000 company shares of ₹10 each and has paid ₹7 per share. Calculate his unpaid amount per share and total further liability, and explain its limit. [3 marks]

1. The unpaid amount on each share is ₹10 − ₹7 = ₹3. The amount already paid must be deducted before calculating further liability.
2. The total further liability is 2,000 × ₹3 = ₹6,000, using the number of shares actually held by Akshay.
3. His further contribution towards company debts cannot exceed this unpaid amount. Company debt does not impose unlimited personal liability on him as a shareholder.

Q4. Distinguish private and public limited companies by minimum members, maximum members, share transfers and public invitation. [4 marks]

1. A private company requires at least two members; a public company requires at least seven members.
2. A private company has a maximum of 200 members, excluding present and past employees; a public company has no maximum membership limit.
3. A private company restricts the right to transfer shares; a public company has no such restriction.
4. A private company cannot invite public subscription to its securities; a public company can invite such subscription.

Q5. Explain five limitations of general partnership as a form of business organisation. [5 marks]

1. Unlimited liability exposes personal assets when business resources cannot pay debts. Joint and individual liability can place the entire repayment burden on a partner able to pay.
2. Resources remain limited because the number of partners is restricted. Their combined capital is usually insufficient for very large business operations.
3. Shared decision-making authority can produce conflicts. An unwise business decision by one partner can also bind the others and harm their interests.
4. Continuity is uncertain because death, retirement, insolvency or insanity of a partner can end the business, although a fresh agreement can allow continuation.
5. Public confidence is generally low because financial reports need not be published. Outsiders can therefore find it difficult to judge the firm's financial position.

Q6. Kiran has expanded an accessories shop into three city branches over a decade, manages their varied functions herself and plans branches countrywide. Explain two benefits of remaining a sole proprietor, two benefits of a company, one implication of nationwide expansion and one formation requirement. [6 marks]

1. Remaining a proprietor preserves quick decision making. Kiran need not seek agreement from other owners before responding to business opportunities.
2. She retains the profits herself, creating a direct incentive to work and linking business rewards with her efforts.
3. A company offers greater scope for raising finance, helping meet the capital needs of additional branches and expanded operations.
4. A company can employ specialist managers and divide work, reducing dependence on Kiran's ability to handle every function personally.
5. Nationwide expansion increases the importance of finance and professional management, strengthening the reasons for considering the company form rather than assuming the existing form remains suitable.
6. She would need compulsory incorporation through registration, preparation of the required documents and compliance with the applicable company-law requirements.

Q7. A general partnership of Anthony and Akbar has assets of ₹50,000 and unpaid debts of ₹80,000. No sharing ratio is provided. Calculate the shortfall, state whom creditors may approach, and explain whether either partner can limit repayment to half the shortfall. [3 marks]

1. After using the business assets, the unpaid shortfall is ₹80,000 − ₹50,000 = ₹30,000, which may require the partners' personal resources.
2. Creditors may approach Anthony or Akbar because general partners are jointly and individually liable for the debts of the firm.
3. In the absence of a contrary agreement, partners share losses equally. This internal sharing rule does not limit either partner's liability to creditors to ₹15,000; either may have to repay the entire shortfall.

Q8. Explain four features that distinguish a company from a sole proprietorship. [4 marks]

1. A company has a legal identity separate from its members; a sole proprietorship has no legal identity separate from its owner.
2. A company has perpetual succession; the proprietor's death or incapacity may cause the individual business to close.
3. A shareholder's further liability is limited to unpaid share amounts; a sole proprietor may need personal assets to repay debts.
4. A company separates ownership and management through its board; the sole proprietor directly manages and controls the business.

Key takeaways

• Sole proprietorship combines ownership, control, profits and risk in one individual, making decisions quick but exposing personal assets.
• Partnership combines funds and skills through agreement; mutual agency means that one partner's business acts can bind others.
• General partners have unlimited, joint and individual liability, even though they agree internally how profits and losses are shared.
• A company acquires separate legal identity through incorporation and continues despite changes affecting its members.
• A shareholder's further liability is the unpaid amount on shares, not an unlimited obligation to meet company debts.
• Private companies restrict share transfers and public invitations; public companies permit transfers and can invite public subscription.
• Compare forms using common criteria such as formation, control, liability, continuity, capital and managerial requirements.
• Choice depends on interrelated business needs; expansion may justify reconsidering a form that suited a smaller operation.

Test yourself

Why can a sole proprietor's personal car be sold to repay business debts?

Unlimited liability allows recovery from personal assets when business assets are insufficient to meet the debts.

Does a sleeping partner escape liability by avoiding management?

No. A sleeping partner contributes capital, shares profits and losses, and still has unlimited liability.

How does a partnership deed differ from registration?

The deed records the partners' agreement. Registration records the firm's name and prescribed particulars with the Registrar of Firms.

What condition makes Rani liable in the Simplex Solutions example?

She represents herself as a partner through her conduct, and credit is extended on the basis of that representation.

Why does a member's death not end a company?

The company has separate legal identity and perpetual succession, so its existence continues despite changes in membership.

What is the difference between two private-company members and two directors?

Members hold ownership interests, while directors manage company affairs through the board. Membership and directorship are different capacities.

Can the company form guarantee quick decisions?

No. Communication and approval across several management levels may delay both decisions and their implementation.

Why is Neha's ₹2,500 profit insufficient to calculate her expansion capital?

The profit figure describes her initial result; the amount required to expand the business has not been supplied.