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The Entrepreneur's Guide to Computer Recycling: Basics for starting up a computer recycling business in emerging markets
PC Recycling Guide
Legal Structures

Different countries have several different types of legal structures for new businesses and it is the responsibility of the entrepreneur to choose the structure that is most suitable for the relevant organisation.

Common legal structures

Natural person

Asset ownership, in this case, is not shared, and therefore, personal property is not protected. The natural person is responsible for all risks relating any commitments made. Therefore if, for example, a client goes bankrupt, the sole trader will suffer as a result. In most countries, a simple registration to the adequate authorities is sufficient to create this structure.

Sole proprietorship

By creating a sole proprietorship or opting for a general corporation, the founder will have control. There are many advantages to sole proprietorship: it is flexible, reactive and it satisfies the customer’s needs and requests; it will emphasize the quality of service. It should be noted that companies can benefit from government assistance, in the form of loan guarantees, tax exemption or reduction of certain fees or taxes.

Association

A non-profit association differs from a for-profit association partly because its earnings and profits are indivisible and belong to all its members. Associations may also receive grants. In an association, the board of directors is responsible for the structure and major decisions are often made collectively.

Cooperative

A cooperative is a collective enterprise in which each member is both an employer and an employee. This presupposes that the members are willing to undertake activities in groups and to accept the collective distribution of profits. The main aim is to develop the company’s own procedure rather than to make personal profits. This does not, however, prevent the company from ensuring its viability, and from ensuring its viability by way of expanding and generating profits as any other company.

Partnerships

This type of company can be seen as a legal entity having one or more partners. This structure is recommended if two or more cofounders bring contributions, either in cash or in industries (for example a business or a vehicle). This type of structure can boost banking relationships, as well as access to certain markets. However, there are several disadvantages to this kind of legal structure. First, the general partner has huge responsibilities. Second, the enterprise can be difficult to manage, because all decisions must be made in meetings. Lastly, partnerships often have to resort to consultants on accounting and administrative issues.

Common models of recycling structure

Model 1: creation of a new activity

The creation of a new recycling business is often initiated by an entrepreneur seeking to undertake a different activity. The entrepreneur is generally advised against starting such a business alone. It would be better if he associated himself with other, close entrepreneurs or small business owners who have complementary skills. At the beginning, the enterpreneur will use the local market both for supplies and sales, and will quickly create three to seven jobs to support development.

As the new business leader, the entrepreneur will have to be versatile and be ready to take up various tasks, technical as well as administrative. Therefore, he should have skills and experience in trade, logistics and, if possible, the treatment of used computer equipment.

Several legal structures could be used for such a business: association, natural person or sole proprietorship.

Model 2: creation of a partnership or an association

When an entrepreneur belongs to an international or national network of associations, businesses or governmental agencies, he will have the opportunity to provide solutions that bridge the digital divide. With the support of this network, he can create a business that specialises in putting used equipment back on the market, at a lower cost so that it can be used by low-income people, libraries, schools and other local associations.

To create such a business, the entrepreneur will have to be very versatile. In the early stages of the project, he will be in charge of presenting it to his partners, and will have to provide them with a relevant economic model and market research. If he works on an international level, for example if he receives foreign containers of used equipment, he will also have to know how to assess the value of this equipment and to determine to what extent it could be put back on the market. He will also have to master logistics and management.

Model 3: development of activities

Some businesses already involved in computer science and computer technologies can choose to distinguish themselves, using their existing activity to take up computer recycling. Such a business has several advantages: the entrepreneur already knows the market and the recycling issues, and the profits generated by other activities can ensure rapid development. Moreover, the project manager can take advantage of an already existing customer base.

In such a business, the project manager will be responsible for assessing the profitability of this new activity and for bringing about synergies within. In this case, logistics skills are also a valuable asset.

With this model, the project manager will not have to set up a new legal structure, as the new activity can take place within the existing structure.

Afterwards, the new activity can have its own structure, such as a partnership or an association, in order to motivate employees as much as possible.