y10 business management

sole trader

one person owns and runs the business

advantages to sole trader

• easy and cheap to run

• owner controls all the decisions

disadvantages to sole trader

• unlimited liability

partnership

2-20 partners run the business together

advantages to partnership

• shared ideas, decision-making and responsibilites

disadvantages to partnership

• shared debts

• potential for disputes without partnership agreements

incoporation

when the business is legally its own identity

advantages to incorporation

• limited liability for shareholders

• separate legal identity to the owner

disadvantages to incorporation

• costs more money to setup

• more rules to follow

private companies

a small people where only chosen people can own shares

advantages to private companies

• limited liability

• easier to control ownership throughout the company

disadvantages to private companies

• harder to sell shares

• more paperwork and legal steps

public listed companies

a big company anyone can buy shares in on the stock market

advantages to public listed companies

• limited liability for shareholders

• shares can be bought and sold by the public

disadvantages to public listed companies

• must share financial info every year

• harder to control who owns it

social enterprise

a business that helps people or the planet and earns money

advantages to social enterprises

• do good things for the world

• profits go to help others

disadvantages to social enterprises

• might not make as much profit

• need to balance helping and earning

government business enterprises (GBE)

a business run by the government

advantages to GBE

• provides services that are not adequately supported

• doesn’t always aim for big profit

disadvantages to GBE

• controlled by the government

• must follow strict rules

online business

sells on the internet

advantages to online business

• no shop rent

• can sell to customers globally

disadvantages to online business

• customers can’t see or touch products before buying

• at risk of credit card theft

bricks and mortar

has a real store you can visit

advantages to bricks and mortar

• face-to-face customer interaction

• you can try on items before purchase

disadvantages to bricks and mortar

• more costly to establish and maintain

• harder to keep prices of products low 

direct-to-customer

businesses that sell their products directly to the customer

advantages to direct-to-customer

• cheaper to maintain

• closer relationships with customers

disadvantages to direct-to-customer

• much more work for the business

• time consuming

franchise

when a business sells to others the rights to distribute its goods and use the business name

advantages to franchise

• known brand name

• training and support

disadvantages to franchise

• must follow lots of rules

• expensive to purchase

import and export

businesses that generate sales revenue by trading goods internationally

advantages to import and export

• cheaper and better products

• can grow the business

disadvantages to import and export

• high costs of shipping and taxes

• must follow Australian safety rules

what factors must be considered when considering the location of a business?

• business model

• visibility

• cost

• complementary businesses

shopping centres

• shops in a mall

• advantage: lots of people

• disadvantage: expensive

shopping strip

• shops on busy streets

• advantage: high visibility from traffic

• disadvantage: lack of parking

online presence

• shops on the internet

• advantage: cheap to maintain and can reach customers globally

• disadvantage: need good tech skills

home-based business

• working from home

• advantage: cheap to maintain

• disadvantage: difficult to separate work from home 

equity finance

• funds contributed by the owner 

• advantage: does not have to be repaid

• disadvantage: owner may expect a good return but only generate low returns

family or friends

• asking family or friends to help fund your business

• advantage: they may not want the money back immediately

• disadvantage: puts danger to relationships and contracts are required

private investors

• individuals that contribute funds in return for share in profit and equity

• advantage: they are willing to give support and advice to the owner

• disadvantage: lost of complete control over the business

selling shares

• selling parts of the business

• advantages: generates lots of money

• disadvantages: only big businesses are capable of selling shares

crowdfunding

• raising finance through appeals for donations 

• advantages: quick way to raise finance

• disadvantages: difficult to generate customer interest

external sources

• short term: bank overdraft, trade credit

• long term borrowing: loan, leasing

factors affecting the choice of finance

• terms of finance

• flexibility

• level of control

accountant

a professional who provides advice on all financial management issues and taxation obligations

solicitor

a professional who provides advice on legal matters such as business formation, registration, contracts and legislation.

csr - corporate social responsibility

when the business takes into consideration how their operations affect their stakeholders, environment, staff and wider public

csr - environmental issues

the owner needs to consider the impact their business has on environment and how it can be better managed

csr - customer issues

• owners should ensure their products are of high quality and reliability

• owners should seek to respect and satisfy customers

csr - staffing issues

the owner should consider fair pay, staff morale and safe and healthy working conditions