unit 1 exploring business

what is a sole trader

an individual who exclusively owns and manages a business , retaining all profits but holding unlimited liability for all debts

what is unlimited liability

A legal status where business owners are personally responsible for all business debts , placing personal assets at risk

limited liability

a legal protection where owners are only responsible for business debts up to the amount they invested

what are the advantages of a sole trader

retains the profit / full decision-making / choose work patterns / complete control

what are the disadvantages of a sole trader

unlimited liability , long hours ,high level of responsibility

partnership

A business structure owned and managed by two or more people who share responsibilities , decision making and profit

deed of partnership

-the owners share responsibility and profitt

-decision making is shared as well

people usally draw up a ‘deed partnership’

what are advantages and disadvantages of partnership

ADVANTAGES:

-shared decision making by the owners

-usually quick and easy to set up

-shared responsibility of debt by the owners

DISADVANTAGES:

-unlimited liability

-liable debts for there partners

-shared profit

what is a private limited company

A business structure owned by private shareholders with limited liability whose shares cannot be traded publicly on the stock exchange

what are the pros and cons of private limited company

Pros;

-reduced personal liability

-protected business name

-owners have limited liability

cons:

-very time consuming to set up

-higher set- up costs

public limited company

a business that can sell its shares to the general public, without least 50,000 share capital and 25% paid up before trading

advantages and disadvantages of public limited company

advantages;

-

what is dividend

a payment a company distributes to its shareholders , typically representing a portion of its profit

franchise

it is like a contractual agreement between the franchisor and the franchisee

a franchisee can be a sole trader partnership or a private limited company

what are advantages and diadvantages of a franchise

ADVANTAGE:

• they are using a tried and tested brand name so their is greater success

• making profit for yourself

• specialist advice and training available

• DISADVANTGES:

• have to buy supplies form franchiser - very expensive so Lowe profit margins

• royalty payment

• less control then your own payment

what is a co-operative

is when a group of people come together to work or buy or sell goods and services for the groups shared benefits

7 key principle of co- operative

• voluntary and open memebership

• democratic control

• Member economic participation (financial interest)

   Autonomy and independence

   Education, training and information

   Co-operation among co-operatives

   Concern for the community

  
  

what is the difference between worker co-operative and producer co-operative

WORKER CO-OPERATIVE:

 This is where the workers get

together and buy the business

they work for

 They have the aims of sharing

all risks, profits, decisions etc.

 Main features are shared

decision making and shared

risk

 Possibility that no-one has

experience of running a business

PRODUCER CO-OPERATIVE

 This is where producers get

together to share resources, such

as machinery

 Groups have more power than

individuals

 Can share marketing such as Café

Direct or Sunkist

What are the advantages vs disadvantages of co-operative

ADVANTAGES:

 They are a relatively ethical way

of doing business

 They can benefit the local

community by providing jobs

 They keep money within the

local community

 Staff motivation can increase as

all employees share in the

success.

 Member investors are unlikely

to withdraw finance at short

notice

DISADVANTAGES

 Meeting both co-operative aims

and business needs requires

complex management

 They can limit your choice of

external finance

 Employment benefits often can't

match those offered by other

business types

what is a stakeholder

A stakeholder is someone with an interest in the

decisions a business makes.”