Business Ownership 1.2

sole trader

someone who sets up a business on their own

advantages of being a sole trader: (4)

easy to set up

make all the decisions

keep all profits

flexible work hours

disadvantages of being a sole trader: (4)

unlimited liability

difficult to receive Finance or borrow money

Heavy workload

lack of skills

partnership

2 or more people join together in a business enterprise to pursue profit

stakeholder

individuals who are affected and interested in the decisions of the business

disadvantages of partnerships

may disagree with other partners

unlimited liability

shared profits

advantages of partnerships

shared workload

more sources of finance

SHARED SKILLS

A COMPANY

a business that has its own legal identity

private limited companies advantages

better status

limited liabilty

company still exists after owners death

disadvantages of ltd

must pay corporation tax

investors become important stakeholders

must have an idep[endant accountant to check accounts

PLC

its shares are sold to the public on the stock market (stock exchange)

public limited companies advantages

can advertise its shares to the public

not for profit organisations`

set up to acheive objectives other than profit

an asset

something that is owned by the business, e.g. land, buildings and machinery

social objectives

the goals of a business intended to help society in general or specific groups of people

a business aim

a general goal of the business

a business objective

a specific target that is set for a business to achieve

purpose of setting objectives

helps with decision making#

helps investors to understqand the direction the business is going

provides a target

can motivate everyone

the 8 roles of objectives

survival

proift maximisation

customer satisfaction

shareholder value

market share

growth

being ethical

environmental targets

survival as an a objective

an objective which requires a business to be able to continue trading

profit maximisation

to acheive the largest possible surplus of revenues over expenditures

changing objectives for a small business can be…

from surviving to increasing market share

the main stakeholders of a business

employees

owners/shareholders

government

customers

local community

suppliers

objectistakeholdersves of the employees

secure jobs and higher wages

objectives of the stakeholder owner

high dividends

dividends

the parts of a companies profits paid out to shareholders each year

objectives of the stakeholder governmet

legal behaviour, taxes paid, growth

objectives of the stakeholder suppliers

paid on time, kept informed on changes in the business

objectives of the stakeholder customers

useful and accurate information on the product, good services

why is business location important

costs of rent

sales how close u r to potential customers

brand image

factors influencing location

the proximity to the market

proximity to labour

availabilty of raw materials

competition

transport links

technology

costs

tariff

a tax on a foreign goods imported into a country

a quota

a limit on the number of goods imported into as country

the purpose of planning

to raise finance

to help predict actions of business

problems of business planning

uncertainty

a risk that something could go wrong

variable costs

that vary directly with the business level of output

revenue

the income a firm makes from selling goods or services

business expansion

when enterprises become bigger by increasing its outputs and sales

franchising

when a business sell.s the right to another business to use its name and sell its products

outsourcing

when a business uses another business to produce for it

examples of external growth

a merger

a takeover

advantages of business expansion

economies of scale

economies of scale

when a business unit costs of production fall as its output rises and the business expands