types of business ownership and share prices

What is a sole trader?

Individual to establish an operate businesses alone they are owned and managed by one person but these people may employ others

Advantages of being an Sole trader

You can keep all the profits.

Quick decision-making.

Easy to set up. You only need to declare profits to HMRC which is his Majesty’s revenue and costs.

You could make all decisions which is motivating.

You can be your own boss.

Direct contact with market.

Disadvantages of operating as a sole trader

Unlimited liability.

They have all responsibility for decision decisions that may lead to loss.

No time for holiday holidays/can’t afford to take holidays

lonely.

Difficult difficulty raising finance as it’s high risk and they have Little security for borrowing so this can lead to hiring interest

Index number

Index numbers are a way of comparing and contrasting complex numbers over a period Of time 100 years as a base numbers and figures are compared to this number

Who is a company owned by ?

A company is owned by shareholders each share represents a part of the company.

A company is owned by shareholders each share represents a part of the company.

The more share someone owns the more of the company that belongs to them.

A company has its own legal identity separate from its owners.

If the company fails the shareholders can lose the money they invested when they bought shares but they cannot lose more than this. This is called limited liability.

The company can own property equipment and other goods in its own right and is responsible for its own debts

What is incorporation?

The owners have to complete various documents, including a memorandum of association and articles of association and register the business at companies house. This process is known as incorporation.

How can shareholders benefit from owning shares?

The value of the company and therefore the value of the shares can increase which can increase the amount of money a shareholder that can gain if they decide to sell the shares.

Why is limited liability essential for companies to be able to raise money by selling shares

Because without it and investor would be far less slightly to buy shares due to the risk to their personal possessions.

with limited liability the maximum amount that could be lost is fixed

What is a Company

A company is a business organisation that has its own blood identity and that has limited liability companies in the UK are divided into two legal categories.

What is a shareholder?

A shareholder is investor in and one of the owners of a company

What are dividends?

Dividends are that part of a company’s profits that are paid to shareholders in proportion to the number of shares that they own

How to become a private limited company

Private Limited companies are generally smaller than public limited companies and a relatively cheap set up. It can cost only a few pounds to register a private limited company with the registrar of companies in the UK.

Reasons for setting up as a private limited company

Desire to retain control of the company as they’re not at risk from takeovers because in a publicly company the original owners may only hold minority of the company shares

Taking decisions in the companies long-term interests because in public limited companies many shareholders will be seeking short-term profits in the form of dividends. This may put the senior managers of the company under pressure to make decisions which might generate attractive levels of profits short-term but may not be in the company’s best long-term interest.

Taking decisions in the companies long-term interests because in public limited companies many shareholders will be seeking short-term profits in the form of dividends. This may put the senior managers of the company under pressure to make decisions which might generate attractive levels of profits short-term but may not be in the company‘s best long-term interest interests.

Enjoying the profit generator by the company as going in public and selling more shares means that there are more shareholders which whom dividends have to be shared with this results in a dilution of profits

Advantages of private limited companies

They are relatively cheap and easy to establish.

They are relatively cheap and easy to establish.

Owners can retain control as they are not vulnerable to take Over

Disadvantages of private Limited companies

Sources of finance are Limited compared to public limited companies as I cannot list shares on the general stock exchange

Limited compared to public limited companies as I cannot list shares on the general stock exchange

Shareholders my experience difficulties when seeking to sell their shares.

Often unable to attract the most talented employees which can restrict their ability to develop and promote new products and to gain increase sales

Shares have to be sold privately

Shares have to be sold privately

How to measure the size of a public limited company

Market Capitalisation shows the market judgement of the value of a public limited company

ItCapitalisation shows the market judgement of the value of a public limited company.

It is calculated by multiplying the companies’s current share price by the number of shares I’ve been has been issued by the company

Selling shares in public Limited companies

Paul Limited companies are owned by shareholders but restrictions cannot be placed on the sale of these shares.

Put Limited companies are owned by shareholders but restrictions cannot be placed on the sale of the shares.

Shareholders in public companies to cancel their shares to who they like.

This one cause problems if another firm starts to buy up shares in the business in an attempt to gain control of it.

Public limited companies can Ad

Advantages of operating as a public limited company

Access to substantial amounts of capital as They can sell shares freely using stock exchanges raising capital through share issues means public limited companies are not committed to fix interest payments as in the case when taken out a loan

They can sell shares freely using stock exchanges raising capital through share issues means public limited companies are not committed to fix interest payments as in the case when taken out a loan.

The amount public companies pay the shareholders in form of dividends will reflect the profitability of the business and will not be more than that can afford.

Publicity public limited companies are often in media because of their size and appearance. This can potentially enhance the companies public image.

May have a high public profile assisting marketing activities

The ability to take over other companies as they are more able to buy out other companies as they have access to capital through selling shares.

Disadvantages of operating as a public limited company

Pressure from shareholders to receive higher dividends.

Pressure from shareholders to receive higher dividends.

Public image as they can suffer from publicity which can lead to a fallen share prices if shareholders decide to sell substantial numbers of shares in response to bad news.

Rules and regulations as this type of company faces additional rules and regulations with which they must comply.

For example they have to publish more detailed information about their financial performance and this information may attract critical comments from the media.

What is a takeover?

Takeover occurs when one company acquire control of another by buying more than 50% of it share capital

What is a stock exchange/stock market?

It’s a sense of a trading financial security such as shares both existing shares as well as New share issues sold by companies to race finance

What is a cooperative?

A cooperative is a democratic organisation which is owned in controlled by its members who worked together to benefit from achieving common goals

Consumer cooperative

In these customers are members of the business

In these customers are members of the business.

These are a common form of corporative and many towns and cities have corporative stores selling groceries other products

Worker cooperative

They are not just employed own businesses but are democratic managed by their workers when the cooperative performs well employees benefit financially E.G.actors artist

Producer cooperative

This is when a group of businesses work together to benefit from factors such as increased bargaining power. This type of corporative is sometimes called a marketing when for example it is owned by farmers and used to market their products.

Advantages of cooperative

The structure means that all customers/members have the right opportunity to voice their opinions on decisions relating to the business.

The structure means that all customers/members have the right opportunity to voice their opinions on decisions relating to the business.

Each member has equal voting power so members who have invested more do not have greater influence.

The equality may help the business to win sales and also to help motivate members who work within the cooperative.

.

It can help attract members and investment as the risk to those putting funds into the enterprise is limited to the investment and possessions are Protected.

Protected

They are performed public limited companies in terms of leadership and desire among employees to perform well

Disadvantages of cooperative

Some may not imply sufficient or skilled managers as they might elect members who may not make the best quality decisions this can have an impact on the performance.

Some may not imply sufficient or skilled managers as they might elect members who may not make the best quality decisions this can have an impact on the performance.

Sometimes they cannot match levels of pay available in other forms of business.

Some do not coordinate and control their organisations as well so this can be a challenge when a large number of members have the right contribute to decision-making.

so this can be a challenge when a large number of members have the right contribute to decision-making.

Decision-making can be slow resulting lost opportunities.

It’s difficult to raise finance as they do not have access to stock exchanges. This can limit their ability to grow and be competitive.

They tend to perform Pauline in terms of innovation. They can be relatively slow to introduce new goods or services and also to adopt new processes of production.

What is a social enterprise?

A social prize is a business which operates with social or environmental aims and trades to benefit is Local community or wider society

Brand

A brand is a promise of experience and conveyed to consumers a certain assurance as to the nature of the product they will receive

How to be a social enterprise

Have a clear stated social or environmental aim.

Being independent of the state or government control and earn more than half its income through trading and not donations

Reinvest or donate at least half it profits towards its mission

Be transparent in the way it operates and the impact it has on society and the environment

Advantages of social Enterprises

Limited liability.

Limited liability.

Greater commitment and high levels of performance from their employees as they motivated to work hard as a contributing to a meaningful change.

Such work can be fulfilling for employees.

Social enterprise is conform strong bonds with customers who valued the businesses commitment to social and environmental well-being.

This can make customers very loyal and help the social enterprise to increase sales and profitability

They can be distinctive due to their objectives which can help stand out against competitors.

They can be distinctive due to their objectives which can help stand out against competitors.

This distinction can assist a social enterprise in its marketing and developing a recognisable brand and brand loyalty among its customers.

It is likely to have clear objectives of which all its workforce can understand this means decision-making across the enterprise is focused making it more likely to be achieved

Disadvantages of social Enterprises

They can struggle to raise finance that they need to operate effectively.

They can struggle to raise finance that they need to operate effectively.

Investors may be discouraged by commitments to reinvest or donate at least 50% of profits as that reduces the potential return available.

Many social enterprises rely on donations or grants to exist.

This can make it hard to achieve growth.

Managers can experience difficulty in achieving a balance between fulfilling social objectives and increasing or maintaining profits

Reasons to buy shares

Financial return in dividends.

Financial return in dividends.

Some shareholder mean invest to make a quick return and seek risky companies that offer high returns others such as pension funds and insurance companies who have large sums of other peoples money may seek long-term more secure returns

Some investors may hope that the price of shares will increase the sell for a profit

Influences on the share prices

The company performance and the business environment in which it trades

What are regulatory announcements?

Public limited companies published their financial results and trading updates twice a year. These communication communications provide the company stakeholders with information about the companies performance companies are also obliged to give information about any event that could influence their share prices such as a takeover bid.

Why might an accompanies Share prices increase?

If the company is performing well and is expected to continue to do well it share price should benefit as a share price of 10 to anticipate the future slick and rise of a company is good prospects.

If the company is performing well and is expected to continue to do well it share price should benefit as a share price of 10 to anticipate the future slick and rise of a company is good prospects

.(or fall if the Outlook is not)

How can the economic climate affect share prices?

If economic conditions are good and expected to continue to do that investors feel confident.

If economic conditions are good and expected to continue to do that investors feel confident.

Good news about our countries employment levels or positive data on manufacturing production will encourage investors and may help to push share prices up.

Companies more to perform my own with a strong profits when the business environment is favourable as sales and product prices are likely to rise.

As a consequence they like to generate high profits and pay higher dividends.

Under the circumstances the demand for shares tends to rise and prices increase

How may the economic climate negatively impact of businesses share prices?

If the economic climate is troubled investor may feel nervous and worry about the companies profitability if economic conditions are difficult.

If the economic climate is troubled investor may feel nervous and worry about the companies profitability. If economic conditions are difficult.

Fears about future profits tend to reduce among for shares prices may fall.

This means in the challenging business environment companies may see their share price full even if they’re performing well.

Rising share price

This reflects well on the company management team as likely to be considered to be doing a good job they may receive promotions or bonuses as a result.

This reflects well on the company management team as likely to be considered to be doing a good job they may receive promotions or bonuses as a result.

A business may find it easier to raise capital and share prices of rising as investors will be more willing to buy a share that is rising in price, especially if they receive high dividends.

Banks will be more willing to offer loans to companies if they believe the rising share price is the result of the business performing well

Falling share prices

This may be just to be the result of a poor performance by the management team and it might make it difficult for the business to raise capital

This may be just to be the result of a poor performance by the management team and it might make it difficult for the business to raise capital.

It may also make the company vulnerable to a takeover at the cost of buying controlled interest in the company is reduced

What are assets

Items owned by business and using the production of goods and services