Business activity

Two types of objectives a business can have

• Financial

• Non-financial

Financial objectives

• survival

• profit

• sales

• market share

• financial security

Non-financial objectives

• social objectives (e.g. providing a product/service which is beneficial to the environment)

• personal satisfaction

• challenge

• independence

• control

Main types of business ownerships (4)

• sole traders

• partnerships

• private limited companies

• public limited companies

Sole trader (definition, advantage, disadvantage)

Definition: a person who is the exclusive owner of a business

Advantage: they can keep all of the profits, make key decisions

Disadvantage: Liable for all losses

Partnership (definition, advantage, disadvantage)

Definition: a formal agreement made by two or more parties to jointly manage and operate a company

Advantage: You can have a second opinion on important decisions

Disadvantage: Profits must be shared

Private limited company (Ltd) (definition, advantage, disadvantage)

Definition: a type of business structure where the company shares are not available to the general public

Advantage: Limited liability

Disadvantage: High set-up costs

Public limited company (Plc) (definition, advantage, disadvantage)

Definition: a type of business structure where the company shares are available to the general public

Advantage: Limited liability

Disadvantage: Less control over business

What type of business model do small businesses usually employ

Small businesses are more likely to be either sole traders, partnerships or private limited companies.

Different sectors of the economy (+examples)

1. Primary sector - includes extractive industries and agriculture and fishing.

2. Secondary sector - includes all manufacturing businesses that produce physical goods.

3. Tertiary sector - includes all businesses which provide services e.g. tourism and education

Measurements of how businesses are successful

• revenue

• market share

• customer satisfaction

• profit

• employee satisfaction

• shareholder satisfaction

Reasons businesses fail

Poor cash flow/lack of finance represents the main reason for business failure. Failure can also be caused by failing to adapt to changes in the market or a lack of competitiveness.