Business Ownership and Finance Concepts

These flashcards cover key concepts related to business ownership structures, finance, and operational models.

What is a sole trader or proprietor?

A sole trader or proprietor is someone who owns and runs the business themselves.

What are two advantages of being a sole trader?

More profits and the ability to make any business decisions.

What is a major disadvantage of being a sole trader?

Unlimited liability for debts.

What is a partnership in business?

A partnership is owned by a minimum of two individuals but less than 20 who run and own the business.

List two advantages of a partnership.

Less start-up cost and shared responsibility.

What does limited liability mean?

Limited liability means shareholders are not personally responsible for the company's debts.

Who are shareholders?

Individuals or companies that have purchased a percentage of the company in exchange for returns or profits.

Define 'franchise'.

A franchise is a business licensed to operate under an existing business name and distribute goods and services.

What is the main characteristic of an online business?

An online business operates solely on the internet without physical stores.

What are two advantages of online businesses?

Not paying rent and higher profit margins.

Define 'import'.

Import refers to bringing goods or services into a country from abroad for sale or use.

What is 'goodwill' in a business context?

Goodwill is the reputation a business builds over years, which can enhance its value.

Name one advantage and disadvantage of starting a new business.

Advantage: The owner can set it up as they wish. Disadvantage: Profits may be slow to generate.

What are natural resources in business?

Natural resources are materials used by businesses that come from natural environments.

What does 'debt financing' entail?

Debt financing involves borrowing money from banks or financial institutions that must be paid back with interest.

What is a bank overdraft?

A bank overdraft allows a business to withdraw more money than it has in its account, up to a limit.

What is crowdfunding?

Crowdfunding is a method where a business solicits small amounts of money from many people to raise funds.

Define 'leasing' in a business context.

Leasing is paying to use equipment that belongs to someone else without a large upfront payment.

What is a long-term loan?

A long-term loan is borrowed money for more than two years, often used for purchasing property or equipment.

What is 'self-funding'?

Self-funding means the business owner uses their own money to finance the business.

What is the advantage of government grants?

Grants provide access to funds without the need to repay, as they often do not require interest payment.

How can proximity to competitors affect a business?

Establishing a business near competitors can impact success and customer base.

What does Digital to Consumer (DTC) mean?

DTC refers to a business model that sells products directly to customers, bypassing third-party retailers.