State two disadvantages for sole trader businesses. (2)
Disadvantage:
*Owner is fully responsible for any dept (also known as unlimited lability.
*Difficult to raise finance, so often owner has to rely on personal savings.
State two advantages for sole trader businesses. (3)
- Cheap, quick and simple (less documentation and legal formalities) to start.
- The owner can keep all the profits.
- The owner can make his/her own decisions in relation to the business.
What are some examples of a sole trader?
- Hairdresser
- Photographer
- Freelance writers
- Tutor
What is the definition of a sole trader (simple)?
A business that is owned and run by just one person although they may employ staff. It is an unincorporated business in which the owner unlimited liability for the business.
What is the definition of an unincorporated business?
A business that does not posses a different identity from the owner. If the business goes into dept it is viewed as if the owner has gone into dept.
What is the definition of a partnership business?
A business owned and run by one or more people (up to 20) known as partners. This sort of business is an unincorporated business so, the partners have unlimited liability.
What are two advantages of a partnership? (4)
- Cheap, quick, simple to start
- partners can keep all profits
- partners have full control of business
- the decision-making and workload is shared
What are two disadvantages of a partnership? (4)
- partners have unlimited liability
- Difficult to raise finance so entrepreneurs have to rely on personal savings.
- Disagreements and conflicts may slow down business progress.
- the decision made by one partner is legally binding on all others.
What is the definition of unlimited liability?
Shareholders/owners are liable for all depts of their organization and stand to lose their investments as well as personal assets if the business goes in dept.
What is the definition of a limited company?
An incorporate business that is separate legal entity from its owners.
What is the difference between a public and private limited company?
In a private limited company the shares are usually held by friends and family so their are a small number of shareholders.
In a public company the shares are offered to and often owned by the public and other organizations.
What is the definition of limited liability?
Shareholders/owners are only liable to pay or lose the amount they have invested.
What are two advantages of a limited company?
(3)
- Shareholders have limited liability
- It is easier to raise finance than it is for sole traders and partnerships as they can sell their companies shares.
- Since the company is a separate unit from the owner, it will continue to exist even if one owner leaves or dies.
What are two disadvantages to a limited company? (3)
- Not very easy to set up (a lot of legal formalities, rules and regulations needed to be followed.)
- Original owner may lose control over business as shares are sold to public.
- Accounts of company have to be published for public to be seen.
What is a co-operative business?
A business organization that is owned and managed by the people who use its services or who work there.
What are two advantages of a co-operative business? (5)
- They are democratic.
- The members work together and there are fewer chances of conflicts as members share a common interest.
- The owners/shareholders often have limited liability.
- Usually get a lot of tax relief from the government.
- Most co-operatives are treated as separate legal units.
What are two disadvantages of a co-operative business? (3)
- Difficult to raise finance because co-operatives cannot issue shares.
- Accounts have to be made accessible by public.
- Members may not have the skill sets to run the business and hiring professional to do it may be expensive.
What is the meaning of a franchise?
A form of business that allows a company (franchisee) to buy the rights to use an existing company’s (franchisor) brand name and products/service.
What are two advantages of franchises. (3)
- The franchisee has a great chance of success as they are selling a well known product/service.
- The franchisor may offer some support to the franchisor with advice and training.
- easier to gain loans from bank, as the business is low-risk.
What are two disadvantages of franchises. (3)
- Franchisee will have to pay a licensee fee and possibly a percent of the revenue to the franchisor.
- The initial cost of setting up a franchise may be expensive.
- Franchisee will not have control over how to run the business as he will have to follow the controls set by the franchisor.
What is a social enterprise?
A business aimed at benefitting the community. the money owned is reinvested in the business or used for a social cause. There are different types of a social enterprise.
What are the two different types of social enterprises?
Not-for profit enterprise and charities.
What are the differences between not-for profit enterprise and charities.
Not for profits are directly in volved with making and providing their services or products in a socially responsible way. They use all of their money to reinvest it in their business to further their cause. Charities raise money through solely donation and fundraisers. Charities work quick solutions for immediate disaster/adversity and there impact is often short lived.
What are the advantages of a social enterprise? (3)
- Employees who work for the social enterprise often feel for the cause and have a personnel interest and aim and objectives.
- Job satisfaction is high as they know they have they have a difference to there cause.
- They bring positive changes to the community.
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Intro & Chapter #133
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Chapter #2 - Skills And Behaviors Of Enterprising People6
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Chapter #3 - Opportunities, Risk, Legal And Ethical Considerations26
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Chapter #4 - Market Research48
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Chapter #5 - Business Planning30
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Chapter #6 - Sources Of Finance58
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Chapter #7 - Trade Credit17
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Chapter #8 - Cash Flow, Break-Even, and Income Statement35
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Chapter #9 - Marketing38
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Chapter #11 - Communtication62
