1.4

Question 1

1.4 - What are sole traders?

Answer 1

• Easiest business to start
• Have just one owner
• Most small business are sole traders (hairdressers, news agents and plumbers).

Question 2

1.4 - Advantages and Disadvantages of sole traders

Answer 2

Advantages:
- Easy to set up
- Own boss
- You alone decide what to do with nay profit.
Disadvantages:
- May have to work long hours.
- Unincorporated.
- Unlimited liability
- Hard to raise money

Question 3

1.4 - Definitions of Unlimited reliability and unincorporated

Answer 3

Unincorporated -
The business doesn’t have its own legal identity. If anyone sues the business, they sue the owner personally.

Unlimited liability -
You are legally responsible (liable) for paying back all business’ debts.
Your own personal finances are at risk.

Question 4

1.4 - What are partnerships?

Answer 4

Two or MORE sole traders.
Each partner has an equal say in making decisions.
- Equal share of profits.

Question 5

1.4 - Partnerships advantages and disadvantages

Answer 5

Advantages:

• More ideas and expertise.
• More people to share the work.
• More capital.

Disadvantages:

• Each partner is legally responsible for the others actions.
• unlimited liability.
• More disagreements
• Profits are shared.

Question 6

1.4 - Limited companies

Answer 6

• Private and public
• Incorporated: has a separate identity.
• Everything belongs to the company not owner/s.
• Limited liability.
• Owned by shareholders.

Question 7

1.4 - Private limited companies - what is it and advantaged and disadvantages

Answer 7

Have Ltd. at the end.
Shares are only sold if all shareholders agree.

Advantages -

• Limited liability
• easier to get a loan

Disadvantages -

• More expensive to set up because of legal paperwork.
• legally obliged to publish its accounts.

Question 8

1.4 - Advantages and Disadvantages of franchising

Answer 8

Advantages -

• Less risk of business failure and brand is already recognised.
• Easier to get a bank loan as its less risky.
• Franchisor might provide training, management and accounting.

Disadvantages -

• Less freedom
• Have to pay a lot of money to start the franchise and have to make regular payments.

Question 9

1.4 - What factors affect business locations?

Answer 9

1) Location of raw materials
2) Labour supply.
3) competition
4) location of the market
5) Using the internet.

Question 10

1.4 - Marketing mix

Answer 10

product
price
promotion
place

Question 11

1.4 - Factors that can affect a business’ marketing mix

Answer 11

Technology
customer needs
competition

Question 12

1.4 - Business plan : what it contains?

Answer 12

• The business idea
• Business aims and objectives
• Target market
• Marketing mix
• location
• Finance