1.4 making the business effective

Question 1

Describe these ownerships: sole trader, partnership

Answer 1

sole trader- unlimited liability, 1 owner so one person running, no legal identity

partnership- unlimited liability, between 2-20 people co-owning, not legally registered
debt and profit gets shared

Question 2

describe these ownerships: LTD (private limited company), PLC(public limited company)

Answer 2

LTD- limited liability, legally registered, can sell shares, publish financial records, 1-100

PLC- limited liability, high continuity, share profits with shareholders, publish financial records, shares are sold to public, larger than 1000

Question 3

describe franchise, franchisee, franchisor with examples and benefits

Answer 3

franchises-allow an entrepreneur to run a branch of an existing brand (McDonalds)
franchisee (the entrepreneur) - benefit from existing brands as it means loyal customers
franchisor (the business)- expands quickly

Question 4

differentiate limited & unlimited liability

Answer 4

Limited Liability means the debt is limited to the assets the business owns, unlimited liability means the owners person assets could be in debt

Question 5

give benefits & disadvantages of business plans

Answer 5

benefits- forecasts future steps, avoid failure/risks, guides through stages
disadvantages- unrealistic, waste of time/money, overestimate companies value

Question 6

what is a business plan

Answer 6

a document explaining what the business aims to achieve and how it will do it

Question 7

what do business plans include (3)

Answer 7

aims & objectives, sources of finance-(forecasted revenue, costs, profit), market research