1.4 - Making the business effective Flashcards
What is a sole trader?
A business with only one owner
What are the advantages of being a sole trader?
- They’re easy to set up
- You get to be your own boss
- You get to decide what happens to any of the profits
What are the disadvantages of being a sole trader?
- You have to work long hours
- You have unlimited liability
- It can be hard to raise money
What is a partnership?
A business with between two and 20 partners
What are the advantages of a partnership?
- More ideas due to more owners
- Less work
- More capital to grow the business faster
What are the disadvantages of a partnership?
- Each partner is legally responsible for what other partners do
- Unlimited liability
- More arguments
- Profits are shared
What are the two kinds of limited companies?
Private and public
What are the differences between private and public companies?
In a private limited company ownership is restricted whereas in a public limited company ownership is available to everyone.
What are the advantages of being a limited company?
- limited liability
- easier to get a loan or a mortgage than a sole trader
What are the disadvantages of being a limited company?
- They’re more expensive to set up
- You are legally obliged to publish your accounts every year
What is limited and unlimited liability?
Limited liability - You cant lose more than you invest
Unlimited liability - You have to pay back all your debts if your business goes bust
What is franchising?
Using the brand name or product of another firm
for example Mcdonalds
What is the advantages of franchising?
- Recognisable brand
- Less risky
- The franchisor may provide training for the staff or help with things like management and accounting
What is the disadvantages of franchising?
- The franchisor may have strict rules
- Expensive to start
What is the location of a business influenced by?
- Location of raw materials
- Labour supply
- Competition
- Location of the market
- The internet
