1.5.4 business forms

Question 1

what is a sole trader?

Answer 1

a self employed person who runs their own business as an individual

Question 2

pros and cons of a sole trader?

Answer 2

\+ easy to start up
\+ full control
\+ owner keeps all profits 
- can be financially risk as you have unlimited liability
- difficult to secure funding
- less flexibility

Question 3

what is patnership?

Answer 3

a business owned by two or more people and share profits

Question 4

pros and cons of partnership?

Answer 4

\+ greater borrowing capacity
\+ more capital available
\+ easy to establish
- risk of disagreements
- lack of stability 
- future selling complication

Question 5

what is a private limited company?

Answer 5

owned by shareholders and have a separate legal entity

Question 6

pros and cons of a private limited company?

Answer 6

\+ limited liability
\+ builds credibility
\+ tax efficient
\+ wider access to capital
- complicated to set up
- records re public
- accountancy costs

Question 7

what is a public limited company?

Answer 7

is a company that offers it shares to the public

Question 8

pros and cons of a public limited company?

Answer 8

\+ growth and expansion opportunities
\+ raise capital through the public
- potential loss of control
- stock market vulnerability
- increased legal complications

Question 9

what is franchising?

Answer 9

is a limited company that licenses the right for individuals to set up an identical business in a new region

Question 10

pros and cons of franchising?

Answer 10

+ effective way to grow your business
+ franchisor gets set up fee and royalty payments
- risk if franchisee damaging brand image if not effectively

Question 11

what is a franchisee?

Answer 11

is a small business owner who operates a franchise

Question 12

what are some other forms of business?

Answer 12

• lifestyle business
• social enterprise
• online business

Question 13

what is a lifestyle business?

Answer 13

a business run in order to sustain a particular lifestyle for its owners