1.5.4 - Forms of Business Flashcards
What is a sole trader and advantages/disadvantages?
Single owner
ADV
- Easy
- Inexpensive
- All profits and control
DIS
- Fully responsible
- Limited finance
- Limited skill set
What is a partnership and advantages/disadvantages?
Two or more people join together
ADV
- Easy and inexpensive
- More skills and knowledge
- Increased access to finance
DIS
- Unlimited liability
- Potential disputes
- Profits shared
What is a private limited company and advantages/disadvantages?
Ownership broken to shares normally friends and family
ADV
- Limited liability
- Greater access to finance
- Can aid professional reputation
DIS
- Expensive and time consuming
- Complex legal regulations
- Shareholders have little control
What is public limited company and advantages/disadvantages?
Shares sold to the general public
ADV
- Finance
- Shared risks
- Greater public profile
- Increased liquidity
DIS
- Expensive
- More complex
- Dividends
What is a franchise?
A business which sells the rights to use their business idea,
products and name in a chosen area
What does the Franchisor provide to the franchisee?
- Recognised brand
- Training and equipment
- Marketing
- Cheap insurance etc
What does the franchisee have to pay?
- Initial start up fee
- % of sales
- One off fees
Advantages of a Franchise Business
- Reduced risk of failure
- Brand recognition
- Higher profits
Disadvantages of a Franchise Business
- Restricting regulations
- Potential conflict
- Reputation risk
What are social enterpises?
A social enterprise is a business that has the primary purpose to create social or environmental impact
What are lifestyle businesses?
Lifestyle businesses are typically small, owner-operated businesses that prioritise a specific lifestyle or personal interest of the owner over profits or growth
What are features of lifestyle businesses?
- Small usually one owner
- Similar to sole trader
- Likely home based
What are features of social enterpises?
- Clear social and environmental mission
- Reinvest profit
- No connection to Gov
- Accountable and transparant
