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A Level Business Theme 1 > 1.5.4 Forms Of Business > Flashcards

1.5.4 Forms Of Business Flashcards

1
Q

What are the forms of business

A
  1. Sole trader
  2. Partnerships
  3. Private limited companies
  4. Public limited companies
  5. Social enterprise
  6. Franchise
  7. Lifestyle business
  8. Online business
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2
Q

Sole trader

A

one person business with unlimited liability

  • individual who owns and operates his or her own business (set up by entrepreneur)
  • may be employees
  • only one to benefit financially
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3
Q

4 ADVS of sole trader

A

1-no administrative costs / formal rules
2-income = own (profits)=personal satisfaction
3-complete confidentiality
4-less bureaucracy (less legal paperwork)

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4
Q

4 DIS of sole trader

A

1-unlimited liability
2-limited access to finance for growth
3-long hours of work
4-difficulty to run during ill health

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5
Q

Partnerships

A

type of business organisation comprising between 2-20 people
pool money/skills/resources/share profit/loss based on partnership agreement/deed of partnership (GENERAL)
-without forming a company
UNLIMITED

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6
Q

4 ADVS of partnerships

A

1-flexible & easy to set up
2-flow of personal income
3-each partner contributes resources and skills
4-shared workload

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7
Q

4 DIS of partnership

A

1-little protection/unlimited liability
2-lack of structure
3-easy to fail
4-potential conflict due to clash of interest

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8
Q

Unlimited liability

A

owners liable for any debts incurred by business
may require selling of assets/possessions = personally bankrupt
Personal possessions of owners are at risk

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9
Q

Limited liability

A

owners only liable for debts of business , lose no more than sum invested
Owners of business are only responsible to pay back total value invested
(Suing company not investor)

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10
Q

2 ADVS & 2 DIS of forming a limited company

A

ADV
1-SH= confidence to expand
2-SOF options

DIS
1-financial info public
2-more expensive rules

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11
Q

Private limited company;

A

Business that sells shares to friends and family

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12
Q

3 ADVS of private limited company

A

1-limited liability
2-shares to family/friends = trusted circle
3-no risk of hostile takeover

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13
Q

3 DIS of private limited company

A

1-harder to find funding
2-pay corporation tax
3-no of SH limited to 50

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14
Q

Public limited company

what are the minimum values

A

Company with limited liability whose securities are traded on stock market bought/sold by anyone
Min SH = 2
Min = 50,00 pounds

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15
Q

4 ADVS of Public limited company

A

1-capital = selling shares
2-large production scale
3-legal status - benefit publicity
4-limited liability

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16
Q

4 DIS of public limited company

A
  1. 50,000 pounds as a share capital
  2. lose control
  3. disagree conflict
  4. publish detailed accounts
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17
Q

flotation

A

Process of offering a company’s shares for sale on stock market for first time

18
Q

Social enterprise

A

focus= put profits -> strong social/env mission social obj rather than monetary

  • social problems,
  • communities, life challenges & environment
  • directly involved in producing goods/services
  • social aims/ethical values
  • operates as a business
  • tradable shares
19
Q

4 ADVS of social enterprise

A

1-access to grants
2-doing good socially ethically and environmentally
3-gives opportunities to help others
4-more likely to invest = good cause

20
Q

4 DIS of social enterprise

A

1-lack of support structure
2-lack funding
3-monitor market continuous innovation
4-lack public exposure/recognition=less support

21
Q

Deed of partnership contains info on:

4 things

A

1-capital invested by each member
2-distribution of future profit
3-rules should a partner leave
4-not compulsory

22
Q

5 characteristics of Companies:

A 
1-owned by investors SH (owners )
2-different types of shares (most common =ordinary) 
3-separate legal entity 
4-limited liability 
5-controlled  = managers
23
Q

Seperate legal entity

A
  • Companies can own things such as land equipment

- what share holders own is different compared to what company owns

24
Q

Dividend (plc):

A
  • payment from profits of company to SH
  • cant be payed if no profit
  • SH paid a dividend per share
  • paid depending on how business organises its financial cycle e.g.quartery
25
Q

Franchise

A

business that sells the legal right to use the name and logo of an existing firm and sell the same products and trading methods

E.g. KFC

26
Q

Franchisee

A

Someone who buys the right from a franchisor to copy a business format

27
Q

ADVs and DISs of being a franchisee

A

ADV:

  • easier form of starting/running
  • established brand = benefit franchiser adverts
  • franchisor = assistance

DIS:

  • not full control / own business
  • royalties
  • pressure of brand
28
Q

Franchisor:

A
  • Grants license (the franchise)
  • another business (the franchisee)
  • trade using the brand or business format
29
Q

ADVS and DISs of being a franchisor

A

ADV:

  • quick expansion
  • lump sum/royalties
  • less work
  • EOS

DIS:

  • not 100% of profit
  • lose day to day control
  • risk of brand name
30
Q

Royalties

A

Payment made from the franchisee to the franchisor

Percentage of the franchisees’ total profits

31
Q

Lifestyle business

A
  • aim = provide great quality of life for owner (live how want & still working)
  • may start doing something they really enjoy
  • hope to sustain a certain level of income (satisficing)
32
Q

Aim of a start up business

A

-big enough

= return of investment for investors

33
Q

Satisfice

A
  • course of action
  • satisfy the minimum requirements
  • achieve a particular goal.
34
Q

Benefits of a lifestyle business

A
  • use all your talents and interests
  • startups = risky businesses
  • 9-5 structure (avoid it) (hour flexibility)
  • location flexibility
  • personal profits
35
Q

5 characteristics of an Online business

A
  • business set up &run online (easily)
  • available 24/7
  • managed anywhere (no need for office)
  • heavy inv in time more than money
  • financial risks = lower & potential rewards = higher
36
Q

Percentage change

A

New - Old divided by Old x100

37
Q

5 Factors that influence legal structure chosen for a new firm

A
  1. risk
  2. location
  3. finance needed
  4. nature of product
  5. entrepreneur wants to make all decisions themselves
38
Q

limited company

A

company with limited liability

considered business structure whereby company considered legally distinct body

39
Q

company

A

organisation sells good/services to make money

40
Q

incorporation

A

establishing business as separate legal entity from owners, = give owners limited liability

41
Q

registrar of companies

A

gov department which allows firms to be incorporated

A Level Business Theme 1 (24 decks)

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