business in the real world Flashcards
what is an entrepreneur
an individual who starts their own business based on an idea they have.
what are the characteristics of an entrepreneur?
creativity, risk taking, determination and confidence
what is ownership?
the legal control over a business
what is a sole trader?
a business that is owned and run by one person
what is unlimited liability?
business owner who is responsible for all the debt
what is limited liabilty?
not liable for the debts in a business
advantages of sole trader
quick and easy to set up
total control over the business
your own boss
disadvantages of a sole trader
risk of unlimited liability
involve long hours, stressful conditions
high level of responsibility
what is a partnership
type of business that has between 2 and 20 owners.
what is a deed of partnership
a document that is signed by all owners of the business agreeing to their obligations.
advantages of partnership
quick and easy to set up
shared decision making
shared responsibility for debt
partners have more skills and ideas
disadvantages of partnership
can involve long hours
profits have to be shared between partners
conflict between owners
risk of unlimited liability
what is a private limited company (ltd)
can be a small or large business that has limited liability
The owners of a private limited company are known as shareholders
what are shareholders
A part owner of a private or public limited company.A share is a portion or percentage of a company.
advantages of a LTD
the owners have limited liability
it gives individuals the opportunity to be their own boss
any new shareholders need to be invited, which protects the business from outside influence
shares in the business can be sold to raise money
disadvantages of an LTD
there is often more paperwork
in some instances, other people are able to view the business’ financial information
it can be very time consuming to set up
the business may require outside professional help to manage its finances
what is a public limited company (plc)
a business that is legally allowed to sell its shares to the public
shareholders become part owners of the business and have a voice in how it operates.
advantages of being PLC
the business has the ability to raise additional finance through
share capital
the shareholders have
limited liability
disadvantages of PLC
it is expensive to set up, requiring a minimum set up cost of £50,000
there are more complex accounting and reporting requirements
there is a greater risk of a
hostile takeover by a rival company as the company cannot control who buys its shares
what is a not-for-profit organisation
A not-for-profit organisation is a business that aims to do something other than to make profit for the owners, such as providing a public service or helping people
eg a charity
what are business aims and objectives
These give a business direction and provide a purpose for what the business does each day.
aim
business aim is the overall long-term target or goal of the business,
objective
objectives are the short-term steps a business needs to take to meet its overall aims.
financial aims and objectives
survival
profit maximisation
growth
non financial aims and objectives
social and ethical objectives
customer satisfaction
what is the purpose of setting objectives?
what is a stakeholder
A stakeholder is any person, group of people or other organisation that has an interest in the activities of a business.
internal stakeholder
work within a business, either making decisions or carrying them out
external stakeholders
do not work within a business but are affected by its activities.
what is a pressure group
groups of people who share a common interest in the business .
managers
Staff who are responsible for implementing the decisions made by the owners and overseeing the work that is required.
suppliers
Other businesses and organisations that provide products or services to the business
