Theme 1.4 - The Options For Small Businesses Flashcards
What are the two types of small private business ownership?
Sole trader (proprietor)
Partnership (2-20 people)
What does unlimited liability mean?
Sole traders and partnerships have unlimited liability, meaning if the business fails, they might have to sell personal belongings to pay debts for the business, and are legally responsible for problems
What are the benefits of limited companies?
Government is better equipped to support the business
Customers find companies more trustworthy
Banks are keen to prevent them failing
What are the benefits of the sole trader?
Simplicity
The individual keeps all of the profits
The individual has all of the control
What does a Deed of Partnership do?
Sets out the rules of the partnership
Protects the other partners if one partner gets into a big debt
What matters do Deeds of Partnership set out?
• The amount of capital contributed by each partner to the partnership
• How much say each partner has
• How profits are shared
• What should be done if one partner wishes to leave or another one is joining
• How to settle any disputes between partners
What are the advantages of joining a franchise?
You have an established brand that people recognise
You have an existing customer base
The franchise provides training to help you get started
Higher survival rate over first five years
Less decisions to make
Benefits from national marketing
What are the disadvantages of joining a franchise?
You have to pay a fee for the rights to the brand, which is more than setting up your own business
Less control
Some profits paid to franchiser
Few holidays/long hours
