Theme 1.5 Entrepreneurs and Leaders Flashcards
4 advantages of a partnership?
More capital invested
Can share ideas
More partners add more skills
Financial information is private
4 disadvantages of a partnership?
Unlimited liability
Disagreements
Profit is shared
Slower decision making
Incorporated meaning?
The business shad a seperate legal identity from the owner, which is why they have limited liability
5 advantages of a private limited company?
Can raise capital by selling shares
Limited liability
Incorporated - shareholders can’t be sued
No chance of takeover without shareholder agreement
Continuity
4 disadvantages of an LTD?
Harder to raise capital as can only sell to friends and family
Have to pay dividends
More expensive to set up
Must publish accounts every year
5 advantages of a public limited company?
Limited liability
Easy to raise capital
Benefit from EOS
Easier to raise finance from banks as seen as less risk
Can employ specialist staff
4 disadvantages of a PLC?
Expensive to set up
Anyone can buy shares (untrustworthy)
Harder to deal with customers on a personal level due to the size
Owners do not control the day to day decisions in the business
5 advantages of a sole trader?
Flexible working hours
Keep 100% of profits
Make all decisions
Easy/Cheap to set up
Able to work in an area they have an interest in
5 disadvantages of a sole trader?
Unlimited liability
Stress
Limited investment/capital/skills
Increased workload (long working hours)
Lack of continuity
What is a deed of partnership? (4)
A document/contract setting out:
Name and roles of each partner
Info on the way the business operates
How much 💰 each partner has contributed to the business
How profits and losses will be shared amongst partners
What if there is no deed of partnership?
The profit is equally shared amongst partners no matter how much they have invested
What are social enterprises?
Businesses that trade for a social or environmental purpose (not for profit organisations)
Over 131,000 in the UK
3 things that a business must be to be a social enterprise?
Have a clear mission set out in its documents
Reinvest or donate at least half of its profits towards their mission
Be transparent in the way they operate and the impact they have
What is a franchise?
A way of doing business that involved a franchisor and franchisee
What is a franchisor?
A business with an established brand, property and systems. They grant a license to franchise to use their name, owns the overall brand
What is a franchisee?
A person/business that pays an initial fee and ongoing profits to a franchisor for the right to do business under their names and systems
2 advantages of franchising?
Franchisee doesn’t have to establish their own brand and reputation
Buying into an established business which will significantly lower risk
2 disadvantages of being a franchisee?
Very expensive for franchisee to buy and then also give away the profits (33%) to the franchisor (royalty)
Don’t have full control
4 skills required to be an entrepeneur?
Communication
Problem solving
Teamworking
Numeracy skills
2 financial motives?
Profit maximisation (to make as much profit as possible
Profit satisficing (to make enough profit to be satisfied)
3 non financial motives?
Ethical stance (to be morally correct)
Social entrepreneurship (motivated by supporting a cause rather than making a profit, which will then be used to further support the cause)
Independence (Be your own boss)
