Types of Business Flashcards
What are the sizes of Businesses?
Small, Medium and Large
What is an example of a small business?
Corner store, local mechanic, or hairdresser.
What is the typical number of employees for a small-sized business?
Less than 20
What is the legal structure of small businesses?
Soletrader/
partnership
What is the market share of a small business?
Small - local area, not so dominant in the industry
What kind of ownership does a small business have?
Independant, 1 or 2 people
What is an example of a medium business?
Services club Motel/hotel Engineering factory
What is the typical number of employees for a medium-sized business?
20-199 employees.
What is the legal structure of medium businesses?
Partnership/
private company
What is the market share of a medium business?
Medium - dominance within a geographic region
What type of ownership is a medium business?
Owned & operated by a few people/and or shareholders
What is an example of a large business?
Woolworths Qantas
National Australia Bank
What is the typical number of employees for a large-sized business?
200+
What is the legal structure of large businesses?
Public Company
What is the market share of a large business?
Large - especially for multinational corporations that dominate the markets of many countries
What kind of ownership does a large business have?
Thousands of public shareholders
What defines a local business as well as an example?
It operates services in a local community, like a bakery or butcher.
What defines a National Business as well as an example?
Operates within only 1 country
such as Commonwealth Bank
What defines a global Business as well as an example?
Operates on a worldwide scale, partially owned in other countries such as McDonald, Starbucks
What is a Primary Industry?
Extraction of natural, raw materials/resources
What is a secondary Industry?
Manufacturing and production of products from raw materials
What is the Tertiary Industry?
The provision of services to consumers
What is a Quaternary Industry?
Provision of information/intellectual services and knowledge
What is a Quinary Industry?
Domestic services provided to others
What does a Primary industry provide?
Mining, Agriculture
What does a Secondary industry provide?
Food processing, Oil refining
What does a Quaternary industry provide?
Intellectual services Journalism, Teaching, Banking
What does a Quinary industry provide?
Domestic services like cleaning and restaurants.
What is a liability in a business context?
The financial responsibility of owners for any debt created by their business.
What is the main difference between incorporated and unincorporated businesses?
Unincorporated businesses (sole trader/partnership) have unlimited liability, while incorporated businesses (private/public company) have limited liability.
What is limited liability (LTD)?
Business assets and owner’s personal assets are separate (separate entities) Personal assets do not have to be sold in order to pay business debt
What is unlimited liability
The owner’s assets are linked to the business assets (one entity) Personal assets must be used in order to pay business debt
What does a Tertiary industry provide?
Retail, healthcare, finance, retail, transportation, hospitality, and entertainment
How many owners does a sole trader business have?
One owner.
List three advantages of being a sole trader.
Low start-up costs
Full control over decisions
Majority of profit goes to the owner
List three disadvantages of being a sole trader.
Unlimited liability
Limited ability to raise money
Hard to take holidays
How many owners can a partnership have?
2-20 owners.
List three advantages of a partnership.
Low start-up costs
Shared responsibilities
More capital can be raised
List three disadvantages of a partnership.
Unlimited liability
Risk of disagreements
Profits must be shared
What happens to a partnership if one of the partners dies?
The partnership may cease to exist.
How many owners can a private company have?
1-50 owners.
List three advantages of a private company.
Separate legal entity
Limited liability
Perpetual succession
List three disadvantages of a private company.
Cannot trade shares on ASX
Higher administration costs
Limited personal control over decisions
How many owners can a public company have?
Unlimited number of shareholders.
List three advantages of a public company.
Can raise capital by selling shares
High borrowing capacity
Growth and expansion opportunities
List three disadvantages of a public company.
More legal requirements
Transparency (all details kept public)
Higher initial financial commitment
What is a government enterprise?
A government-owned and operated business that provides essential services.
Give two examples of government enterprises.
Australia Post
Service NSW
What type of legal structure do small businesses usually have?
Sole trader or partnership.
Why do larger businesses tend to have more complex legal structures?
They require more employees, more owners, and greater financial investment.
What must happen to a business’s legal structure as it expands?
It must change to accommodate more employees and owners.
Which business structure allows the owner full control?
Sole trader.
How does control change in a partnership?
Control is shared between partners
What happens to ownership when a company goes public?
Ownership is divided among thousands of shareholders, and control is lost.
How can original owners maintain control of a public company?
By holding more than 50% of all shares.
How does business expansion impact owner control?
Owners have less control as the business grows.
Why do sole traders and partnerships struggle to obtain debt finance?
They are considered high-risk businesses.
What type of finance do sole traders mainly rely on?
Equity finance (their own capital).
Why do private and public companies find it easier to obtain loans?
They have lower risk and greater financial backing.
How can a public company raise capital easily?
By selling shares to investors.
Why do expanding businesses need more capital?
To support increased operations, hiring, and production.
