Unit 1.2 Flashcards
> Turnover of 1.7m
9 member of staff
Micro Business
Less than Turnover of 5.6m
less than 10-49 members of staff
Small Business
Explain Medium Sized Business
Less than Turnover of 22.9m
Less than 50-249 member of staff
Explain Large Business
Turnover of 22.9m +
249 member of staff +
Explain Private Sector Business
Aim is to Make Profit
Capital Provided by Capitalists
Profit is divided amongst shareholder or is reinvested back into the business
Owned by Private Induviduals
Explain Public Sector Businesses
1) Owned by the government
2) Controlled by the council
3) Capital is raised by taxes and rates
4) Profits is handed to back to the governments or used to schools/hospitals/roads
5) Aim is to provide a service
What is a Sole Trader?
A sole trader is a business completely owned and controlled by a single person
Advantages of Sole Trader
1) All Profits are kept( TMT a sole trader doesn’t need to split all his profits and has more money to spend on luxuries)
2) Better Control(The owner is able to make all the decisions herself)
Disadvantage of a Sole Trader
1) unlimited Liability( If the business goes into debt, the owner might have to loose his personal possessions to repay his debt)
2) Lack of Continuity( is she was to become ill, her business may suffer as a result)
What is a Partnership?
A partnership is when 2-20 combine to form a business.
Agreement to set up a partnership
Deed of Partnership
Advantages of a partnership
1) Partners have less workload( This is advantageous because the work can be shared , and if one person is ill other person can manage mean time)
2)Easy to raise capital as they can share the investment ( This is advantageous because it is easy to raise more capital)
Disadvantages of Partnership
1) Conflict between partners( running a business’ as a partnership might be hard as different people have different views on how to run a business)
2) unlimited Liability( If the business goes into debt, the owner might have to loose his personal possessions to repay his debt)
Explain Private Limited Companies
1) Owned by shareholders
2) Shares cannot be sold to the public or transferred without the permissions of all shareholders
Advantages of Private Limited Companies
1) Shareholders have limited liability . This means that if a business goes into to debt, shareholders wont loose their personal possessions and would only loose what they invested
Disadvantages of Private limited Companies
Shares cannot be sold to the public, this means that it is hard to raise capital for the business
Have to share dividend
What do Public Limited Companies have at the end of their name
PLC
What do Public Limited companies have at the end of their name
PLC
Advantages of PLCs
1) Members of Public can buy shares, this means that it is easy to raise capital
2) Banks are will to give loans to PLC( this is advantageous because it is easy to raise capital)
What is it called when shareholders have to divide their profit
Dividend
Disadvantages of PLCs
Anyone can buy shares( This is disadvantageous because the company might be taken over
Decision making is often slow as several meetings have to be held
What is a Franchise?
a Franchise is when a franchisor, gives permission to a franchisee to open up a business under the franchisor’s name
Who is a franchisee?
is someone who buys a franchise form a franchisor
Who is a franchisor?
is someone who sells a franchise to a franchisee
Advantages of a Franchisee
Will create revenue as the brand is well established and customers are already intrested in the business
Banks are willing to give loans to franchises
Disadvantages of Franchisee
Doesnt have much freedom to manage his store as he little control of the business and has to follow the franchisor’s guidelines( TMT less job satisfaction)
Has to pay the franchisor a down payment and has to pay royalties every month( tmt less profit)
Advantages of a Franchisor
Franchising the brand allows the business to expand more quickly( This increases corporate image)
Doesn’t need as much day-to day involment in the business( Tmt there is less workload)
Disadvantages of a Franchisor
Should a franchise do poorly, this will affect the whole brand’s reputation
This is putting the business at risk
What are the monthly payments a franchisee pays to a franchise
Royalty Payments
