Unit 1.6 - business ownership Flashcards
Define sole trader.
Single owner of a business.
Name the advantages (6) and disadvantages (8) of a sole trader.
Advantages
Easy and cheap to set up
Owners make all the decisions
Keep all profits
Information is kept private
Personal service
Work your own hours
Disadvantages
Unlimited liability
No continuity
Difficult to raise finance
High workload
Decisions made can be rushed and incorrect
Long hours
Lack of specialist skills
Responsible for all decisions
Define partnership.
Two or more owners of a business.
Name the advantages (10) and disadvantages (7) of a partnership.
Advantages
Easy and cheap to set up
Information kept private
Personal service
Able to raise more capital
Specialist skills
Better decisions made
Shared risk
More ideas
Sleeping/silent partner
Flexible working hours
Disadvantages
Unlimited liability
No continuity
Partners may disagree
Bound to partners decisions
Some partners may not work as hard as others
Share profit
Slower decision making
Define private limited company.
A business owned by shareholders who are invited.
Name the advantages (9) and disadvantages (6) of a private limited company.
Advantages
Limited liability
Continuity
Raise more capital
Specialist management
Greater status - well known
Maintain control
Specialist skills
Pay less tax than a sole trader and partnership
Don’t publish as much information as a PLC
Disadvantages
Expensive and difficult to set up
Need to pay dividends
Publish financial information
Cannot raise as much money as a PLC
Divorce of ownership and control
Possible loss of control - shareholders have voting rights
Define public limited company.
A business that is owned by shareholders who can get shares from the stock exchange.
Name the advantages (8) and disadvantages (7) of a public limited company.
Advantages
Limited liability
Continuity
Raise the most capital
Banks more likely to lend capital
Specialist management
Greater status - well known
Pay less tax than a sole trader and partnership
More publicity - media coverage
Disadvantages
Lose control
Expensive and difficult to set up
Need to pay dividends
Publish all information
Divorce of ownership and control
More regulated
More media focus
Define co-operative.
A business owned and run by its members.
Explain the difference between a worker and consumer co-operatives.
A business owned and controlled by workers whereas a consumer co-operative is owned by the customers.
Name the advantages (5) and disadvantages (5) of a co-operative.
Advantage
Motivated to do well
Profits are not the only objective - customer satisfaction
Profits are distributed fairly among the members
Less arguments
Involved in the education and training of employees
Disadvantage
Slow decision making
Difficult to attract the best workers
Lack of experience
Business may not be focussed on objectives such as profit maximisation and growth
Decision making harder due to lack of business experience
Define social enterprise.
A business set up to help others.
