unit 1: exploring business activity business owners
TRANSCRIPT
Unit 1: Exploring Business Activity
Business Owners
Introduction:
Business ownership is divided into the 3 following sectors:
– Private Sector– Public Sector– Voluntary Sector
Private Sector:
Sole traders Partnerships Limited Liability Partnerships Public & Private Limited companies Franchises
Public Sector:
Government departments
Government agencies
Worker co-operatives
Voluntary Sector:
Charitable trusts
Sole Traders:
Owned & controlled by one person
Most common type of business
Found in wide range of activities
Sole Traders:
Advantages:
– No complicated set-up process
– Close contact with customers & employees
– All profits retained
– Individual satisfaction
Disadvantages:
– Have to make all decisions
– May work long hours– Issues regarding
holidays/illness– No legal protection– Unlimited debts– Need to provide most of
finance– Need to be jack-of-all-
trades
Partnerships:
Formed by signing Deed of Partnership
Usually found in professional work
Deed of Partnership sets out guidelines re share of profits, responsibilities and payments
Partnerships:
Advantages:
– Share skills & workload
– Easier to raise capital
– Easier to cope with holidays/illness
Disadvantages:– People can fall out– No limited liability– Difficult to borrow
large amounts of capital
– Difficult to make business decisions
– May be disagreements– Profits will be shared
Limited Companies:
Have to be registered Owners are shareholders Shareholders elect Board of directors Shareholders can have a say at AGM Shareholders put funds into limited
company by buying shares
Franchises:
Ready-made business opportunity Established brand and business model Franchisee has to put in money & effort to
reap the rewards Franchisor supplies products, business
systems, etc Franchisee pays fixed sum and regular
payments Franchise is not a form of business ownership
Government Departments:
Department for Customs and Revenue Operates on behalf of government Staffed by civil servants Collect taxes, student loans payments
and make tax credit payments Aim is to be efficient and ensure
fairness
Government Agencies:
More independent than government departments
Set up by government with responsibility for certain activities
Child Protection Agency is one example Funded & accountable to government
but free to manage own affairs Set up within tight guidelines
Local Government:
Local councils responsible for local services
Cover specific areas of the country Give contracts to private companies to
run services, e.g. refuse collection Council oversee efficiency of services Supervise other local amenities and
services
Worker Co-operatives:
A body owned by it’s members Has limited liability Employee must buy a share in the organisation Each member has one vote in making decisions Democratic Members receive share of profits Those who do the work get the rewards Generally small-scale local enterprises
Charitable Trusts:
Raise funds & support good causes Create a surplus to use for helping others Surplus occurs when revenue is greater than
cost of running charity Managed by trustees Trustees experienced in both charity and
business activities Must be registered & produce annual accounts Charities employ paid managers & workers