WORKERS - EMPLOYESS• Workers are employed in the business. They have tofollow instructions given to them by the owners ormanagers. They may have part-time or full-timecontracts. These are legal documents which givedetails of the hours of work and other conditions ofemployment. Workers earn money for the work theydo and this is usually a weekly wage or monthly salary.Often workers need training to do their work well. Ifthere is not enough work for all workers in abusiness, some may be made redundant(retrenchment), that is, they may be asked to leave thebusiness. This could be of great concern to the workersinvolved
OWNER• Owners put money into the business to set it up.Without this capital, no business activity canbegin. The owners will take a share of the profitsif the business is successful. They may have topay for any losses made. All owners are takingrisks. Putting money into a business will notguarantee success. If the business makes thewrong type of product or does not attract enoughconsumers, the owners may lose their money.Owners are therefore risk-takers.
Managers• Managers are employed by the business tocontrol the work done by other workers. Theygive instructions to other workers, organise theresources of the firm and take importantdecisions. These decisions might include whereto locate the business, what to produce and whatprice to sell products for. If these decisions aresuccessful, the business does well. If managersmake poor decisions, the business could fail.Good and successful managers often earn verylarge salaries
Consumers• Consumers are important to every business.They are the customers who buy the productor service that a business makes. Withoutconsumers buying enough products, abusiness will make losses and eventually fail.Businesses need to find out what productsconsumers are prepared to buy. This is calledmarket research Consumers must then beattracted to the product by advertising andother forms of promotion.
Government• The government decides on laws which willaffect business activity. The government wantsbusinesses to be successful in its country.Successful businesses will employ moreworkers and reduce the numbersunemployed. When successful businessesmake profits, a tax must be paid to thegovernment. This money can be used to payfor the services which government providesfor the benefit of the population.
The whole community• Business activity affects the whole community. Landand resources are used up during business activity.Sometimes businesses produce goods which can bedangerous and might harm members of thecommunity -such as cigarettes and cars. Factories canproduce harmful pollution. Some products are verybeneficial to the community, such as medicines orbuses for public transport. In addition, business activityprovides jobs for workers and managers and incomesare paid to these groups. This raises the communitysstandard of living. The whole community cantherefore be affected by business activity in bothpositive and negative ways.
Types of businesses• Large or small businesses• Privately owned or owned by the state.• Owned by one person or by thousand of shareholders.
Business Structure12/04/12Owners have to decide on the best legal structure for theirbusiness - opting to run as sole traders, partnerships orprivate limited companies. As the business expands andstarts to employ hundreds of staff in many locations, it maydecide to become a public limited company or to offerfranchises.
Sole tradersA sole trader describes any business that is owned andcontrolled by one person - although they may employworkers. Individuals who provide a specialist service likeplumbers, hairdressers or photographers are often soletraders.Sole traders do not have a separate legal existence fromthe business. In the eyes of the law, the business andthe owner are the same. As a result, the owner ispersonally liable for the firms debts and may have topay for losses made by the business out of their ownpocket. This is called unlimited liability.
Sole traderAdvantages• It is easy to set up as noformal legal paperwork isrequired.• Generally, only a smallamount of capital needs tobe invested, which reducesthe initial start-up cost.• As the only owner, theentrepreneur can makedecisions withoutconsulting anyone else.Disadvantages• The sole trader has no one toshare the responsibility ofrunning the business with. Agood hairdresser, forexample, may not be verygood at handling the accounts.• Sole traders often work longhours. They may find itdifficult to take holidays ortime off if they are ill.• They face unlimited liability ifthe business fails.