usefull for business topic

1. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
The Private Sector

2. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
• Sole Trader:
– Owned, financed and controlled by
one individual but can employ other
staff
• Common in local building firms,
small shops, restaurants, butchers,
etc.

3. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Sole Traders: Advantages
• Easy to set up
• Personal incentive –
• keep all the profits
• make key decisions
• high degree of control
• Flexibility
• Ability to offer personal service

4. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Sole Traders: Disadvantages
• Unlimited Liability
• Limited access to capital
• Potential for long hours
• Pressure of being solely responsible
• Lack of continuity – business ceases once
owner dies

5. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Partnerships:
• Owned, financed and controlled by upwards
of 2 partners
• Terms of Partnership agreed through contract
• Bound by the terms of the Partnership Act
1890
• Common in professions – lawyers,
accountants, architects, surveyors, estate
agents, vets, etc.

6. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Partnerships: Advantages
• Greater access to capital
• Shared responsibility
• Greater opportunity for specialisation
• Easy to set up

7. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Partnerships: Disadvantages
• Unlimited Liability
(However since 2001, Partnerships can apply to be Limited Partnerships)
• All partners liable for the debts of the others
• Partnership dissolved on death of one partner
• Potential for conflict
• Decisions of one partner binding on the rest
• Limited access to capital

8. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Limited Companies:
– Private Limited Company (Ltd) Owned
by between 1 and 50 shareholders
– Public Limited Company (PLC) Owned by
minimum of 2 but no maximum number of
shareholders
– Has a separate legal identity – the
company can sue and be sued
– More complex to set up
– Minimum share capital of £50,000

9. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Limited Companies:
Must Register with Registrar of Companies at Companies House
• Memorandum of Association
Details of the nature, purpose and structure of the company
• Articles of Association
Details of the internal rules of the company
• Certificate of Incorporation – allows the company to trade
• Shareholders have limited liability – can only lose what
they agreed to put into the company – no personal liability
• PLCs – shares traded on Stock Exchange
• LTDs – shares only bought and sold with agreement of
existing shareholders

10. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Limited Companies – Issues
• Divorce between ownership and control
• Potential for diseconomies of scale –
communication, decision making, etc.
• Must publish accounts
• PLCs – shareholders may be large institutions –
pension funds, insurance companies, etc.
• PLCs - Share value subject to volatility –
affects company value
• PLCs – can be large, complex, possess market
power

11. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Co-operatives:
Ownership, finance and control in hands of ‘members’
•Exists for the benefit of ‘members’
• Consumer co-ops – members buy goods in bulk,
sell to members, divide profits between members
• Worker co-operatives – workers buy the
business and run it – decisions and profits shared
by members
• Producer co-operatives – producers organise
distribution and sale of products themselves

12. http://www.bized.co.uk
Copyright 2006 – Biz/ed
Business Ownership
Franchises:
Method of business ownership backed by established ‘brand’ name
• Owner gets to run a business with less ‘risk’
• Owner buys the right to use the established company’s name,
format products, logos, display units, methods, etc.
• Speedy way for business to expand
• Become very popular
• Owner – (Franchisee) responsible for debts, pays a royalty to
owners of the brand, keeps any remaining profit
• Franchisee – pays a fee for the purchase of the franchise
• Common franchises – Body Shop, McDonalds, Costa Coffee,
Subway