BUSINESS TYPES

• What is an innovator?

  someone who introduces changes and new ideas
• What is labour?

  people employed in a business/used in production
• What is an entrepreneur?

  someone who takes risks to set up a business (owners) they organise factors of production and use their own personal money to do so
• What are the main roles played by an entrepreneur?

  • innovators
  • organisers
  • risk takers
  • decision makers
• What is an unincorporated business?

  where there is no legal difference between the owner and the business. Everything is carried out in the name of the owner, usually small and owned by one person or a group of people
• What is an incorporated business?

  a business that has a separate legal identity from its owners. It can sue, be sued, taken over or liquidated
• What is a sole trader?

  a business owned and created by one person
• What is unlimited liability?

  when the business owner is personally liable for all business debts
• What are the advantages of being a sole trader?

  • the owner keeps all the profit
  • owner has complete control
  • simple to set up with no legal requirements
• What are the disadvantages of being a sole trader?

  • unlimited liability
  • long hours and hard work
  • can be a struggle to raise finance
• What is a partnership?

  a business owned by 2 to 20 people
• What is a deed of partnership?


  a legal agreement stating the rights of each partner in a business
• What does a deed of partnership state?

  • how much capital each partner will contribute
  • how profits and losses will be shared among partners
  • the procedure for ending the partnership
  • how much control each partner has
  • rules for taking on new partners
• what are the advantages of a partnership?

  • shared responsibility
  • partners can specialise in their area of expertise
  • more people equals more capital
  • financial information is not published
• What are the disadvantages of a partnership?

  • unlimited liability
  • profit is shared
  • disagreements and fall outs
  • tends to be small
• What is a limited partnership?

  where some partners can contribute capital and enjoy a share of profit but do not take part in running the business
• What is limited liability?

  if the business incurs debts or faces legal action, the owners are not personally liable beyond the amount they have invested in the business.
• what are audits?

  a professional check of a company's financial records to make sure everything is correct
• What is a franchise?

  when a business allows another operator (franchisee) to trade under their name
• What is merchandise?

  goods that are being sold
• What does the franchiser offer the franchisee?

  • a licence to trade under their brand name
  • training on how to run the business and operate their systems
  • marketing support
• What fees does the franchisee have to pay the franchiser in return?

  • a one-off start-up fee
  • contribution to marketing costs
  • an ongoing fee that kis usually based off sales
• What are the advantages to the franchisee?

  • less risk
  • they have back-up support
  • set-up costs are predictable
• What are the disadvantages to the franchisee?

  • profit is shared with franchiser
  • lack of independence
  • can be expensive
• What are the advantages of the franchiser?

  • fast method of growth
  • cheaper method of growth
  • takes some of the risk
• What are the disadvantages of the franchiser?

  • profit is shared with franchisee
  • franchisees can damage franchisers reputation
  • cost of support for franchisees may be high
• What is a social enterprise?

  a business that is non-profit making and aims to improve human or environmental well-being
• What are some examples of a social enterprise?

  • charities
  • youth clubs
  • sports clubs
• What is a cooperative business?

  a company, factory, or organisation in which all the people working there own a equal share of it
• What is a customer cooperative business?

  a compnay, factory or organisation that is owned by its customers
• What is a worker cooperative?

  a cooperative that is owned by its employees
• What is a charity?

  an organisation that gives money, goods or help to people who are poor, sick or in need