1.4 Making the Business Effective

• Limited Liability - The owner of a business is not personally liable for the debts of the business.
• Unlimited Liability - The owner of a business is personally responsible for all debts and obligations of the business.
• Implications of limited Liability - People who own shares in a business can lose on their inital investment.
• Implications of Limited liability - the business owner can't have personal assets seized
• sole trader - Business owned by one person, unlimted liability, employees dont won the business.
• Private Limited Company (Ltd.) - company made by friends or family, shares can't be traded publically, and there is limited liability.
• franchise - a license given out to businesses to allow it to trade using the brand format.
• Franchisees operate under the same marketing mix as the franchiser. This often comes with a start up fee for the franchisee.
• Royality - a franchisee has to pay royalies to the franchisor
• Low cost strategy - low costs means a product can be mass produced.
• business plans are used when applying for a bank loan to show the plans for the business and the loan.
• business plans identify the aims and objectives of the business
• business plans identify the target market for the product or service.
• cashflow forecast - a graph that represents the cashflow of a business over a period of time and is used to predict what it will be like in the coming months.

  
• Business plans help reduce the rusk of failure in a business.