Types of businesses

• A good is a tangible product a business sells. Eg. Shoes
• A service is an intangible product that a business sells. eg. Netflix subscription
• A customer is someone who buys a product from a business.
• A consumer is someone who uses the goods and services provided by the business.
• An entrepreneur is someone who is willing to take the risks involved with starting a business.
• Entrepreneurship refers to the ability to be an entrepreneur.
• A social enterprise a business that is set up to help society rather than to make a profit. Eg. Leisure centre
• Interest is the cost of borrowing or the reward for saving.
• Inflation refers to the rate at which prices are increasing.
• GDP = Gross Domestic Product

  Measures all the income earned in a country's economy in a year.
• Sole trader

  Set up a business by themselves

  Pros:

  • Your own boss
  • Keep all profits
  • Make your own decisions
  • Easy to set up

  Cons:

  • Unlimited liability
  • Heavy workload
  • Difficult to take a holiday
  • May lack finance
• Unlimited liability means that the personal possessions of the owner are at risk if the business is sued.
• Partnership

  When 2 - 20 people join together to make a business.

  Pros:

  • Share workload
  • More sources of finance
  • Share skills

  Cons:

  • Unlimited liability
  • Share profits
  • Liable for the actions of other partners
• A deed of partnership is an agreement between partners that sets out the rules of the partnership. Eg. How profits are split.
• Stakeholders are individuals that have an interest in the business's success.

  Eg:

  • Neighbours
  • Customers
  • Investors
  • Suppliers
  • Government
• Shareholders are individuals that own part (a 'share') of a company.

  Eg.

  • Owners
  • Investors
• A shareholder is a stakeholder, but a stakeholder may not be a shareholder.
• LTD = A private limited company


  A company that cannot advertise its shares on the stock market, and so is owned by family and friends.

  Pros:

  • Limited liability
  • Higher status
  • If the business's owners die, ownership is passed on and the company still exists.

  Cons:

  • Difficult to set up
  • A summary of the business's financial accounts must be published
  • Can't sell stocks on stock market
• PLC = Public limited company

  A company that can sell its shares on the stock market.

  Pros:

  • Limited liability
  • Higher status
  • Invites investment

  Cons:

  • A competitor may buy it out, and gain control
  • Must produce a financial summary each year, and send it to shareholders
  • Difficult to make decisions
• Dividends are the financial rewards paid out to shareholders each year