Business Paper 1

• The main types of businesses are sole traders, partnerships, limited companies and public limited companies (plcs).
• Purpose of a business plan:

  To reduce the risk of starting a business

  To help a business succeed
• Role of a business plan:

  Identify markets

  Helping with finance

  Identifying resources needed Achieving aims and objectives
• Risks of starting a Business:

  Financial

  Health

  Strained relationships

  Starting a business is time consuming
• Reward of starting a Business:

  Financial

  Independence

  Self-satisfaction
• Disadvantages of sole trader:

  Unlimited liability

  Business stops if ill or on holiday

  Long working hours

  Shortage of capital

  Skills shortage

  No continuity
• Advantages of Patnership:

  More capital available

  Easy to set up

  More skills available

  Shared workload

  Financial information is private
• Advantages of sole trader:

  Easy to set up

  Little finance required

  Full control

  Keep all the profits

  Financial information is private
• Disadvantages of patnership:

  Shared profit

  Unlimited liability

  Shortage of capital

  Slower decision making

  No continuity
• Advantages of LTD:

  Limited liability

  Continuity

  Can raise capital more easily

  Control over share sale
• Disadvantages of LTD:

  Financial information available to the public

  Complex and expensive to set up

  Sale of shares is restricted

  Dividends to be paid
• Advantages of PLC:

  Can raise large amounts of capital

  Easier to borrow  money

  Limited liability for shareholders
• Disadvantage of PLC:

  Possibility of a takeover

  Complex and expensive to set up

  Hard to manage as so large

  Financial information available to the public