3. Business ownership

• Apart from profit explain 2 reasons why a business may be started

  One reason a business may be started is a entrepreneur has a good idea that they think will sell well

  Another reason is that they wish to be independent and be their own boss rather than work for someone else
• How do business start? (Step 1 to 6)

  1.Decide on the product and produce a model or prototype

  2.Decide on the best place to get the materials required

  3. Decide on a business plan(all details about a product in document)

  4. Study the market to see if there are already similar products availible

  5. Research the price at which competitors are selling the product

  6. Work out the costs of production and a profit margin to decide on a price
• How do businesses start? (Step 7-12)

  7. Carry out market research to show the type of people likely to buy

  8. Research where the product could be sold to best advantage

  9. Organise the necessary finance. This may be from personal savings.

  10. Advertise the product widely in the most economic way

  11. Create a brand for the product that will make it stand out

  12. Register the product and get a patent
• What are the different sizes of businesses and their properties

  Micro= Number of staff: 1-9, Turnover: Less than £1.7m

  Small= Number of staff: 10-49, Turnover: Less than £5.6m

  Medium= Number of staff: 50-249, Turnover: Less than £22.8m

  Large= Number of staff: >249, Turnover: More than £22.8m
• What is a private sector business?

  The private sector is made up of organisations owned and controlled by private individuals. The aim of businesses in this sector is to make profit.
• What is a sole trader?

  A business that is owened and controlled by one person. Sole traders are easy to form as they do not require legal documentation before they are established. All the sole trader must do it get a licence to trade
• 2 advantages of being a sole trader?

  One advantage of being a sole trader is that there is low start up costs as there is few legal formalities involved and so starting up as a sole trader is quite straightforward.

  Another advantage is full control over decisions as the sole trader retains complete control over the business, and so can make all the decisions without consulting anyone else.
• 2 disadvantages of being a soletrader?

  One disadvantage is unlimited liability and there is no separate legal existence between the business and its owner, any debt incurred will have to be paid by the sole trader. This could involve personal possessions having to be sold to pay the debt

  Another disadvantage is the lack of continuity as if the business and the owner are seen as one, if the owner dies the business cannot continue
• What is a partnership?

  A partnership occurs when 2 to 20 people combine to form a business enterprise. The partners share the responsibility of running the business and therefore any decisions relating to the business should be taken with agreement from all partners
• Name 2 things that would be included in a deed of partnership

  The first thing that would be included in the deed of partnership is the trading name and function of the business.

  The second thing included in the deed of partnership is the amount of capital each partner will invest
• 2 advantages of a partnership

  The first advantage about being a partnership is a shared workload as partnerships have a reduced workload as the work can be shared amongst partners

  The second advantage is raising capital as each partner can contribute to the business and as partnerships are generally bigger than soletraders they are seen as less risky and may find it easier to raise finance from banks
• 2 disadvantages of a partnership

  The first disadvantage of a partnership is the loss of autonomy as not a single person is able to make all the decisions without consulting the other partners.

  Another disadvantage is unlimited liability and if the business does not have enough money to cover its debts, each partner will be personally liable for the debts
• Compare and contrast the public and private sector

  Ownership; private individuals / country or state

  Purpose and aim; to make a profit / to provide a service

  Control; owners or directors / central or local government

  Capital; raised by private owners / comes from treasury or from rates

  Use of profits; distributed to owners / handed back to government or local authority
• Explain the meaning of the term social enterprise

  This is a business which has social aims. It does not exist to make profit but covers costs and reinvests additional money made into the community or back into the enterprise. A social enterprise makes money the responsible way. It is not the same as a charity (3 ps- planet people profit)
• Analyse how a social enterprise aims to deliver a range of outcomes

  economic- to reduce unemployment

  social- to reduce crime or support the homeless

  environmental- encouraging sustainable business practices