1.4

• Define the term liability 


  Liability means being legally responsible
• What are the two types of liability?

  Limited and unlimited
• Define limited liability 


  Where the owners of a business are not legally responsible for all the debts a business has.
• Define unlimited liability?


  Where the owners of a business are legally responsible for all the debts a business has.
• Define the term ’sole trader’?

  When one person owns an unincorporated company.
• List two examples of sole traders?

  • Plumber
  • Hairdresser
• List two advantages of being a sole trader?

  • Keep all the profit
  • Be your own boss
• List two disadvantages of being a sole trader?

  • Long working hours
  • Liable for all debts
• What is a partnership?


  A business ownership structure in which a small number of people - usually 2/20 - own and unincorporated company.
• Give two examples of partnership

  • Solicitor
  • Doctor
• List two advantages of a partnership

  • More owners = more ideas.
  • More capital (money).
• List two disadvantages of a partnership

  • Each partner is legally responsible for what all the other partners do.
  • The profit is shared.
• What is a private limited company


  A business that is owned by its shareholders, run by directors and where the liability of shareholders for the debts of the company is limited.
• List two examples of private limited companies g

  • Any LTD business.
  • Dentist.
• List two advantages of a private limited company

  • Limited liability, you can’t lose more than you invest.
  • It‘s easier for a ltd company to get a loan or mortgage.
• List two disadvantages of a private limited company.

  • More expensive to set up due to all legal paperwork.
  • Company is legally obliged to publish it’s account every year.
• What is a franchise?

  Where a company lets another firm sell its products or use it’s trademarks in return for a fee or percentage of the profits.
• List two advantages of franchising.

  • Franchises are less risky than starting a business from scratch.
  • Customers will already recognise the franchisor’s brand so are more likely to buy from the franchisee.
• List two disadvantages of franchising.

  • Franchisor might have rules about how to operate the business, so the franchisee’s freedom is limited.
  • Franchisee usually has to pay a lot of money to start the franchise.
• Name three factors that a business needs to consider when deciding business location

  • Location of raw materials.
  • Labour supply.
  • Competitors.
• How has the internet made it easier for start-up businesses when making location decisions.

  • Information Access: The internet offers data on local demographics and market trends.
  • Online Presence: Helps businesses communicate and operate without a fixed location.
  • Better Decisions: Enables start-ups to choose locations that best fit their needs.
• Define the term ‘marketplace’


  A place where goods are traded between customers and suppliers, trade in a particular type of product or the potential customers for a products.
• Identify the 4 elements of the marketing mix.

  • Price
  • Product
  • Promotion
  • Place
• What is e-commerce?


  Online buying and selling.
• Why is labour important when considering location for a business?


  Workforce