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Types of ownership
Description
Business Mind Map on Types of ownership, created by abbieralphs on 04/24/2014.
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business
Mind Map by
abbieralphs
, updated more than 1 year ago
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Created by
abbieralphs
almost 11 years ago
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Resource summary
Types of ownership
sole trader
definition: running a business by yourself with unlimited liability.
advantages: easy to set up & give a personal service
owner independent- quick decisions made
less paper work
knows customers- helps to avoid bad debts
disadvantages: unlimited liability
longs hours, no cover for holidays/sickness
capital may come from own savings
business ends on death
partnership
definition: business run between 2-20 people
advantages: decision making, work load, profit & liability are shared=responsibility
individual partners specalise in an area in which they have skills/expertise
work of a partner can be covered
able to access more funds
disadvantages: unlimited liability
limited access to finance
disagreements
franchise
definition: a agreement that allows you to but the rights to operate your business in the style of an existing business
advantages: operating under name of a major franchisee gives them a greater chance of success
many fanchisers provide national or local advertising & training
bulk purchasing (discounts)
disadvantages: success of the business dependent on the success of the franchisers product
little control over areas; product development
liability to pay a continuing annual fee/royalty
dependence on the franchisee for success
private limited company (LTD)
definition: the owners are the shareholders and their ownership of the business is determined by the proportion of total shares each person holds
advantages: access to funds through the issue of shares
stable form of business structure
limited liability
incorporation means the business exists even if the owner dies
disadvantages: banks may see it as a risk
complicated set up process
limited liability as a risk
public limited company (PLC)
definition: shares are bought and sold publicily
advantages: funds can be raised from a flotation
future founds can be raised because banks see this as a stable structure
disadvantages: flotation process is expensive
its not possible to control who owns the shares in a PLC as the shares are traded publically
theres nothing stopping competitors/customers/suppliers buying shares
the PLC must provide regular, detailed financial info. This shows the competitors how well/bad the business is doing
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