Task1: different types of business ownership

Ahsanul Islam 10YER Task1: different types of business ownership Types of ownershipexamplesDescriptionAdvantages / disadvantages of this type of ownershipWhat type of business ownership could they change toReasons for changeSole traderA GB store is a corner shop in Leeds chapeltown and is also an off licence.Leeds city stores is a corner shop in Leeds Harhills which sells sweets and meat. Yasin bros is a corner shop in Leeds Harehills which sells sweets, biscuits and fish.A sole trader is a business owned and run by one individual.They are usually a small business.Sole trader have unlimited liability.This means that there is a legal obligation on the owners of the business to pay all the debts of the business.There is distinction between the owner and the business.The owner could loose all their personal possessions to pay the debt of the business.Most business starts as sole traders or partnerships.Sole traders include plumbers, electricians and mobile hairdressers.The sole trader can keep all the profit.Can make all of the decisions.Respect.Less arguments/ conflicts The sole trader can choose what hours they want to work and what holidays they work.Sole trader could change into private limited company. (LTD)So that they have limited liability.This means they can become bigger and better known.So they can expand and raise capital through selling shares to family and friends.Stressful Sole trader may not get paid when they are ill or on holiday (could loose profit)Unlimited liabilityMay be harder to raise capital Could be lonely if the business is not busy.Sole trader could change into public limited company. (PLC)To become better known.So that they become bigger.To gain limited liability.So that they can raise capital by selling shares on the stock exchange.Sole trader could change into a partnership.To reduce the work load and stress.So that they can raise capital (e.g. through selling part of the business).To expand.To share decision making.PartnershipsKarim brothers is a corner shop in Leeds Chapeltown which sells sweets, drink, vegetables and meat etc.Harrison Bundy’s and John Lewis is a local solicitor company.Owned and run by two to twenty people.Partnerships have unlimited liability and the owners must pay all business debts. Even if this means they loose their personal things (such as their house and car).Partnerships are usually small to medium size businesses.Partnerships are usually

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run by the partners.Employers can be employed to work in the business.Any problems or worries can be shared and discussed between them. The partners have more skills and ideas than a single person. More capital can be raised as all the partners contribute.Partners with different skills can specialise in their own areas.This helps to Increase the range of services they offer to customers.Partnership could change in to a private limited company. (LTD) To become better known through selling shares.To gain limited liability.To grow and expand.To raise capital through selling shares to family or friends.The partners may not always agree and some may work harder than others which can cause problems The profits must be shared All the partners must be consulted before a decision is made which can take time The partners have unlimited liability for all the debtsAn action or decision made by one partner has to be followed by all other partnersThe death of a partner means that his or her share must be taken out of the business and paid into the partners estate which can cause serious problemsEach partner usually has a life assurance policy to cover this amount which can be expensiveThe insurance company then pays this money into the estate if the partner dies.Partnership could change into public limited company. (PLC)To raise capital through selling shares on the stock exchange.To expand.To be a rival for competitors.To become better known.So the partners have limited liability.Partnership could change into a sole trader.So that one partner can retain all of the profits. Due to conflict between partners.Death of a partner.The partnerships might not be making enough profit for two wages.Public limited company (PLC)McDonald’s, Nike, Arsenal football club.All of these compiles are listed on the stock exchange and sell shares. Can sell shares to the general public often on the stock exchange.Public limited companies have limited liability.They are often large companies.Public limited companies can raise capital through taking out special loans called debentures.Limited liability.Can sell shares on the stock exchange which can raise capital.Public limited companies are usually well known.Public limited company could change in to a partnership.To become smaller so only the partners make decisions.They don’t have to sell shares therefore can choose who owns the company.So they don’t have to disclose financial information.Must hold AGM which can be expensive.Must disclose financial information which can put off potential shareholders and customers. Open to take over if one person buys all of the shares.Can become too large to meet aims and objectives.Shareholders make the decisions and will have different aims to the directors.A Plc could become a franchise.So that the company becomes better known.So that the company raises profits without a big capital investment as the franchises raise capitals.A plc could become a sole trader.If one individual buys all of the shares.Therefore owns 100 per cent of the organisation.To increase profits as one person keeps all of the profits.So that all decisions are made by the individual.A plc could become a partnership.If a group of partners buy all of the shares.So that they gain more profits.So that partners can make all decisions.If they want the company to become smaller.If the company is not profitable as a public limited company. Private limited company (LTD)Woodhead publishing Ltd Nestle UK LTD Panasonic UK LTDCan only sell private shares to family or friends.Has limited liability.Are usually large, well know business.Limited liability and the owners can choose the share holders.Private limited company could change into a soul trader. If one person buys all of the shares.To keep all of the profits.To avoid conflicts.Get to make all of the decisions.Is the boss of his selves.Must disclose financial information.Can not sell shares publically. Must have an annual general meeting (AGM) which can be expensive.Private limited company could change into franchise.To raise capital through minimum effort.So that the business becomes better known to customers.If the owners want to give some control to the franchiser.FranchiseSubway , McDonalds and Burger KingThe right given by one business to another to use its name to sell its goods and service for a fee.Franchise must buy the rights and stock from the franchisor.Franchisees are opening an already successful business.Well known product or services (established customer base)Franchise will advertise and promote the productsBanks are more willing to lend money to start the franchiseBusiness failure is low.Franchise could change into a PLC or LTD.This will allow them to control and own all outlets.They will gain higher profits.They have more controlThey will be able to make all of the decisions.You have to sell the franchisers products and service (even if cheaper stock can be found elsewhere).Cost of buying the contract from the franchiser will be high.Franchise agreement can be withdrawn at any time.Percentages of profits must be paid to the franchiser. Key Terms: FRANCHISER:THE LARGE COMPANY FRANCHISEE: PRIVATE INDIVIDUAL.Franchise could change into a sole trader/partnership.If there is no demand from franchise or the franchisees are not making enough profit.The business would have to downsize to make sure they survive.Co-OperativeThe Co-op, Co-op Travel and Co-op Funeral Services Alpha communications ltdPeople join together to organise the business.Make decisions and share profits.All members have an equal share and an equal say profits are shared equally. They are similar to limited liability partnerships.Each worker/owner has an equal share in the business and one vote each.Each person also has an equal share of the profits.A worker co-operative can also be a limited company.Such as alpha communications ltd.Have the protection of limited liability.Decisions are made jointly by the owners and in the collective interests of every one.Jobs can be rotated so people can extend their skills and the least popular jobs can be shared because the workers own and work in their own businessThey are committed to its success and workers are not forced to be owners.Each worker can make an independent decision. Co-operative could change into a sole trader.Co-operative could change into a partnership.If one worker buys out all other workers.So they can keep all of the profits and make all the decisions.If the aim of the business changes they can return into different areas. Traditional financial organisations.Such as banks are often wary of lending money to co-operatives because there is no recognised leader.Suppliers may be reluctant to provide goods on credit for the same reason.Decision making can take a long time if everyone is involved.Hard business decisions may conflict with members’ social beliefs such as sacking a worker even if this would be in the best interests of the business.Members often lack financial and business skills.A good leader may become impatient and feel unable to operate effectively and job rotation may not work effectively-some people may not be sufficiently competent to do certain jobs. Ownership changes Sole trader A sole trader could become a private limited company (LTD) so that they have a limited liability, to become bigger plus better known and so that they can raise capital through selling shares to family and friends. A sole trader could also become into a partnership to reduce the work load, stress and to expand. A sole trader could again become into a public limited company (PLC) so that they can raise capital by selling shares on the stock exchange, to gain limited liability, so that they become bigger and to become better known. Partnership A partnership could become into a public limited company (PLC) so that one partner could retain all of the profits, due to conflict between partners, death of one partner and so that the partnerships might not be making enough profit for two wages. A partnership could also become into a private limited company (LTD) to become better known, known through selling shares and to become a limited liability. A partnership could again become into a sole trader so that one partner could retain all of the profits, due to conflict between partners, death of one partner and so that the partnerships might not be making enough profit for two wages. Private Limited Company (LTD) A Private Limited Company (LTD) could become into a sole trader if one person buys all of the shares, to keep all of the profits, to avoid conflict and to make all of the decisions because of being own boss. A Private Limited Company (LTD) could also become into a public limited company (PLC) so that they can raise capital through selling shares on the stock exchange. A Private Limited Company (LTD) could again become into a franchise to raise capital through minimum effort and so that the business becomes better known. Franchise A franchise could become into a sole trader if the franchise is not successful and if no one wants to become a franchise. A franchise could also become into a partnership if the franchise is not successful and if no one wants to become a franchise. Public Limited Company (PLC) A Public Limited Company (PLC) could become into a sole trader if one person buys all the shares, to keep all of the profits and to have more power. A Public Limited Company (PLC) could also become into a Private Limited Company (LTD) to become a smaller business and so that they can choose who buys their shares. A Public Limited Company (PLC) could again become into a franchise to become better known and so that they can raise capital with minimum investment. Co-Operative A co-operative could become into a public limited company (PLC) to raise capital and if the arms of the business change. A co-operative could also become into a sole trader, if one person buys out the owners, to reduce conflict, so that they can make all of the decisions and so that they get all of the profits. By Ahsanul Islam

Task1: different types of business ownership

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