Task 1 - Finish exam Question from last lesson Task 2 – New date and title: Tuesday 19th January 2.1.3 Liability Task 3 – Answer Question 1a on P159

Business Ownership

Sole traders Partnerships Private Limited Companies (LTD) Public Limited Companies (PLC) At least 1 shareholder, 1 director, 1 secretary At least 2 shareholders, 2 directors, qualified Company secretary Easy to raise finance as has a good credit rating and high status One owner Two to 20 partners Smallest form of ownership Profits shared between partners Small to medium sized organisation Large organisation, high status Needs at least £50,000 of finance before able to sell shares Most common type of business in the UK Expertise available through partners Sells shares to family and friends Shares sold on stock exchange, sold to public Shares sold easily to public Owner has total control over business decisions Must register company with Companies House Unlimited Liabilities Must register company with Companies House Lots of rules and regulations to comply with Easy to set up May be divisions between shareholders and managers Owner keeps all the profits Financial records must be declared at the end of ever year Financial records must be declared at the end of ever year Yearly dividends paid to shareholders Unlimited Liabilities Annual report must be published to shareholders Annual report must be published to shareholders Easy to set up Limited Liabilities Limited Liabilities

Sole Trader One owner Smallest form of ownership Unlimited Liabilities Most common type of business in the UK Owner has total control over business decisions Owner keeps all the profits Unlimited Liabilities Easy to set up

Sole Trader One owner Smallest form of ownership Unlimited Liabilities Most common type of business in the UK Owner has total control over business decisions 1 – Discuss with the person next to you, whether you would start a business as a Sole Trader 2 – Write a short paragraph in your book on: What are the benefits to being a sole trader? Owner keeps all the profits Unlimited Liabilities Easy to set up

Partnership A partnership has between 2 - 20 owners. The partners have unlimited liability – if the business goes bankrupt they can lose personal possessions. Partners share the risks, can both put in ideas and share the profits. Disagreements may occur. A Deed of Partnership is a legal document which may be drawn up to agree the details of the partnership

Limited Companies The company is separate to the people who own it It issues shares Limited stands for ‘Limited Liability’ which means if the company runs into debt, the amount that the shareholders can lose is limited to the money they have invested. Shareowners own the company and elect directors to run it

Private v Public Limited Companies Have the letters ‘ Ltd’ or the word ‘Limited’ after their name Shares are privately owned and can only be sold with the permission of the shareholders Generally few shareholders Generally greater control by the share owners Lever Brothers Ltd were a private limited company Public: Have the letters ‘plc’ after their name Shares are openly traded on the Stock Exchange Generally greater numbers of shareholders Control is delegated to directors/managers Unilever Plc now has this types of ownership

Franchises The franchisee: Pays a start-up cost – this covers equipment and sometimes a premises. Pays a royalty each year – this is a percentage of the revenue earned. Must follow the rules laid down by the franchisor. The franchisor: Provides equipment and resources Provides training

Franchise Franchise: The right given by one business to another to sell its goods or services using its name Ben and Jerry’s started to franchise their brand in 1981. Brand – “a named product which customers see as being different from other products” 11

Advantages of franchising (for the franchisor e.g. Ben and Jerry’s) Can be a rapid method of expansion The franchisee shares some of the risk of expansion. Can be a good way of expanding into overseas markets as franchisee will have knowledge of the local market.

Disadvantages of franchising (for the franchisor e.g. Ben and Jerry’s) Lose some control over the brand A bad franchisee might affect the image of the brand for the whole company. The franchisor will only receive part of the profit earned by the franchisees. A franchisee will gain detailed knowledge of the company and may set up a competitor

Activity Create a poster containing the logo and two key facts for sole traders, partnerships, private limited companies, PLCs and franchises. I want at least two for each type of business ownership Sole Trader Partnership Private Limited PLC Company You only have 10 minutes! Email all posters to me when you’re done – jharon@thewarrenschool.net

Extension activity Use Google to find out what the word stakeholders means for business. Create a list of all of the different types of stakeholder