1. Business Ownership
The Private Sector

2. Business Ownership Sole Trader:
Owned, financed and controlled by one individual but can employ other staff
Common in local building firms, small shops, restaurants, butchers, etc.

3. Business Ownership Sole Traders: Advantages Easy to set up
Personal incentive –
keep all the profits
make key decisions
high degree of control
Flexibility
Ability to offer personal service

4. Business Ownership Sole Traders: Disadvantages Unlimited Liability
Limited access to capital
Potential for long hours
Pressure of being solely responsible
Lack of continuity – business ceases once owner dies

5. Business Ownership Partnerships:
Owned, financed and controlled by upwards of 2 partners
Terms of Partnership agreed through contract
Bound by the terms of the Partnership Act 1890
Common in professions – lawyers, accountants, architects, surveyors, estate agents, vets, etc.

6. Business Ownership Partnerships: Advantages Greater access to capital
Shared responsibility
Greater opportunity for specialisation
Easy to set up

7. Business Ownership Partnerships: Disadvantages
Unlimited Liability (However since 2001, Partnerships can apply to be Limited Partnerships)
All partners liable for the debts of the others
Partnership dissolved on death of one partner
Potential for conflict
Decisions of one partner binding on the rest
Limited access to capital

8. Business Ownership Limited Companies:
Private Limited Company (Ltd) Owned by between 1 and 50 shareholders
Public Limited Company (PLC) Owned by minimum of 2 but no maximum number of shareholders
Has a separate legal identity – the company can sue and be sued
More complex to set up
Minimum share capital of £50,000

9. Business Ownership Limited Companies: Memorandum of Association
Must Register with Registrar of Companies at Companies House
Memorandum of Association
Details of the nature, purpose and structure of the company
Articles of Association
Details of the internal rules of the company
Certificate of Incorporation – allows the company to trade
Shareholders have limited liability – can only lose what they agreed to put into the company – no personal liability
PLCs – shares traded on Stock Exchange
LTDs – shares only bought and sold with agreement of
existing shareholders

10. Business Ownership Limited Companies – Issues
Divorce between ownership and control
Potential for diseconomies of scale – communication, decision making, etc.
Must publish accounts
PLCs – shareholders may be large institutions – pension funds, insurance companies, etc.
PLCs - Share value subject to volatility – affects company value
PLCs – can be large, complex, possess market power

11. Business Ownership Co-operatives:
Ownership, finance and control in hands of ‘members’
Exists for the benefit of ‘members’
Consumer co-ops – members buy goods in bulk, sell to members, divide profits between members
Worker co-operatives – workers buy the business and run it – decisions and profits shared by members
Producer co-operatives – producers organise distribution and sale of products themselves

12. Business Ownership Franchises:
Method of business ownership backed by established ‘brand’ name
Owner gets to run a business with less ‘risk’
Owner buys the right to use the established company’s name, format products, logos, display units, methods, etc.
Speedy way for business to expand
Become very popular
Owner – (Franchisee) responsible for debts, pays a royalty to owners of the brand, keeps any remaining profit
Franchisee – pays a fee for the purchase of the franchise
Common franchises – Body Shop, McDonalds, Costa Coffee, Subway