1. Different Types Of Business
You need to understand:
How sole traders and partnerships are owned,
managed and financed.
The differences between private and public limited
companies.
The main features of co-operatives and franchises.
How public sector companies differ from the
private sector.

2. Sole Traders And Partnerships
Sole traders (sole proprietors) and
partnerships are the smallest forms of
business but are the easiest to set up.
A sole trader is a business owned and
controlled by one person. Sole traders
operate under their own name.

3. Sole Traders And Partnerships
Partnerships are owned by the partners
(there must be a minimum of two and
usually a maximum of 20 partners).
Most partnerships write a Deed of
Partnership – a set of rules to follow if trust
between partners breaks down. A Deed usually
covers the sharing of profits and losses and the
financial contribution of each partner.

4. Sole Traders And Partnerships
Have unlimited
liability, which
means the owners
are personally
responsible for all
the debts of the
business.
Finance comes
from own
resources, bank
loans or
government
grants, where
available.
Sole Traders
And Partnerships
Do not have to make their business dealings public.

5. Advantages and Disadvantages
Sole Trader
Makes all the decisions, keeps all the profits, has total control, small start up costs, can keep the business flexible, lots of job satisfaction.
Unlimited liability, can lose personal wealth if business fails, lack of capital so can’t bulk buy, do market research, pressure of responsibility.
Partnership
Easy to set up, lots of expertise available than to the trader, shared responsibilities mean less pressure.
Liability still rests with partners, each partner is responsible for debts of others, disagreements possible.

6. PLC And LTD Plc A public limited company is usually a much
larger company.
It sells shares to the general public through the Stock Exchange in
London.
The original owners often lose control over decision-making.
The interests of shareholders and managers may be different.
AGM and annual report are important in keeping everyone informed
and involved.
Plc’s find it easier to raise additional finance to help fund further
developments in the business.
Banks and financial institutions are willing to buy shares and lend
money more readily than they would to a Ltd.

7. PLC And LTD Ltd It sells shares privately to family or friends.
A Private Limited Company is usually a small to
medium-sized business.
It sells shares privately to family or friends.
The original owners, as the board of directors,
keep control. Managers are usually appointed to
run the day-to-day business.
Private limited companies find it comparatively
hard to raise finance from banks for expansion.

8. PLC And LTD Ltd’s and Plc’s Annual General Meeting (AGM) – report for
shareholders.
Accounts must
be audited and
published.
Ltd’s
and
Plc’s
Limited liability
means no-one is
personally liable
for company debts.
Finance comes from sale of shares, bank loans, government grants where available.

9. The Main Differences LTD PLC Shares sold only to founders
Shares listed on Stock Exchange,
sold to public
1 shareholder, 1 director,
1 secretary
2 shareholders, 2 directors,
Company Secretary
Takes time to sell shares
Minimum share capital £50’000
Owners retain control
Original owners may lose control
Loans more difficult
High status, good credit rating
Shareholders likely to agree
May be disagreement

10. Franchises Advantages to Franchiser Advantages to Franchisee
Business grows without risk
Less risk during start-up
Regular income
Keep most of the profits
Less organisation and staff
Selling established product
Keep control
Using successful brand image
Help and training available
There is national marketing

11. Private and Public Sectors
Big organisations are important to the government
for a variety of different reasons:
Security Reasons
Economic Reasons
Financial Reasons
Social Reasons

12. Private Sector Organisations
Public
Limited
Companies
Incorporated
Private
Limited
Companies
Private
Sector
Business
Partnership
Unincorporated
Private
Sector
Business

13. Public Sector Organisations
Local Services
Administrative
Departments
Local
Government
Local Authorities
Public
Sector
Business
Government
Agencies
Public
Corporations
Central
Government
Public Service
Organisations
Government
Departments

14. Privatisation Private Businesses Ordinary People
From 1979 companies began to be privatised by
selling shares to:
Private Businesses
Ordinary People

15. Some Reasons For Privatisation
Control in private hands.
More people can be share owners.
More competition encourages efficiency.
Reduces the need for government subsidies.
Private sector is better and quicker at making
decisions.

16. Some Reasons Against Privatisation
Many of these industries are monopolies and can
change high prices or cut services.
Private industry is not interested in providing non-
profitable services that bring social benefits.
Private industry may not afford key investment.
Competition can be wasteful as resources are duplicated.
Profits go to the wealthy who can afford shares.
There may be a risk of job losses.