Forms of business

Question 1

Public limited company

Answer 1

Sell shares to the general public on the stock exchange

+Limited liability
+Easiest way to raise finance
-Greater admin costs
-Greater regulation + public disclosure of company info

Question 2

Sole trader

Answer 2

Individuals owning the business on their own

+Quick & easy to set up
+Control over business decision
-Unlimited liability
-Illness means lack of income

Question 3

Private limited company

Answer 3

Owned by shareholders- family & friends

+Limited liability
+Easiervto raise finance
-Greater admin costs
-Public disclosure of company info

Question 4

Partnership

Answer 4

A business is owned by 2 or more people

+Quick & easy to set up
+Business has expertise & skills of more than one owner
-Unlimited liability
-One partner’s decisions affect another

Question 5

Franchise

Answer 5

A franchisor grants a license, to another business to allow it to trade using the business brand

+Training provided by franchisor
+Franchisor (subway) pay for marketing
+Buying into an established brand
-Initial fee is high
-Pay royalties to the franchisor
-Less freedom & control over how the franchise is run

Question 6

Advantage to franchisor

Answer 6

-Rapid geographical growth
-Can still open your own branches
-Gain capital from franchise ‘above normal profits’

Question 7

Lifestyle business

Answer 7

Prioritise specific lifestyle & interests over profits e.g. yoga instructor

Question 8

Social enterprise

Answer 8

Not for profits, look to improve social issues
e.g environmental issues, charities

Question 9

Online business

Answer 9

Lower overheads, operate from anywhere