making business effective Flashcards
(31 cards)
what is limited liability
the business owner or owners are only responsible for business debts up to the value of their financial investment in the business
what is a private limited company
has limited liability, ‘Ltd’,
what is unlimited liability
the business owner or owners are personally responsible for all of the debts of the business, no matter what the value.
what is a sole trader
a business that is owned and run by one person, usually start up/small businesses.
what are advantages of a sole trader
quick/easy/cheap to set up, makes own decisions, keeps profits
what are disadvantages of sole traders
risk unlimited liability, works long hours, high level responsibility
what is a partnership
a type of business that has 2-22 owners
advantages of partnership
quick/easy to set up, shared knowledge/responsibility/workload
disadvantages of partnership
conflict, unlimited liability, shared profits
what are the owners of a private limited company called
shareholders
advantages of private limited company
limited liability, new shareholders need to be invited, share capital
disadvantages of private limited company
more paperwork, time consuming to set up
what is a franchise
gives the right to another person or business to sell goods or services using its name.
what is a franchisee
a business that agrees to use branded products under the licence of a franchisor
what is a franchisor
gives franchisees the right to use its branded products in return for a fixed sum of money or royalty payment
disadvantages of setting up a franchise
expensive to set up, franchisee has to consult franchisor before making any decisions, competitive, royalities
advantages of setting up a franchise
free training/marketing, established business already, easier to make money, lower risk
who does proximity to market refer to and why is important
customers- easier to attract costumers if they are nearby as they find it convenient
who does proximity to labor refer to and why is it important
employees- easier to attract the correct skill level if you are in the right area
who does proximity to materials refer to and why is it important
suppliers- saves money if you are closer as transport is shorter
who does proximity to competitors refer to and why is it important
competition- depending on the type of business being close to competitors (clothing/car shops) is more beneficial where being far away (corner shops/hairdressers) is more beneficial
where do retail companies prefer to be located
proximity to consumers
where do service companies prefer to be located
anywhere, maybe near consumers
where do manufactoring companies prefer to be located
cheap to rent land, need to transport long distances
