Unit 1: Exploring Business Activity Business Owners

Introduction: Business ownership is divided into the 3 following sectors: – Private Sector – Public Sector – Voluntary Sector

Private Sector: Sole traders Partnerships Limited Liability Partnerships Public & Private Limited companies Franchises

Public Sector: Government departments Government agencies Worker co-operatives

Voluntary Sector: Charitable trusts

Sole Traders: Owned & controlled by one person Most common type of business Found in wide range of activities

Sole Traders: Advantages: – No complicated set-up process – Close contact with customers & employees – All profits retained – Individual satisfaction Disadvantages: – Have to make all decisions – May work long hours – Issues regarding holidays/illness – No legal protection – Unlimited debts – Need to provide most of finance – Need to be jack-of-all- trades

Partnerships: Formed by signing Deed of Partnership Usually found in professional work Deed of Partnership sets out guidelines re share of profits, responsibilities and payments

Partnerships: Advantages: – Share skills & workload – Easier to raise capital – Easier to cope with holidays/illness Disadvantages: – People can fall out – No limited liability – Difficult to borrow large amounts of capital – Difficult to make business decisions – May be disagreements – Profits will be shared

Limited Companies: Have to be registered Owners are shareholders Shareholders elect Board of directors Shareholders can have a say at AGM Shareholders put funds into limited company by buying shares

Franchises: Ready-made business opportunity Established brand and business model Franchisee has to put in money & effort to reap the rewards Franchisor supplies products, business systems, etc Franchisee pays fixed sum and regular payments Franchise is not a form of business ownership

Government Departments: Department for Customs and Revenue Operates on behalf of government Staffed by civil servants Collect taxes, student loans payments and make tax credit payments Aim is to be efficient and ensure fairness

Government Agencies: More independent than government departments Set up by government with responsibility for certain activities Child Protection Agency is one example Funded & accountable to government but free to manage own affairs Set up within tight guidelines

Local Government: Local councils responsible for local services Cover specific areas of the country Give contracts to private companies to run services, e.g. refuse collection Council oversee efficiency of services Supervise other local amenities and services

Worker Co-operatives: A body owned by it’s members Has limited liability Employee must buy a share in the organisation Each member has one vote in making decisions Democratic Members receive share of profits Those who do the work get the rewards Generally small-scale local enterprises

Charitable Trusts: Raise funds & support good causes Create a surplus to use for helping others Surplus occurs when revenue is greater than cost of running charity Managed by trustees Trustees experienced in both charity and business activities Must be registered & produce annual accounts Charities employ paid managers & workers