Business ownership - spider diagram

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  • BUSINESS OWNERSHIP
    • Sole trader - A business owned and run by one person
      • Advantages
        • Cheap and easy to set up
        • All of the profit goes to you
        • Highly motivating because you are the boss.
      • Disadvantages
        • Unlimited liability
        • not easy to get finance ( loans )
        • Hard work and long hours
        • Difficult to find cover when you are ill or on holiday.
        • A lot of pressure
    • Partnership - A business owned and run by two more more people
      • Advantages
        • Still relatively simple to set up
        • Shared responcibility and work load
        • More skills coming into the business
        • 2 or more people putting money in
      • Disadvantages
        • Unlimited liability
        • You have to share profit
        • You don't have completes control
        • Creates conflict if you disagree
        • If one of the partners die then the business has to be shut down
    • Private limited company ( plc)
      • Advantages
        • Limited liability
        • Able to raise large amounts of finance
        • Offers some protection from takeover
      • Disadvantages
        • More legal control on business.
        • Can't sell shares to the general public.
        • Have to publish your accounts each year.
    • Public limited company
      • Advantages
        • Limited liability
        • Able to raise large amounts of finance
        • Can generate publicity for the business
      • Disadvantages
        • The business is vulnerable to takeover
        • Share price is determined by market forces (demand/supply)
        • Have to publish your accounts every year
  • Unlimited liability - in law, the owner and the business are seen as the same thing. if the business runs up a debt, then the owner is fully responsible for that debt, even if that means selling their own assets to pay off that debt.
  • Limited liability - The business itself is it's own legal entity. Any debt that the business runs up is owed by the business itself and is not the responsibility of the stakeholders. All the stakeholders can lose is what they had put into the business in the first place

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