• Created by: Saminn
  • Created on: 08-12-19 22:30

Topic 1.4 - Making The Business Effective

1.4.1 - The options for start up and small business

1 - The concept of limited liability

Unlimitied Liability - A legal obligation on the owner of a business to settle (pay off debts) of the business. If you go bankrupt you will lose personal possessions to pay off debt

Limited Liability - You will not lose personal possessions to pay off debt 

  • For a business owner, limited liability is good as you are able to keep your business deals and paperwork and finances private and if you go bankrupt you do not need to lose personal possessions to pay off debt. Examples of this are private and public limited companies. However with unlimited liability, public companies or people can access finances and information about your business and you can lose personal possessions, if bankrupt

2 - The types of business ownership for start ups

Sole trader - The only owner of a business which has unlimited liability. Their accounts do not have to be published publicaly

Partnership - Where 2 or more individuals run a continuing business for profit

Private limited company definition - A type of privately held, small business entity. This business entity limits owner liability to their shares, limits the number of shareholders from publicaly trading shares

3 - The option of starting up and running a franchise operation

Franchisee -

strengths - Training, equipment, Materials, Back up services, Brand name, exclusive area

Weaknesses - Royaltee fee, Franchise fee, lack of flexibility and long term costs

Franchisor - 

strengths - Growth, Profit, Customer awareness and long term income

Weaknesses - poor perfomance, changing demands and brand


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