Professional Documents
Culture Documents
Sole Trader, Partnership Etc
Sole Trader, Partnership Etc
• Poor management –
• Over expansion –
1
Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)
Platinum Business Academy
No 106 SDS Jayasinghe Mawatha
Kohuwela, Nugegoda Ordinary Levels
Entrepreneur
• Entrepreneur is an individual who has the ability to combine land, labour and capital
to turn a business idea into reality.
• Entrepreneur is called enterprise.
Qualities
• Innovation- to come up with new ideas. e.g.- Steve Jobs, Ratan Tata.
• Understanding of the market- an entrepreneur must know what his customers want.
• Resilience- determination to never give up.
• Passion- you must always like what you are doing.
• Risk Taking- he must not be a risk averse person.
• Reduce unemployment – new businesses will often create jobs to help reduce
unemployment.
• Increase competition – when more businesses exist there will be more competition
and therefore consumers will benefit by having greater choice at affordable prices.
• Increase output – the GDP of the economy will improve.
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Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)
Platinum Business Academy
No 106 SDS Jayasinghe Mawatha
Kohuwela, Nugegoda Ordinary Levels
• Benefit society – entrepreneurs may create social enterprise which
benefits society other than jobs and profits.
• Can grow further – all large businesses were once small, as they continue to grow
government benefits as more taxes can be collected.
Business plan
This is a document containing the business objectives and important details about the
operations, finance and owners of the new business.
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Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)
Platinum Business Academy
No 106 SDS Jayasinghe Mawatha
Kohuwela, Nugegoda Ordinary Levels
Choosing a legal structure.
Sole Trader
A business in which one person provides permanent capital and, in return has full control and
enjoys all the profit. This form of organization is only suitable for small, simple businesses
with few employees and little capital.
Benefits:
• Quick & easy to set up – business can always be transferred to a limited company
once launched
• Simple to run – owner has complete control over decision-making
• Minimal paperwork
• Easy to close / shut down
Limitations
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Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)
Platinum Business Academy
No 106 SDS Jayasinghe Mawatha
Kohuwela, Nugegoda Ordinary Levels
Partnership.
2-20 persons can put up capital and start a business called PARTNERSHIP. There will be a
partnership agreement knows as the Partnership deed and the business will have to be
conducted accordingly. The deed will usually cover following aspects of a business.
• How profits and losses are to be shared. For eg: if there are three partners putting in
$10000, $20,000 and $50,000, respectively, then profits will be shared among them in
the same proportion as the capital invested, that is
• How much money can be withdrawn. It is important to have rules about this sp that
the business can continue to grow as a result of profits being reinvested.
• Arrangements about holidays, time off and illness.
• How long the partnership is expected to last.
• Getting rid of a partner or taking another partner.
Benefits.
Limitations.
1) Franchises.
Definition: A business that uses name, logo and trading systems of an existing successful
business.
The franchisor will have to pay an initial payment for franchise agreement (Start-up fee) and
also yearly royalty payment based on a % of sales. Franchisor has developed a successful
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Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)
Platinum Business Academy
No 106 SDS Jayasinghe Mawatha
Kohuwela, Nugegoda Ordinary Levels
business and is willing to allow others to trade under his name. The key support
franchisor offers to the franchisee are as follows.
• Does not require significant investment as the franchisee will bear the cost.
• Can collect royalties and the start up fee which is a big income from each franchise.
• Franchisee will have local knowledge which can ensure success to the franchisor.
• Can expand very quickly and cover wide geographic areas.
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Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)
Platinum Business Academy
No 106 SDS Jayasinghe Mawatha
Kohuwela, Nugegoda Ordinary Levels
Limited liability companies.
1. Memorandum of association:
This sets out the constitution and gives details about the company. The following details must
be included.
2. Articles of Association
This document deals with the internal running of the company. The article includes details
such as:
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Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)
Platinum Business Academy
No 106 SDS Jayasinghe Mawatha
Kohuwela, Nugegoda Ordinary Levels
Private limited companies.
A small to medium sized firm that is usually family owned. This type of company cannot
issue shares to the public (Stock market). The name of the company has to end with “Ltd”
Benefits.
Limitations.
• To convert private limited to public, you should issue shares to the public (stock
market) and the company name must end with the word “plc”.
• When a private limited company expands to a point of having share capital of more
than £50000, it can convert to a public limited company.
Benefits
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Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)
Platinum Business Academy
No 106 SDS Jayasinghe Mawatha
Kohuwela, Nugegoda Ordinary Levels
Limitations
Joint Venture
Definition: Two or more businesses agree to work closely together on a particular project and
create a separate business division to do so. E.g.: herohonda, Sony Erickson, Fiat and
GAC
Benefits:
• They allow companies to enjoy some of the advantages of mergers, such as higher
turnover, without having to lose their identity.
• Each business can specialise in aspects of the venture to suit its expertise.
• Takeovers are expensive. Takeovers often incur heavy legal and administrative costs.
• Mergers and takeovers are often unfriendly. Most joint ventures are friendly. The
companies commit their funds and share responsibility. This may help to improve the
success of the venture.
• Competition may be eliminated. If companies co-operate in a joint venture they are
less likely to compete with each other.
Limitations.
• Some joint ventures do not work out. There may be control struggles. For eg: who
should have the final say in a 50:50 joint venture?
• Disagreements may occur about the management of the joint venture. As with any
joint venture there may be different views on which direction to take.
• The profit from the venture capital between the investors. This obviously reduces the
profit potential.
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Sameer Anis
CIMA Passed Finalist, Post Graduate Diploma (University of West London)