Business Market

What is market?
• Refers to a group of people with economically
important needs and demands which opens
entrepreneurial or business opportunities to
everyone.

• Is a socially, politically and economically

organized people whose needs and demands
are based on tradition, culture and technology.
Introduction

A person wanting to set up a

business has to consider what
legal form organization should
take.
 Factors influencing this decision are:
• How many owners the business is going to have?
• What is the tax position of the business?
• Can the owner take the risk of unlimited ability?
• Does the owner want all the business profits?
• Is there a complete privacy in the affairs of the
business for the owner?
• In the case of the owners illness or death what will
happen to the business?
THE 3 LEGAL FORMS
OF BUSINESS
1. Sole proprietorship/trader
2. Partnership
3. Corporation
THE 3 LEGAL FORMS
OF BUSINESS
• Characteristics
• Advantages
• Disadvantages
What is a SOLE/PROPRIETORSHIP
TRADER?
Characteristics:
• Owned by only 1 person who is
responsible for the whole business
• The owner can assume the role of
manager, finance officer and worker
Advantages:
• Profits - they are kept by the owner. There are no
other shareholders so the profits don't have to be split.

• Easy to run - every business is difficult to run

successfully but sole trader is the easiest form of
business.
• Easy to establish - hardly any complicated forms or
procedures. Some of the other legal forms have to
have legal forms completed before the business can
start.
Advantages:
• Total control - the owner is in charge of the
business. He/she does not need to discuss their
decisions with any other owners. They have
total control of the business.
• Privacy
• Flexibility - very flexible working hours as sole
trader is its own boss e.g. Rather than working
on Friday he/she decides to work on Sunday
instead.
Disadvantages:
• Illness - If ill the business might be forced to shut
down stopping the income and profits
• Unlimited liability - if the things don’t work out as
planned the sole proprietor could lose all its
investment.
• Lack of continuity - because the owner is the
business there is no guarantee that the business will
carry on running once the owner decided to stop.
Disadvantages:
• Long hours - long hours may be required of
the owner to keep the business afloat.

• Difficulty in raising capital - small

businesses find it hard to find a start up
capital and usually the owner might have to
put his/her house as an insurance for capital
borrowed
What is PARTNERSHIP?
Characteristics:
• A business owned by two or more people
• 2 persons have combined resources and
skills
• Any of the 2 can act financer or manager
• They can share responsibilities and roles in
the business operations
Advantages:
• More capital is available than for the
sole trader
• Better use of business expertise
because each partner can concentrate
on what they are good at
• There is a check and balance among
partners only
What is CORPORATION?
Characteristics:

• 2 or more persons own the business

• The owners of the
corporation/company are called
shareholders
• Shares or stocks
Advantages:
• Business risk are shared by many
people
• If business is good growth is
maximized due to bigger capital
• Burdens in the operations are shared
by various specialized individuals
Disadvantages:
• The complex organizational set-up
impose a long line of more
expensive ways of control

• Complex decision making process

will delay operation
 FILL THE TABLE

LEGAL FORMS OF CHARACTERISTICS ADVANTAGES DISADVANTAGES

BUSINESS

SOLE TRADER/
PROPRIETORSHIP

PARTNERSHIP

CORPORATION