Business ownership

Part 2

.2b 1

Private ownership review

Most private businesses are owned by sole traders, partners or are companies. Other alternatives are:

Cooperatives societies which operate for the

benefit of their members (whether customers or workers).

Franchises where a large company allows a

small operator to trade on name in return for share of profits.
1.2b Business ownership Part 1

Cooperatives
Benefits

Each owner has equal share/one vote Profits are shared equally Can have limited liability status

Drawbacks Obtaining finance may be difficult

Decisions by consensus take time Hard decisions may be difficult to make Equality can be hard for good leaders/workers

Workers can decide whether to be owners

1.2b Business ownership Part 1

Franchise
Benefits Drawbacks Share of profit goes to franchisor

Less risky than starting own business Selling a known name Advice and guidance available Owner keeps most of profit

Franchisee must abide by legal agreement Only franchisor products can be sold Success very dependent on popularity of product

1.2b Business ownership Part 1

Public ownership

Term used for enterprises owned and

controlled by the state.

Aim is to provide services needed by

everyone, regardless of income or wealth, eg health and education.

Mainly financed through taxation.

1.2b Business ownership Part 1

Examples of public ownership

Central government departments, eg

Department of Health

Local authorities and councils Public corporations, eg BBC, Bank of

England, British Nuclear Fuels

1.2b Business ownership Part 1

Owner liabilities 1
All owners must:

Produce annual accounts Pay tax on profits

Operate the business within the law Abide by specific agreements (eg Partnership
or Franchise agreement) or trade/professional regulations relating to their activity

1.2b Business ownership Part 1

Owner liabilities 2
Sole traders/partners are personally liable
for debts

Shareholders in companies can lose

investment if business fails

Company directors can be held personally

liable in law in certain circumstances

Franchise operators may have to meet specific

sales targets.

1.2b Business ownership Part 1

Factors which influence changes of ownership

More capital required to finance expansion or

extend operations

More skills/abilities required

Greater security/less risk required Change of business activity Changes in legal regulations and requirements

1.2b Business ownership Part 1