| Who is a sole trader? And what are the advantages and disadvantages of being one? | A person who sets up their own business. Advantages are that it is easy to set up (just register with HMRC, the owner makes all of the decisions and the owner can decide what to do with any profits made. Disadvantages include it is difficult for the owner to take holiday time, the owner has a lot of responsibility and there is unlimited liability. |
| What is a partnership and what are the advantages and disadvantages of it? | A business owned and operated by two or more people. Owners must register with HMRC. Advantages are responsibility is shared, likely to have more capital to set up as funds are coming from more than one person and wonders may bring new skills to the table. Disadvantages are partners could disagree, complicated for owners to join and leave and unlimited liability for all partners. |
| What is a limited liability partnership? | The multiple owners have limited liability, meaning that the wonders are not responsible for the debts that the business cannot pay (this is an advantage). An LLP agreement must be written and registered with Companies House. |
| What are franchises? | Franchising is when a business sells the right to its name to other people, so they can trade under the same name and format. |
| What’s a franchisee? | The person opening up a new version of the main business. This could be a sole trader, partnership, limited liability partnership or a limited company. |
| What are the advantages and disadvantages of being a franchisee? | vantages are the business is already established so there is less risk, the franchisee benefit from any advertising the franchiser does and the franchiser will give help and support to the franchisee. Disadvantages are there is a higher initial cost, a percentage of ongoing profits made by the business need to be paid to their franchiser and franchisees have less control therefore changes to the format are not usually permitted. |
| What is a franchisor? | The owner of the main business that is selling their way of operating. |
| The advantages and disadvantages of being a franchisor? | Advantages are the franchisor’s business grows without them having to do very much and franchisors are paid for their business idea and continue to get money from an operating franchise’s profits. Disadvantage is the business name could get a bad reputation if the franchisee runs their branch of the franchise poorly. |
| What is Liability? | The responsibility to pay any debts a business may have. |
| What is unlimited liability? | When you are responsible for all the debts a business may have. If this cant be paid through cash, owners must sell personal belongings. Sole traders and ordinary partnerships have unlimited liability. |
| What is limited liability? | Owners only stand to lose what they put into a business. Limited liability partnerships and limited companies have limited liability. |
| What are the 6 sources of capital? | -borrowing from friends and family
-personal savings
-grant
-crowdfunding
-business angels
-loans |
| advantages and disadvantages of borrowing from friends and family | Advantages are quicker, cheaper and more flexible. Disadvantages are it adds stress as you may be worried about paying them back. |
| Advantages and disadvantages of using personal savings? | Advantages are it is reliable, ready and maximises control. Disadvantages are it has low interest rates. |
| What is a grant? And what are the advantages and disadvantages of it? | It is money given by the government organisation. Advantages are it is free money and has a waterfall effect. Disadvantages are it is difficult to receive and time consuming. |
| What is crowdfunding and what are the advantages and disadvantages of it? | Raising small amounts of money from large amounts of people. Advantages are it is fast, brings good feedback, creates loyal customers and is an alternative option. Disadvantages are you don’t always get onto them, it is a lot of work, and unless protected other people can steal your idea. |
| What are business angels and what are the advantages and disadvantages of it? | People who invest into the initial phase of startups in exchange for participation in capital. Advantages are aces to your investor’s sector knowledge and contacts, better discipline and there are no repayments. Disadvantages are it takes longer, you give up a share of your business and there is less structural support. |
| What are loans and hat are the advantages and disadvantages of them? | An amount of money borrowed for a set period with an agreement to repay it. Advantages are guaranteed money for a certain period and interests rates may be fixed for the term. Disadvantages are a lack of flexibility and security has to be oven to the bank over the assents of the business. |
| What’s a business plan? | A document drawn up before a business first opens. It outlines how a business intends to operate, what the business wants to achieve and how the business will be organised and managed. Business plans make it more likely to succeed. |
| What are the 6 sections of a business plan? | About the business
Aims and objectives
Market research
Finances
Marketing and promotion
Future plans |
