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4.1 TYPES OF BUSINESS ORGANISATION (STARTING A BUSINESS (An entrepreneur…
4.1 TYPES OF BUSINESS ORGANISATION
STARTING A BUSINESS
An
entrepreneur
combines and organizes resources in a
firm
for the purpose of carrying out productive activity or business. Firms are therefore also known as
business organisations
DO I HAVE ENOUGH MONEY?
Money invested in long-lived man-made resources such as premises, machinery and other equipment is called
fixed capital
money in a firm tied up in stocks of finished and unfinished products and used to pay day-to-day running costs, including wages and bills for electricity and telephones, is called
working capital
if the entrepreneur is unable to raise enough money, they would find investors and consider starting a
partnership
or a
limited company
CAN I MANAGE MY BUSINESS ALONE?
starting a business alone can spread the heavy workload and bring people with different skills into the business
workload
working long hours
limited holidays
keep accounts
develop a market strategy
recruit and manage staff
consider minimum wage and health and safety laws
ensure premises complies with planning regulations
place orders for tools and building supplies with other producers
DO I WANT TO SHARE OWNERSHIP AND PROFITS?
no
sole trader
yes
not enough
money
time
energy
skills
investors
business decisions
profits
AM I PREPARED TO RISK EVERYTHING I OWN?
limited liability
reduces the risk of running a business and therefore helps to encourage entrepreneurship and new business start-ups in an economy
seperate legal identity
from business
in the event of a business failure, they will only lose the amount of money or capital they invested in the their businesses. they cannot be held responsible for any business debts.
the business organisation and not the individual entrepreneur will be liable for any injury to a third party as a result of the activities of the business
unlimited liability
no separate legal identity
from business. the entrepreneur and the business are the same under the law
in the event of a business failure, they will
not
only lose the capital they invested but all their savings and possessions in order to repay all the business debts
opposite of above
SOLE TRADER