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Forms of Business 1 - Coggle Diagram
Forms of Business 1
Certificate of Incorporation-a document that declares a business is allowed to trade as a limited company.
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Co-operative-a business organisation owned by its members, who have equal voting rights.
Articles of Association-a document that provides details of the internal running of a limited company.
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Lifestyle business-a business that aims to make enough money and provide the flexibility needed to support a lifestyle.
Sole trader:Advantages-owner keeps all profits, owner has complete control, simple to set up with no legal requirements, can be flexible and adapt to change quickly.Disadvantages-owner has unlimited liability, independence may be a burden, no continuity if the owner passes away and all staff will have to work very hard.
Franchisors franchising:Advantages-fast method of growth, franchisees are more motivated and it's a cheaper method of growth.Disadvantages-profit shared with franchisees, brand reputation can be damaged and cost of supporting franchisees may be high.
Franchisees franchising:Advantages-get support from the franchisor, set-up costs are predictable and they are lower risk as have already been tried and tested. Disadvantages-profit is shared with franchisor, can be an expensive way to start up and they lack independence and are under strict rules.
Private limited companies:Advantages-limited liability, more capital from shares and owners have tax advantages. Disadvantages-profits are shared between more members, financial information must be published and setting-up costs have to be met.
Partnerships:Advantages-partners can specialise in certain areas, more owners can raise more capital and partners share the burden of running the business. Disadvantages-unlimited liability, have to share profits and partners may disagree and fall out with one another.
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Social enterprises trade with the aim of improving human and environmental well being, rather than making profit for external owners.
Mutual organisation-a business owned by its members who are customers not shareholders. Sleeping partner-a partner that contributes capital and enjoys a share of the profit but takes no active role in the running of the business.
Secondary sector-production involving the conversion of raw materials into finished and semi-finished goods.
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