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Sole traders, Partnerships, and Social Enterprises - Coggle Diagram
Sole traders, Partnerships, and Social Enterprises
Entrepreneurs :
people who set up businesses and take risks.
Organisers:
they organise factors of production, buy, hire resources (materials, labour -
people employed in a business/used in production
, equipment, etc.), give instructions, make arrangements, setting up system.
Innovators (someone who introduces changes & new ideas):
try to make money out of a business idea.
Risk takers:
risk losing any money they into the business or more.
Decision makers:
they need to take decisions regarding: product design, choice of production method, how to raise finance, wages, prices, etc.
2 types of businesses
Incorporated:
seperate legal identity from that of its owners.
often called limited companies.
owned by shareholders.
Unincorporated:
no legal difference between the owner & the business.
carried in the name of the owner
owned by a person/ small group of people
Sole trader:
a business by a single person who has unlimited liability -
owner of a business is personally liable for all business debts
.
Disadvantages:
unlimited liablity -> responsible for the debts of the business.
more responsibility -> relies heavily on their ability to make decisions -> may work long hours & have limited holiday, as there is no one to cover them.
limited sources of resources.
Advantages:
profit -> no need to share.
making decisions -> without consulting others.
own business -> free to choose.
independence -> can work at own pace set.
easy to set up -> few formalities -> therefore cheaper to set up.
have a job -> may not be able to find one elsewhere.
Partnerships:
an unincorporated business that is owned by 2 to 20 people that has unlimited liability.
Limited partnership
audits: official examination of a company's financial records in order to check that they are correct.
limited liability -
business owner is only liable for the original amount of the money
.
provide capital but take no part in the management of the business.
Unlimited partnership
Disadvantages:
partners may disagree -> time used up in discussion -> decisions take longer.
profits will be shared.
some partners may not work hard as others -> lead to fights.
continuity -> effect on surviving partners if one leaves.
unlimited liability.
Advantages:
raise more capital.
extra skills -> may be to specialise in aspects of business to provide a better service.
more people to make decisions -> more approach to running the business -> more ideas which may lead to success.
shared responsiblity & more flexibility -> reduce pressure on individuals -> debts/losses can be shared.
easy to setup -> may involve no legal requirements -> deed of partnership -
binding legal doument that states formal rights of partners
.
Social enterprises:
businesses that aimes to improve human or environmental well being.
have a clear social and/or environmental mission.
generate most of their income through trade or donations.
reinvest most of their profits.
are majority controlled in the interests of the social mission.
are accountable and transparent.
Different forms
Charities:
organisations that give money, help, or goods to people who are poor, sick or in need
Cooperatives
- *company, factory or organisation in which all the people working there own an an equal share of it.
Consumer cooperatives:
cooperatives that is owned by its customers.
Worker cooperatives:
are businesses in which its employees share ownership.
Retail cooperatives:
people work together to assert their purchasing power.