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1.5.4 Forms of Business - Coggle Diagram
1.5.4 Forms of Business
Key Terms
Co-operative - A business organisation owned by its members, who have equal voting rights
Franchise - A business model in which a business (the franchisor) allows another operator (the franchisee) to trade under their name
Lifestyle business - A business that aims to make enough money and provide the flexibility neede to support a particular lifestyle for the owner
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Limited liability - A legal status which means that a business owner is only liable for the original amount of money invested in the business
Limited partnership - A partnership where some members contribute capital and enjoy a share of profit, but do not participate in the running of the business. At least one partner must have unlimited liability
Mutual organisation - A business owned by its members, who are customers not shareholder
Online business - A business that uses the global communicatios infrastructure of the internet as a trading base
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Private equity company - A business usually owned by privated individuals backed by financial instituions
Public limited company - A company owned by shareholders where the shares can be traded openly on the stock market
Secondary sector - Production involving the conversion of raw materials into finished and semi-finished goods
Sleeping partner - A partner that contributes capital and enjoys a share of the profit but takes no active in running the business
Social enterprise - A business that trades with the objective of improving human or environmental well-being
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Stock market flotation - The proces of a company 'going public' - making shares to the public for the first time
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Unlimited liability - A legal status which means that the owner of a business is personally liable for all business debts
Sole Traders
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Disadvantages
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The owner may struggle to raise finance, as lenders may consider them too risky to offer credit
Independence may be a burden, for example if the owner is ill
The owner and any employees are likely to work very hard, with long hours
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Partnerships
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Advantages
The partnership is easy to set up and run, with no legal formalities
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