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1 ST Lesson – UNIT 2. This is soooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo exciting! ’’That’s what I go to school for’’ BUSTED, 2005. You will investigate the setting up of a small business, which provides a service to the local area only .
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1ST Lesson – UNIT 2 This is soooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo exciting! ’’That’s what I go to school for’’ BUSTED, 2005
You will investigate the setting up of a small business, which provides a service to the local area only. Examples of services include providing desk top publishing, printing logos on clothes, running a school shop, offering a cleaning or valeting service, supplying food or other items for special occasions.
Create your own glossary of terms • Service • Liquidity/ solvency • Assets • Liabilities • Revenues • Expenses • Current liabilities • Long term liabilities • Current assets • Fixed assets • Budgeting • Fixed costs • Variable costs
Today – You need to decide what business you are going to do
First Thing • What service are you going to choose? • Where will that service be located (has to be somewhere on the island - local)? • Very briefly who will your target market be? • Briefly why have you chosen this (you will do lots of analysis, so give your opinion from a local person’s point of view)
Business Ownership Business Ownership can be categorised by the following: • Businesses with unlimited liability • Businesses with limited liability • Other forms of business organisation
Businesses with Unlimited Liability • Unlimited liability means that the finances of the business are treated as inseparable from the finances of the business owner • If the business owes £1,000,000, the owner owes £1,000,000 and can be forced by court to pay for it themselves. This means selling their own private houses and cars etc. • There are two types: Sole Trader, Partnership
Sole Trader • An individual who owns and operates their own business • There may be employees but there is only one owner who benefits financially from the business • Despite the financial dangers involved, sole traders are the most common form of ownership adopted by UK businesses • Builders, plumbers and many independent shopkeepers will be sole traders • Disadvantages include little finance available, long hours of work (including difficulty of taking a holiday), difficulties of running a business with ill health
Partnerships • Similar to sole trader but with more owners. Between 2 and about 52 • There are advantages and disadvantages of a partnership owned business. Draw up a table of list what you think they are
Businesses with limited liability • Limited liability means that the legal duty to pay debts run up by the business stay with the business. • The debt is not the owners personally • If the company owes £1,000,000 that the company cannot pay. The courts can order the business to sell all of its assets and if that is not enough the business will then be closed. • The owner will have no personal liability for those debts
Businesses with limited liability • Limited liability companies have to go through a legal process to become a company – process of ‘incorporation’ • 2 types of limited company: Private limited and Public limited
Private Limited Companies • Still relatively small companies • Owned by shareholders but the shares are not listed on the stock market • Shares are sold with the permission of the directors • ‘Ltd’ appears after the company’s name
Public Limited Companies • When a private limited company expands past a share capital of £50,000 it can convert to a ‘Plc’ • This means the company will be ‘floated’ on the stock market, which allows any member of the general public to buy shares • This gives the company access to much more money to then further invest in the company
Other forms of Business Organisation • Co-operatives – These can be owned by the staff of the business e.g. John Lewis/ Waitrose • Not-for-profit Organisation – These include charities
Homework Unit 2 • Briefly describe what your company does? • What type of ownership is it? • What are the advantages and disadvantages of your choice? • Why did you choose this form and not others? • Make sure you have discussed: sources of finance, management, unlimited liability
4, 5, 6, 7 • What are aims? • Why are aims important? • What is your business’ aim? • What is a mission statement? • Why do you have a mission statement? • What is your mission statement? • What are objectives? • Why do you have objectives? • Why have you chosen these objectives? • Who are stakeholders?
