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Exploring Business Ownership and Service Development: Unit 2 Insights

This lesson focuses on the foundational aspects of setting up a small business that caters to local services. You'll explore business ownership types, such as sole traders and partnerships, and understand the concepts of limited and unlimited liability. Key terms including assets, liabilities, and budgeting will be defined, and you'll be tasked with developing a business plan that outlines your chosen service, target market, and business structure. This foundational knowledge will empower you to consider vital financial responsibilities and stakeholder roles in your entrepreneurial journey.

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Exploring Business Ownership and Service Development: Unit 2 Insights

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  1. 1ST Lesson – UNIT 2 This is soooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo exciting! ’’That’s what I go to school for’’ BUSTED, 2005

  2. 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.

  3. 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

  4. Today – You need to decide what business you are going to do

  5. 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)

  6. Business Ownership Business Ownership can be categorised by the following: • Businesses with unlimited liability • Businesses with limited liability • Other forms of business organisation

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. Ownership

  16. 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

  17. 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?

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