LO5 - Factors for consideration when starting up a business

What is a sole trader?

• A business that has shareholders (family and friends)

• A business that has two or more owners

• A business that has one owner

• A business that sells shares to the general public

Which TWO of the following are examples of a business that would be run by a sole trader?

• Plumber

• Estate Agents

• Electrician

• Subway

Select two advantages (benefits) of been a sole trader

• Easy to set up

• Easy to gain customers

• Limited liability

• Low start up costs

Select TWO disadvantages (drawbacks) of being a sole trader

• Unlimited Liability

• Long hours and no holiday or sick pay

• Decision making is time consuming

• Potential for disagreement and conflict

How many individuals are typically involved in a partnership?

• 1

• 2-20

• 2-15

• 2-100

Select ONE example of a business that would be run as a partnership

• McDonalds

• Self-employed mobile hairdresser

• Solicitors / Law firm

• Supermarket e.g. Aldi or Sainsburys

Identify TWO advantages of being in a partnership

• Limited business and industry experience required as the business model already exists

• Responsibility and risk are shared between the partners

• Individuals involved in the business bring different skills and experience

• Easier to gain customers

Identify TWO disadvantages of partnerships

• Unlimited liability

• Difficult for the business to grow as there's a limit to the amount of work that can be done

• Decision making is time consuming as everyone needs to be consulted

• Banks are less keen to lend to partnerships as they see them as more of a risk

Select a real life example of a franchise

• Waitrose

• Nike

• Starbucks

• Beats by Dr. Dre (owned by Apple)

Identify ONE advantage of operating your business as part of a franchise

• Greater investment from partners

• Easier to gain customers as the brand is already well known

• Can choose your own working hours and when you go on holiday

• You are able to make all your own decisions