WorksheetsLO5 - Factors for consideration when starting up a business
Total questions: 25
Worksheet time: 13mins
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
Identify ONE disadvantage of operating your business as part of a franchise
You have to pay a license fee
Difficult for the business to grow
It is difficult to gain customers
You do not own the business
What type of liability does a sole trader have?
Limited
Unlimited
What type of liability does a partnership have?
Limited
Unlimited
What type of liability does a public or private limited company have?
Limited
Unlimited
Do sole traders and partnerships have to register with HMRC (Her Majesty's Revenue and Customs)?
Yes
No
Why do sole traders and partnerships have to register with HMRC?
So they can decide how profits will be shared
So they can decide how much money should be paid to the franchisor
So they can make sure the right amount of tax is paid
What is a memorandum of association?
Details of the nature, purpose and structure of a public or private limited company
An overview of who is in charge of who
It is part of the business plan
What are articles of association?
Details of the internal rules of a partnership
Details of the internal rules of a public or private limited company
Details of the internal rules of a franchise
What is ONE advantage of using personal savings to start up your business?
No interest repayable
No limit to the amount of money available
Can get the money back if the business fails
What is ONE disadvantage of using personal savings to start up your business?
If the business fails, you do not get your money back
High interest payable
Strict conditions apply in order to obtain the funding
Is borrowing from friends and family to start your business HIGH or LOW risk?
Low risk
High risk
Why is borrowing from friends and family high risk?
High interest payable
The business may fail and if this happens, friends and family won't get their money back
What is the difference between a business grant and a business angel?
A business grant requires any investment money to be paid back but a business angel doesn't.
A business angel requires any investment money to be paid back but a business grant doesn't.
Are you at risk of losing business assets such as machinery or a factory if you do not repay a bank loan?
Yes, the bank can take possession of these assets if you default on the loan
No, the bank can not take possession of these assets if you default on the loan
Identify THREE parts of a business plan
Description of the business
An overview of how the business will operate e.g. sales plan, financial forecast etc
Your education e.g. GCSE grades
Business aims and objectives
Your hobbies and interests
