154 STUDENT Worksheet

1.5.
4 Forms of
Business
Starter
 Have you ever been to the dentist?
 Have you ever needed to send a pet to the vet?
 Have your family ever used a solicitor (maybe to help them buy a
house)?
• What do these 3 types of business have in common?
__________________________________________________________________________________
__________________________________________________________________________________
Write a definition of business forms here:
__________________________________________________________________________________
__________________________________________________________________________________
Write a definition of limited liability here:
__________________________________________________________________________________
__________________________________________________________________________________
1
Unlimited liability
• If a business gains debts, goes bust or is sued this could be a
problem for the __________________________________
• If there is no money in the business then the owner would need to
pay using their own _____________________________, and finances, they
may even have to reportage their home or even sell their car to pay
the debts
• This is unlimited ____________________________________
• Watch the video can you now explain limited and unlimited liability?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
_________________________________________________________________________________
2
Growth of a business
Sole trader
• Business owned by one owner, but they can take on staff
• Also known as a sole proprietor
• Can employ people but they will not be involved in control of

business
• Tend to be small businesses
• Has unlimited liability
• Examples include;
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
3
Research: Sole trader
Watch the video then in pairs make a list of possible sole trader jobs and
professions
Share these with another pair until your class builds up a large list
How many of these types of businesses would be in trouble if they
remained a limited liability company? To answer this consider if they are
likely to accrue large debts or be sued.
List of sole trader jobs
Pros and cons of sole traders
Advantages Disadvantages
• Easy to set up – no • Unlimited liability, this

complicated forms means that if the business
• Make decisions quickly has financial difficulties the
• Less capital needed sole trader could lose their
• All profits kept by the owner own assets like their
• Can offer personal attention savings, house or car
to customers • Difficult to raise money –
• Don’t have to make any seen as a risk
information about the • Don’t have economies of
company public scale (buying in bulk)
4
Partnerships
• _________________ partners share the risks, costs and responsibilities
of being in business
• The profits and gains of the partnership are shared among the
partners unless the partnership ____________________________ states
otherwise
• Each partner is personally responsible for paying ________________ on
their share of the ____________________ and gains
• Partners raise finance for the business out of their own
___________________, cash or with __________________
• The partners themselves usually manage the business, although
they can delegate certain responsibilities to _____________________
• It is possible to have _______________________ partners who contribute
capital investment to the business but are not involved in running
the business
5
Research: partnerships
• Partnerships tend to be groups of experts who can all work in a

practice together
• For example a dentists practice may be a group of dentists who

have started the business as a partnership
• Carry out some research and create a list of likely partnership

professions
• Also find out what an LLP is - it is outside the scope of you’re a

Level but important to know
List of partnership professions
Pros and cons of partnerships
• Easier than a sole trader to • Unlimited liability

raise extra capital, as • Partners may have
partners all have their own disagreements about;
sources of finance e.g.
savings
• Profits go to the partners,
which is very motivating
• Smaller business means
good working relationships
• No need to make public any
information
6
Private Limited Company (Ltd)
• LTDs can expand and grow by selling more shares, giving the
business more ____________________________________
• _________________________________ can buy shares in the business, this
will make them part owners
• Shares cannot be bought by the _________________________
• LTDs owners have full _______________________ of who buys the shares
• LTDs have the benefit of limited __________________________, those that
own or buy shares in the business can only lose their original
_______________________________, their private assets remain safe
Research: Private Limited Companies
• Limited companies tend to be businesses where having limited

liability is critical.
• For example a scaffolding company could be worried about a pole

falling on the head of someone underneath and being sued. Limited
liability gives the owners some protection over their personal
finances
• Carry out some research and find 9 limited liability businesses in

your local area.
7
Pros and cons of private limited companies (ltd)
• Limited liability • Accounts of the company

• Can raise extra capital by cannot be kept private, they
selling more shares, to have to be available for the
friends and family, making it public to see
easier to expand • More complex and expensive
• Can employ managers to run to set up - more
the business if the owners administration
don’t want to do it
themselves
Franchising introduction
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
What is a franchise?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
8
Franchising vocab
Franchisee_____________________________________________________________________
Franchisor______________________________________________________________________
Cost of a franchise
When a business person decides to buy a franchise they will need to take
into consideration the costs:
• Cost of buying the franchise rights at the start
• Monthly royalty payment to the franchisor
9
Research: franchising
• Have a look at the franchising websites on the _____________________
• Choose a franchise and find out how much it would cost to
____________________
• Include any yearly _____________________ and the cost of premises and
staff
Franchising pros and cons
• The franchisor chooses the • Franchisees do not have the

franchisees carefully, they freedom of running their own
know what characteristics business
make a successful • Bound by rules e.g. Can’t
franchisee vary product or price
• The franchisor decides how • Franchisee pays a
much money the franchisee percentage of profits in
must invest in the business royalties
10
Social enterprise
• A social enterprise is a business that trades for
social and/or environmental purposes.
• At the core of a social enterprise is the objective to help society or
the planet in some way, they are not ______________________ (which rely
on donations)
Lifestyle business
• The aim of a start-up is to grow big enough to provide a return of
investment for _________________________________
• The aim of a lifestyle business is to provide great quality of life for
the owner
• ___________________________ start a business hoping to sustain a certain
level of income
• They may start a business doing _____________________ they really
enjoy
• It allows an entrepreneur to live how they want and still run a
business
11
Online business
• Easy to set up, for example, an eBay business could be up and
running in an hour after some online form filling
• PayPal used to process payment transactions from customers
• Wix can be used for small business owners to quickly build a shop
and a website
• Online businesses can be managed by the owner from their home
• It means the business is open via the website 24/7, what does this
mean for international customers?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
12
Growth to PLC and stock market flotation
• Once a limited ______________________ has grown in size and needs
further ___________________________ which it cannot get from its current
pool of owners it may consider becoming a ___________________________
• If it intends to ____________________________ shares on the stock
market, so they can be bought by anyone, it will need to first issue a
prospectus where ______________________ investors are invited to
purchase share before _______________________
• Going public is expensive
– Lawyers to draw up _______________ paperwork
– Publications
– Advertising and _________________
– Company must have ___________________________ in share capital
13
14
15

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154 STUDENT Worksheet

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1.5.

 Have you ever been to the dentist?

 Have you ever needed to send a pet to the vet?

• What do these 3 types of business have in common?

Write a definition of business forms here:

Write a definition of limited liability here:

• If a business gains debts, goes bust or is sued this could be a

problem for the __________________________________

• If there is no money in the business then the owner would need to

pay using their own _____________________________, and finances, they

• This is unlimited ____________________________________

• Business owned by one owner, but they can take on staff

• Also known as a sole proprietor

• Can employ people but they will not be involved in control of

• Tend to be small businesses

• Has unlimited liability

How many of these types of businesses would be in trouble if they

remained a limited liability company? To answer this consider if they are

likely to accrue large debts or be sued.

List of sole trader jobs

Pros and cons of sole traders

• Easy to set up – no • Unlimited liability, this

• _________________ partners share the risks, costs and responsibilities

partners unless the partnership ____________________________ states

• Each partner is personally responsible for paying ________________ on

their share of the ____________________ and gains

• Partners raise finance for the business out of their own

___________________, cash or with __________________

• The partners themselves usually manage the business, although

they can delegate certain responsibilities to _____________________

• It is possible to have _______________________ partners who contribute

capital investment to the business but are not involved in running

• Partnerships tend to be groups of experts who can all work in a

• For example a dentists practice may be a group of dentists who

• Carry out some research and create a list of likely partnership

• Also find out what an LLP is - it is outside the scope of you’re a

List of partnership professions

Pros and cons of partnerships

• Easier than a sole trader to • Unlimited liability

business more ____________________________________

• _________________________________ can buy shares in the business, this

will make them part owners

• Shares cannot be bought by the _________________________

• LTDs owners have full _______________________ of who buys the shares

• LTDs have the benefit of limited __________________________, those that

_______________________________, their private assets remain safe

Research: Private Limited Companies

• Limited companies tend to be businesses where having limited

• For example a scaffolding company could be worried about a pole

• Carry out some research and find 9 limited liability businesses in

• Limited liability • Accounts of the company

into consideration the costs:

• Cost of buying the franchise rights at the start

• Monthly royalty payment to the franchisor

• Have a look at the franchising websites on the _____________________

• Choose a franchise and find out how much it would cost to

• Include any yearly _____________________ and the cost of premises and

Franchising pros and cons

• The franchisor chooses the • Franchisees do not have the

• A social enterprise is a business that trades for

social and/or environmental purposes.

• At the core of a social enterprise is the objective to help society or

• The aim of a start-up is to grow big enough to provide a return of

_, cash or with