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Forms of Business Ownership PowerPoint Presentation

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Forms of Business Ownership Presentation Transcript

Slide 1 - FORMS OF BUSINESS OWNERSHIP
Slide 2 - Introduction A business is always owned by someone. This can just be one person, or thousands. So a business can have a number of different types of ownership depending on the aims and objectives of the owners. Most businesses aim to make profit for their owners. Profits may not be the major objective, but in order to survive a business will need make a profit in the long term. Some organisations however will be ‘not-for-profit’, such as charities or government-run corporations.
Slide 3 - Key Learning Points What are the different types of business organisation? What are the advantages and disadvantages of each type? What are the implications of the choice of business organisation on key issues such as: Ability to raise finance Control of the business Business aims and objectives
Slide 4 - Main types of business organisation Sole trader Partnership Limited Company (“Ltd”) Private Limited Company (“Pvt. Ltd”) Public Limited Company (“Plc”)
Slide 5 - Sole Trader A sole trader is a business owned by one person The owner makes all the decisions about how the business is run The owner keeps all the profit, but also suffers all the losses of the business
Slide 6 - Examples of sole traders Small shops Small hairdressers Accountants Can you think of any others?
Slide 7 - Advantages of a Sole Trader Cheap and easy to set up Keep all the profits Make all the decisions Personal contact with customers
Slide 8 - Disadvantages of a Sole Trader Unlimited liability (this means that the owner is responsible for all of the debts of the business) Lack of capital can prevent expansion Suffer all losses yourself Business ends when the owner dies
Slide 9 - Partnership Business where there are two or more owners of the enterprise Most partnerships have between two and twenty members though there are examples like the major accountancy firms where there are hundreds of partners
Slide 10 - Advantages of a Partnership Spreads the risk across more people, so if the business gets into difficulty then the are more people to share the burden of debt Partner may bring money and resources to the business Partner may bring other skills and ideas to the business, complementing the work already done by the original partner
Slide 11 - Disadvantages of a Partnership Have to share profits Less control of business for individual Disputes over workload Problems if partners disagree over of direction of business
Slide 12 - Limited Company (“Ltd”) Business owned by shareholders Run by directors (who may also be shareholders) Liability is limited (important)
Slide 13 - Private Limited Company (“Pvt. Ltd.”) A private limited company is where between one and ninety nine people come together and form a business The owners are called shareholders and they invest money in the company The profit is divided up among the shareholders and distributed in the form of dividends “Ltd.” is written after the name of the company The annual accounts are sent to the Registrar of Companies - they are not published
Slide 14 - Advantages of a Private Limited Company Shareholders have limited liability: If the business fails you can only lose the money that you invested in the company. Your own personal wealth cannot be touched. Easier to raise finance Business continues to exist even when an owner dies
Slide 15 - Disadvantages of a Private Limited Company Costly to set up A lot of legal requirements when forming a company Shares cannot be transferred to the general public
Slide 16 - Public Limited Company (“Plc”) Business owned by shareholders Run by directors (who may also be shareholders) Liability is limited
Slide 17 - Advantages of a Public Limited Company The ability to raise larger capital Widening the shareholder base and spreading risk More growth and expansion opportunities Shares are more easily transferable Going public can enhance the options for the founders to exit the business at some point in the future, if they wish to do so
Slide 18 - Disadvantages of a Public Limited Company Costly and complicated to set up as a plc Certain financial information must be made available for public (higher transparency) Shareholders expect a steady stream of income from dividends Increased threat of a takeover
Slide 19 - Thank You
 

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