Business Organisation

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Business Organisation by Mind Map: Business Organisation

1. Sole Trader

1.1. Description

1.1.1. Also known as Sole Proprietor

1.1.2. profit based

1.1.3. Running Business as individuals

1.1.4. Starting Capital: Small bank loans and Family Money

1.2. Advantages

1.2.1. minimal legal formalities

1.2.2. all profits go to owner

1.2.3. Privacy

1.2.4. No conflict of ideas

1.2.5. Owner has full control of business

1.3. Disadvantages

1.3.1. Challenging to compete

1.3.2. Lack of Continuity

1.3.3. Limited capital

1.3.4. Unlimited Liability

2. Partnerships

2.1. Description

2.1.1. Consists of 2 to 20 partners

2.1.2. Banks give loans for starting capital

2.1.3. "Sleeping partners" is a common term for partners who have no say in the business but get a dividend of the profits

2.1.4. Example: Law Firms

2.2. Advantages

2.2.1. Variety of skill sets

2.2.2. Longer continuity

2.2.3. More Finance and start up capital than sole trader

2.3. Disadvantages

2.3.1. Unlimited Liability

2.3.2. Less access to bank loans than Private Limited Companies

2.3.3. If Partner leaves company or deceases, Partnership agreement has to be drawn up again and percentage of company ownership has to be reallocated

3. Private limited Company

3.1. Description

3.1.1. 2 to 50 shareholders

3.1.2. A company that offers limited liability and legal protection for its shareholders

3.1.3. Examples: Warburtons, New Look

3.2. Advantages

3.2.1. Easy to set up

3.2.2. No professional certification required

3.2.3. Only two directors required

3.2.4. share capital can be as little as a dollar

3.3. Disadvantages

3.3.1. Former owner can lose control of company

3.3.2. Does not gain much finance

4. Public limited company(PLC)

4.1. Description

4.1.1. minimum 60000 dollars of shares are put on the stock market

4.1.2. the company is controlled by the board of directors

4.1.3. Finance comes from selling shares

4.1.4. Examples: Apple, Google, GM Foods, Starbucks

4.2. Advantages

4.2.1. Do not have much liability(Limited liability)

4.2.2. Anyone can buy in

4.2.3. Large amounts of money is generated

4.3. Disadvantages

4.3.1. Owners have less control

4.3.2. More Expenses

4.3.3. Income is taxed largely

5. For Profit Social Enterprises

5.1. Cooperatives

5.1.1. Description A form of Partnership whereby the business is run by its members but instead of having 20 members as a maximum, it can have more

5.1.2. Advantages Easy to form No obstruction for membership Limited Liability

5.1.3. Disadvantages Limited resources Disputes and Differences Absence of motivation

5.1.4. Types Financial A financial institution is owned and operated by its members. The goal is to act on behalf of a unified group as a traditional banking service. Housing Housing cooperatives are a form of home ownership. The cooperative generally owns an apartment block and each member is allocated one apartment. Workers Worker cooperatives is a business that is owned and controlled by their members which are the people who work in them. These cooperatives come to exist generally when a business is about to fail and workers fearful of losing their jobs, take over the business and drastically reduce their pay in order for extra funds to run the business Producer This cooperative is where a group of producers collaborate in certain stages of production. This is very common in agriculture Consumer Consumer Cooperative provides a service to its consumers who are also part owners of the business. For example Grocery stores. Individual consumers can become "members", this allows them to purchase groceries at that store for lower prices

5.2. Public Private Enterprises

5.2.1. Description A Public-Private Partnership is a contractual arrangement between a public agency (federal, state or local) and a private sector entity.

5.2.2. Advantages Very high profit High Return on investments Limited Liability

5.2.3. Disadvantages Profit can vary on projects Expensive to Start Contract renegotiation price is very high

5.3. MicroFinance

5.3.1. A type of banking service that is provided to unemployed or low-income individuals. The goal of micro financiers is to give low income people an opportunity to become self-sufficient by providing a means of saving money, borrowing money and insurance.

6. Non Profit Social Enterprises

6.1. Non Governmental Organisation

6.1.1. Description An NGO is any non-profit, voluntary citizens' group which is organized on a local, national or international level. Abbreviation: NGO Not Associated with Governement Pays taxes

6.1.2. Advantages Innovation Considered Ethical Helps people in need Gets Society involved More Funds generated than charity

6.1.3. Disadvantages No profit Unclear Ownership No government donations as they are not associated with government

6.2. Charities

6.2.1. Description An organization set up to provide help and raise money for those in need Examples: CARE International

6.2.2. Advantages Gets Society Involved Money is granted from government Do not pay tax

6.2.3. Disadvantages Less Funds generated than NGOs Unclear Ownership Complete reliability