Business at Work

Unit 1- Business at work

Businesses exist to produce goods and services. If someone is thinking of starting up their own business or becoming part of an existing business, they would have to have the knowledge of what makes business work successfully and know how to how to apply that knowledge in the particular area of business. For this unit I will be entering and exploring the world of business. For this unit I will encounter and evaluate information provided by certain businesses and actually gather my own information from at least one business. The business I have chosen to study is J Sainsbury's.

There are many types businesses in this world; these include Sole trader, Plc, Ltd, Partnership, Co-op and franchise. These types of businesses are all different from each other. Some of them need just one owner, some have hundreds.

Sole Trader

A sole trader is a one man business. There is just one manager. Although they are the sole manager and owner they can employ staff to work for them. They can employ as many as they want to work for them. A sole trader is self employed, this means they work for themselves, they employed themselves, they for nobody. Sole traders trade with others. They may trade expertise, an example of this would be a business consultant taking on a big job and needing an extra hand just for that job, so this person may employ a person with the expertise he/she needs. Because a sole trader is the sole owner he/she keeps all the profits, unless he/she has any employees. The owner of the business makes all the decisions, he/she will not have anyone telling them what to do. When one wants to set up a sole trader business it is relatively easy. There is little paper work involved because he/she does not need to work out how much of the profit to share out with a business partner. This person can work when they want, but if they don't they wont earn any money! Wages to employees are usually low.

Consultancy, Builders, Market traders, Window cleaners, Restaurant and corner shops are all examples of sole traders.

The disadvantages of sole traders are as follows:

* If you don't work, you don't earn, so it would be wise to just work as much as possible and not take holidays all the time.

* There is more pressure if you are a sole trader compared to working in a corporate business like Bt Cellnet.

* You wont be as well known because its harder to advertise a small sole trader company

* There are no free benefits like a company car.

* The owner of the sole trader company has to deal with all the problems for themselves.

* It is very hard to compete with large companies, but on the good side bigger companies usually charge more than a smaller sole trader company

* Probably the disadvantage of a sole trader company is the fact that it will have 'unlimited liability'. This means the owner is personally responsible for anything that goes wrong. The owner could have their car or house taken away, this is why some businessmen with sole trader companies put there house in their wives name.

* If things are bad the company could get bought out or taken over. This is a bad thing because then the owner has little say in how the business is run.

* It may be difficult to cope with expansion because then you have to start paying people from the money you earn

* There will be a lack of capital and funds to run the company because you are the sole owner and sole capital producer

The advantages of a sole trader are as follows:

* The owner will keep all the profits

* You will earn more than doing the same job but for a corporate company

* The owner makes all the big decisions

* Easy to set up

* No one can tell you what to do

* Wages to employees are usually low

Partnership

A partnership can have from two to twenty owners by law. Usually someone would enter a partnership because they cannot run the business on their own or they do not have all the expertise or enough capital to run the business. A partnership is simple to establish. It involves two or more people running a business. They can choose to trade in the name of the owners or make something up which is relevant to the type business they run. The business is often known as a 'firm'. There is limited liability in the partnership. Most partnerships will operate according to the terms of a partnership. They will have some documents to say how much of the company each person owns and how much each person will get.

The advantages of a partnership are as follows:

* Because there are more people involved than in a sole trader, there are more funds for the company to run on

* Because there are more people involved there is more potential for expertise and specialisation

* There is more backup, they can cover for each other if someone falls ill or goes on holiday

* A partnership does not have to make its accounts available to the public.

* The business is bigger and has more power than a sole trader

The disadvantages of a partnership are as follows:

* Again there is unlimited liability

* There could be disagreements between the partners which would be hard to resolve because they all own the business

* You don't get all the profits like in a sole trader, you have to share the profits between you.

* If someone does something wrong everyone suffers the consequences.

Limited Company (Private limited company or Ltd)

A limited company has to do three things to set itself up. It has to buy a name at 'company's house' this costs around Ј180. It has to write up a 'Memorandum of Association' This includes writing on what they are trading in, how