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Types of Business Structures Explained

The document outlines different business structures including sole traders, partnerships, franchises, and social enterprises. It defines an entrepreneur and distinguishes between unincorporated and incorporated businesses. Each business type has its own advantages and disadvantages, with specific examples provided for partnerships and franchises.

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Mariyam Ifham
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19 views4 pages

Types of Business Structures Explained

The document outlines different business structures including sole traders, partnerships, franchises, and social enterprises. It defines an entrepreneur and distinguishes between unincorporated and incorporated businesses. Each business type has its own advantages and disadvantages, with specific examples provided for partnerships and franchises.

Uploaded by

Mariyam Ifham
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

03 ) SOLE TRADER , PARTNERSHIPS , SOCIAL ENTERPRISE & FRANCHISE

WHO IS AN ENTREPRENEUR ?

A PERSON WHO INVEST AND STARTS A BUSINESS BY BEARING RISK , ORGANIZING


THE RESOURCES , WITH A INNOVATIVE IDEA IS AN ENTREPRENEUR.

B → BEARS RISK
O → ORGANIZERS
I → INNOVATIVE
D → DECISION MAKER

Based on the legal form businesses are of 02 types


1.​ Unincorporated → a business where there is no legal difference between the
business and owner.

2.​ Incorporated → a business where there is a legal difference between owner and
the business entity

Sole trader / sole proprietorship

-​ Its a 1 owner business (single owner )


-​ Unlimited liability and no continuity
Advantage Disadvantage

All the profit belongs to the owner All the losses are beared by the owner

Independent decision making Independent decision can lead to


failure

Full control and easy to startup (no Hard to raise finance , no continuity &
legal forms ) unlimited liability .
PARTNERSHIP

A partnership involves two or more people joining together to own a


business
●​ They are relatively easy to set up with relatively few legal formalities
●​ Partners may choose to draw up a deed of partnership which states
the formal rights of each partner including
○​ The amount of capital contributed by each partner
○​ How profits or losses are shared amongst partners
○​ The procedures for dissolving the partnership and taking on
new partners
○​ The level of control each partner has​

●​ Examples of business that commonly operate as partnerships include


lawyers, accountants and doctors
FRANCHISE

★​ Franchising is a business format in which an individual (franchisee) buys the


rights to operate a business model, use its branding and software tools and
receive support from a larger company (franchisor). The franchisee will pay both
an initial lump sum plus ongoing royalty fees.

★​ The franchisee is usually the owner of a private limited company.

★​ The business is operated under the franchisor’s established system and training ,
marketing support and ongoing assistance are provided .
★​ Ex - KFC , MC donalds
SOCIAL ENTERPRISE
A social enterprise is a business that has the primary purpose of creating social
or environmental impacts, in addition to generating profits.

Social enterprise can take different forms ;


Co operatives → have a social mission
Charities → not for profit organizations

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