the main features of different types of business ownership: sole traders, partnerships, private limited companies, public limited companies, franchises, co-operatives, joint ventures and social enterprises

1.2 Business Structure – Business Ownership

Sole Trader 🏪

A sole trader is the simplest form of business. Think of it as a single‑person lemonade stand. The owner runs everything, keeps all the profits, and is personally responsible for any debts. It’s quick to set up and gives full control, but the downside is that the owner’s personal assets (like a car or house) can be at risk if the business fails.

• Full control over decisions.
• All profits go to the owner.
• Unlimited personal liability.
• Easy to start – just register a trade name.

Partnership 🤝

A partnership is like a team of friends running a pizza shop together. Two or more people share profits, losses, and responsibilities. Each partner is personally liable, which means their own money can be used to cover business debts.

1. Shared decision‑making.
2. Profits split as agreed.
3. Joint liability – each partner can be sued for the business’s debts.
4. Requires a partnership agreement.

Private Limited Company (Ltd) 🏢

A private limited company is like a small club where members own shares. The company is a separate legal entity, so shareholders’ personal assets are protected. Profits are shared through dividends, and the company must file annual accounts.

• Separate legal personality.
• Limited liability for shareholders.
• Shares cannot be sold to the public.
• Requires directors and a registered office.

Public Limited Company (PLC) 📈

A PLC is like a big supermarket chain that sells shares to the public on the stock market. It can raise large amounts of capital but must meet stricter regulations, including publishing detailed financial reports and having a board of directors.

1. Shares are publicly traded.
2. Higher regulatory scrutiny.
3. Minimum share capital requirement.
4. Must appoint a chairman and a board.

Franchise 🛠️

A franchise is like buying a recipe from a famous chef. The franchisee runs a business using the franchisor’s brand, products, and support, paying an initial fee and ongoing royalties. It offers brand recognition but limits creativity.

• Brand and business model provided.
• Initial franchise fee + ongoing royalties.
• Strict adherence to franchisor’s standards.
• Limited control over product changes.

Co‑operative 🌱

A co‑operative is a business owned and run by its members, who could be customers, workers, or suppliers. Think of a community garden where everyone shares the produce and the workload. Profits are distributed based on participation rather than investment.

1. Member‑owned and democratically controlled.
2. Profit distribution based on use or contribution.
3. Focus on member benefits over shareholder profit.
4. Often not for large capital investment.

Joint Venture 🤝🏗️

A joint venture (JV) is like two friends building a treehouse together for a specific project. Two or more companies pool resources for a single purpose, share profits and losses, and dissolve once the project ends. Each partner retains its own identity.

• Shared resources and expertise.
• Limited duration – ends when the goal is met.
• Separate legal entity or contractual arrangement.
• Risk and profit shared proportionally.

Social Enterprise 🌍

A social enterprise is a business that prioritises social or environmental goals alongside profit. Imagine a café that uses all its profits to plant trees. The structure can be a limited company, partnership, or co‑op, but the mission is the main focus.

1. Profit used to further a social mission.
2. Can be structured as a company, partnership, or co‑op.
3. Transparent reporting of social impact.
4. May receive grants or impact investment.

Comparison Table 📊