Investigating Business – School Shop
I have decided the main focus of the shop will be on Milkshakes & smoothies which are made from fresh fruit as a healthy and tasty option for students. Sandwich wraps will also be sold as an alternative to canteen food. Mission Statement Our mission statement as a school shop is to provide healthy quality food at convenience for students, by enabling them to purchase what they need during school. We aim to sell healthy but tasty food for students and encourage them to eat healthier by offering an alternative to canteen food.
Ownership and Legal issues The ownership of a business is very important because it effects the legal set-up, responsibilities of the owner, work load, stress and holiday. I am going to look at each type of ownership including their advantages and disadvantages so that I can decide which type of ownership will suit my business best. Sole Trader The most common form of a public sector business is a sole trader this type of business is owned by one individual trading by their name or another suitable name. The owner runs the business but employ other people to help. It is straight forward to set up as a sole trader because there are no legal formalities needed. However once a sole trader has set up and become established they do have some legal responsibilities. Sole traders do not have unlimited liability which means that if the business goes bust your personal possessions can be taken to cover the debts.
Advantages Being a sole trader means a lack of legal restrictions; this means a quick set up and no administration costs. The owner doesn’t have to share any profits that they make from the business after tax. The owner is ‘the boss’ so they can make their own decisions about the business, and have more job variety as they can decide which jobs they do within their business. They have more flexibility with their hours. A small scale business such as a sole trader only needs a relatively little amount of capital of start up.
Disadvantages Unlimited liability is the main draw back; this means that they have total responsibility for his or her debts, personal possessions can be taken to cover the debts. They may not find it as easy to raise capital from banks and investors as they would if they were a limited company. ‘The Boss’ has all the responsibility and may have to work long hours to meet tight deadlines if no one else can work extra hours. This means if the business is unsuccessful all debt lies with the sole trader.
Partnership A partnership is a type of business entity in which partners share with each other the profits or losses of the business. These businesses can also be formed easily. The partners normally draw up a partnership agreement, which is where they both own a part of the company, there can be between 2-20 partners. There can be sleeping partners who have a silent share in the business and choose not to be involved with the running of the business.
Advantages The responsibility can be shared between partners allowing individual partners more free time. They can share all decision making between them if they are unsure how to deal with something. Partners can specialise in different functions, so that they have the most effective workforce possible. There are also no legal formalities to complete when starting up the business. Since this business tends to be larger than the sole trader they are in a stronger business to raise money from outside the business.
Disadvantages Disputes can be caused between the partners if they have different opinions which could make the business suffer. Also one partner has a bigger share in the company that could cause conflict. The partnership ends when one of the partners dies, the partnership must be wound up so that the partner’s family can get the money invested back. There is a legal limit of 20 partners in an ordinary partnership so that means that they can’t sell more shares to raise capital. Unlimited Liability (means that if the money you put into the business doesn’t cover your debts then you have to sell your own personal possessions to cover it e.g. House or car.
Limited Partnership A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). Like shareholders in a business the LPs have limited liability which means that they are only liable on debts incurred by the firm. Therefore they can’t lose their own money just the money that has been invested into the business.