PowerPoint Guide

The news icon is hyperlinked to a related

article or website

Simply click to access

The film icon is hyperlinked to a related clip

Simply click to access

The discuss icon indicates

suggested point to discuss

The writing icon indicates

written activity or question

time.

Lesson 2 – A business idea

Setting up a business

Lesson objectives

• To understand what the term sole trader and partnership means

• To be able to explain the advantages and disadvantages of a sole trader and a partnership

Keywords Sole trader Partnership Unlimited liability

Starter – page 6

For homework you researched an entrepreneur of your choice. Spend five minutes discussing the entrepreneur you researched with a partner. Your teacher will select students to share their research.

A business idea – Sweet Treats

Maria has been baking special occasion

cakes for her family and friends for the past

3 years. She has decided to turn her hobby

into a business which she plans to open in

the next six months.

Maria will be starting the business on her

own and has decided to call it Sweet

Treats.

Starting a business on her own will mean

Maria is a sole trader.

What is a Sole Trader – page 17

• A sole trader is an individual owning the

business on his/her own.

• Most businesses in the UK are small

businesses. These businesses normally

operate as a sole trader. e.g. hairdressers,

gardeners, plumbers and electricians.

• A sole trader can also employ people – but

those employees don’t share in the

ownership of the business.

Maria has researched the benefits of setting her business up as a sole trader. She has found the following: 1.) It was quick and easy to set up. 2.) She will be able to make all the decisions. 3.) She will keep all the profits her business makes. 4.) There is minimal paperwork involved in setting up this type of business.

Do you think there are any disadvantages for Maria being a Sole Trader?

Sole trader benefits – page 17

A major disadvantage of being a sole trader is the business will have unlimited liability. This means that the business owner is personally responsible for the debts of the business—if the business owes any money, the owner is responsible for paying it.

Sole trader - Disadvantages

More disadvantages of a Sole Trader – page 18

May not have all the skills needed to handle all areas of the business

Making all the decisions can be stressful

Can be difficult to raise finance

Heavy Workload

Would you go into business with your bestie?

Would you go into business with your bestie?

Sat in a business studies lesson, you think of a great idea for a new business.

Rather than setting up the business on your own, you

decide to ask you best friend to get involved.

What would be the benefits of going into business with your best friend, rather than setting up alone?

Partnership – page 18

• A partnership is formed where a business is

started and owned by more than one person.

• Common examples of partnerships are

doctors, solicitors or vets.

• A legal document called a Partnership

Agreement is always recommended and sets

out how the partnership is run and how

profits are divided up.

Partnership: the advantages and disadvantages – page 19

Advantages

• Partners can provide specialist knowledge and skills

• Workload and jobs can be shared

• Each partner can contribute money to the business

• Any losses will be shared between the partners

Disadvantages

• Unlimited Liability

• Decision-making can take longer

• Profits have to be shared

• There may be arguments and disagreements between partners

Sweet Treats – Sole trader or partnership?

Maria is unsure of which type of business she should

be. Should she be a sole trader or a partnership with

her best friend Jenny? What would you recommend

for Maria? Provide reasons for your choice in your

booklet on page 19.

Sweet Treats – Sole trader or partnership?

Maria has decided to become a partnership with her

best friend Jenny.

She thinks Jenny will be able to bring skills and ideas

to the business as well as contribute money towards

paying for things such as equipment.

Plenary

In your computing log record: • Complete the progress box explaining the

progress you have made this lesson. • Identify and explain a RICC skill you have

shown during the lesson.

Homework

Maria and Jenny have asked you to research other cake businesses in the local area. Complete page 7 of your booklet. This will be discussed at the start of you next computing lesson.