Types of business
Sole trader
A sole trader is a business owned by one person. Examples of sole traders are hairdressers, butchers, and electricians.
Sole traders can only raise limited finance. They will receive the money from family and friends or their own savings, or they might be able to get a bank loan, if the bank likes the sole trader鈥檚 business plan.
| Advantages | Disadvantages |
| Keeps all the profits they make | Takes on all the risk of starting the business |
| Can run the business as they see fit | Is personally responsible for any losses and debts |
| Makes all the key decisions themselves | Can only raise limited finance |
| Takes on all responsibility and workload |
| Advantages | Keeps all the profits they make |
|---|---|
| Disadvantages | Takes on all the risk of starting the business |
| Advantages | Can run the business as they see fit |
|---|---|
| Disadvantages | Is personally responsible for any losses and debts |
| Advantages | Makes all the key decisions themselves |
|---|---|
| Disadvantages | Can only raise limited finance |
| Advantages | |
|---|---|
| Disadvantages | Takes on all responsibility and workload |
Partnership
A partnership is a business set up by more than one individual. Partnerships can have 2-20 partners. Examples of partnerships include estate agents, doctor and dental practices, and lawyers.
| Advantages | Disadvantages |
| Different partners can bring different skills to the business | Partners may disagree about the future direction of the business |
| Workload and responsibility is shared | Profits must be shared between 2-20 people |
| More partners means a partnership can raise more money than a sole trader | Partners are personally responsible for any losses and debts |
| Advantages | Different partners can bring different skills to the business |
|---|---|
| Disadvantages | Partners may disagree about the future direction of the business |
| Advantages | Workload and responsibility is shared |
|---|---|
| Disadvantages | Profits must be shared between 2-20 people |
| Advantages | More partners means a partnership can raise more money than a sole trader |
|---|---|
| Disadvantages | Partners are personally responsible for any losses and debts |
Non-profit making organisations
Not all businesses are about making a profit - some aim to make a difference or provide a service. These can include charities and community groups.
A charity is an organisations set up for a specific cause. Charities receive money from donations and sales in charity shops. All money goes to help the specific cause.
Examples of charities include Oxfam, Save the Children and Cancer Research UK.
Community organisations exist to provide a service for people. All of the profit goes back into the organisation. Examples of community organisations include rugby or golf clubs.