Explanations Of Types Of Business And Their Advantages Commerce Essay

The cognition of types of concern is merely rudimentss. To go a successful concern adult male you need to cognize everything about concern and besides must hold abilities like defying force per unit area, active determination devising, client service and covering with fiscal issues.

A exclusive bargainer concern is owned by one individual and can be started up by a little capital. Let ‘s move to the 2nd type of concern which is Partnership. It is owned by two or more people and is a fast growth concern but the problem with this concern is that everybody wants to be in control and hence more struggles. The 3rd type of concern is Limited Companies. It is run by the managers of the company and owned by the stockholders but the stockholders most of the times do non affect in running of the company and hence if there ‘s a loss the company has to retrieve it alternatively of the single members/employees. The last type of concern is franchises ; franchises are set up on a accredited understanding by one individual or a group of people. The franchises have the right to sell goods utilizing the name of a celebrated trade name with the licence of the trade name. The chief disadvantage of a franchise is that you can non present any merchandise of your ain and besides the net income has to be divided between franchises and franchisor ( merely for their trade name ) .

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In decision to the research carried out, Sole bargainer is the most dependable type of concern for get downing up a new concern.


This study is being written to Mr Joe Gillis by the fiscal manager of the TRS Company Mr Awais Bin Khalid. Mr Joe wants to get down a little publication concern and needs advice on type of concern he should get down with. This study covers the pros and cons of different types of concern and which type of concern Mr Joe should accommodate for get downing his concern. Besides admiting the types of concern every enterpriser ( the proprietor of concern ) has to explicate a program depending on clip period of concern such as long term concern and short term concern. Another of import thing that should be accounted while get downing up a concern is the location of the concern. As Mr Joe is get downing a publication concern he should take a location that has a concern environment and it would be even better if he set up his concern in an country that has other printing imperativeness that would supply him with more clients as the country is already centre of printing concern but that would besides give him more competition. While maintaining all these things in head an enterpriser must besides possess the passion for the field he/she wants to get down concern in, and in instance of Mr Joe he should hold passion for books and magazines. A successful concern adult male must besides possess accomplishments like concern and industry cognition, self-motivation, direction capablenesss, client service and sidelong thought.

Different Types of Business

Mr Joe following are all four types of concern:

Exclusive Trader


Limited Company


Explanations of types of concern and their advantages

Every type of concern is different from other type of concern and has its ain advantages and disadvantages below are the account and advantages of all four types of the concern:

4.1 Sole bargainer concern and its advantages

Whenever opening a little concern most of the experts recommend exclusive bargainer concern, another name for exclusive bargainer concern is exclusive owner. In exclusive bargainer concern merely one individual owns and manages the concern. The proprietor besides owns all the assets and net incomes made from the concern. It is the cheapest type of concern to get down with.

Exclusive bargainers have a benefit from the undermentioned advantages:

Control – ego bargainers are the lone proprietors of their concern therefore they run the concern as they like to and the concern ca n’t be brought down by intervention of others.

Net income Retention – All the net income made in concern is owned by the exclusive bargainer.

Privacy – The information of a exclusive bargainer concern is ne’er in public and hence.

Speciality – The exclusive bargainer is expert in his concern and can offer more services from their concern which attracts possible clients.

Less Capital – As exclusive bargainer is frequently a little concern so it is inexpensive to get down with and requires less investing.

4.2 Partnership concern and its advantages

Partnership concern is frequently formed when two or more people invest money in same concern, they do this because they might hold common concern point of position or they might believe that their concern accomplishments and talent complement each other in such a manner that they might lift as a successful concern squad. The proprietors of a partnership concern are the spouses that invest into the money. The concern proprietors portion the net income and the assets that belong to the concern. Advantages of a partnership concern are as follows:

Capital – More spouses means more sum of capital for the concern which consequences in rapid and possible growing of the concern and besides more net income which is shared every bit among the spouses.

Flexibility – Partnership concern are easy to form and run and hold less rigorous regulations every bit long as the spouses agree.

Shared duties – Every spouse has his ain duty, that allows doing the most out of their endowment and there is no emphasis on any spouse this consequences in a successful concern.

Decision Making – More spouses ‘ agencies more encephalons therefore more better thoughts for the growing of their concern.

4.3 Limited Company

This is the type of concern which when started allows the proprietors of the concern to maintain their personal wealth and assets separate from the concern, therefore it is a all right manner to run a concern without put on the lining their personal wealth. It is run by the managers of the company and owned by the stockholders but the stockholders most of the times do non affect in running of the company.The Limited Company possess the advantages listed below:

Separate entity – The limited company is treated as a separate entity from its proprietors intending that if members die or retire the company does n’t close down.

Limited Liability – As mentioned earlier the stockholders invest in the company maintaining their personal assets and money separate and these are non involved in instance of debt or loss, this gives a feeling of security.

Gross advantages – The limited company merely has to pay revenue enhancement for their net incomes which is a immense benefit

Using personal auto – Unlike in other concern types in Limited company you have to utilize your ain auto for concern intent which allows you to utilize revenue enhancement free fuel.

4.4 Franchises

Peoples frequently use the name of trade name to intermix in a successful concern rapidly ; this is called as franchising concern. Franchises are set up on a accredited understanding by one individual or a group of people. The franchises have the right to sell goods utilizing the name of a celebrated trade name with the licence of the trade name.

Less failure – The security and promotion provided by the franchisor provides an feeling to the franchises that they have really less opportunity of failure.

More net income – As you are utilizing the name of a known trade name you will pull more clients therefore more net income.

Well established concern – Working under a celebrated trade name no demand to work hard on set uping concern as it is already established

Simpler funding – Investor are more interested in puting in an constituted concern so they invest with assurance and sometimes franchisors would put money excessively which would do the life of a concern adult male easier.

5.0 Disadvantages of different types of concern

Mr Joe Gillis Along with advantages each concern besides has a negative side which are listed below for each type of concern:

5.1 Disadvantages of exclusive bargainer concern

Liability – If a exclusive bargainer concern gets into debt the proprietor is apt, in worse instances

the proprietor has to put on the line his house, wealth, and assets in or outside of the concern.

Finance – It is ever hard for exclusive bargainers to happen finance to raise financess for the development of their concern.

Decision doing – All duty of determination devising is on the shoulders of exclusive bargainer and no good thoughts from others.

5.2 Disadvantages of partnership concern

Disagreements – This is a major job in partnership concern ; all the spouses might non hold on the same thought.

Control – Every spouse wants to be in control of the company and tends to be wiser than others seeking to use their ain thoughts.

Net income sharing – Net income is shared every bit between all spouses whether they have invested every bit or non this could take to inconsistency.

5.3 Disadvantages of Limited company

Complex histories – Limited company has a batch of rigorous and complex regulations and ordinances applied to their clerking and histories.

Cost – A limited company is expensive to setup.

Dilutions – It is hard to state that who are in charge of the company ; the managers or the stockholders therefore differences arise that who will make up one’s mind what is best for the company.

5.4 Disadvantage of Franchises

Net income is shared – A cut from the net income of franchise concern is given to the franchisor merely for their trade name name.

No ownership – The chief disadvantage of a franchise is that you can non present any merchandise of your ain and have no control of the concern.

Hazard from other franchises – If any of the other franchises would make something incorrect that would damage the repute of the trade name name it will impact your concern every bit good.

Recommendation of one concern over another

When opening a little concern it is recommended to get down it as a exclusive bargainer as it requires less capital and you are the lone proprietor of the concern unlike other concern types so there are less opportunities of bigger loss. If one likes to work in a squad and does non hold all the accomplishments to pull off an spread outing concern ; one should travel for the partnership concern as it will turn the concern more rapidly and more duties will be on all spouses and more better thoughts will originate, where in exclusive bargainer concern merely one individual has to be responsible for all the work and determinations. If a concern adult male wants to derive speedy success and does non wants to work on constitution of concern like in partnership and exclusive bargainer concern he should get down his concern as a franchise of a well-known trade name. If a individual wants to put a limited sum of money in a concern so his pick should be the Limited company concern as it gives him the feeling of security for his personal wealth and assets outside of the concern, this benefit is non possessed by other types of concern.

7.0 Decision

Mr Joe Gillis it is concluded that each type of concern has some advantages over another, as you are get downing a little publication concern it is my occupation to urge you that you should get down as a exclusive bargainer because it will let you flexibleness to do determinations on your ain and you will larn more rapidly and besides it will non necessitate a large sum of capital. However be cognizant that book publication concern requires a batch of attending therefore you have to discontinue your twenty-four hours occupation and besides it is a really difficult occupation so you should use your staying power to full extent. Keep in head that you will get down doing good net income non before 3 old ages so be patient. Best of fortune for your publication concern.


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