Understanding Business Structures – Worksheet
ACTIVITY 1.
QUIZ
What is the name of the business structure when a
business is owned and run by one person?
In a franchise business structure, what does the
franchisee use?
What is the name of the business structure where people
invest money into the business in return for shares in the
business?
In a co-operative business structure, who makes the
decisions, controls the business and shares the profits?
What is it called when a business is set up and run by
two or more people?
Who gets to ‘have a say’ in the running of a business that
is a worker co-operative?
In a franchise business structure, what does the
franchisor get?
You often need to invest money into a business. Another
name for this is a word beginning with ‘C’. What is the
word?
If you are a sole trader, who gets to keep the profits?
A sole trader is an unlimited liability. What does this
mean?
Give three ‘typical’ examples of the types of businesses
that would go into partnership.
In a partnership, each partner has an unlimited liability.
What does this mean?
If the partners of a business had a high amount of startup capital or wished to expand, what sort of business
structure should they consider forming?
Who keeps control of a Private Limited Company?
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Who can buy shares in a Public Limited Company?
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ACTIVITY 2.
SOURCES OF FINANCE
When businesses start up, in addition to deciding on the control and structure of the company, they must also
make sure they have capital to invest. There are various sources of finance that are available for owners to use
for this purpose.
Write the correct word from the list below, next to the correct definition.
Leasing
Mortgage
Retained profit
Loan
Sale of Assets
Grants
Overdraft
Debenture
Share issue
Hire purchase
Borrowing a sum of money which then has to be repaid with interest over
a period of time, usually in fixed instalments, e.g., repay $100 a month for
three years.
Borrowing money from a bank by drawing more money than is actually in
a current account. Interest may be charged on the overdraft, some banks
offer interest free overdrafts. The bank has the power to recall the
overdrawn amount at any time.
A loan where property is used as security.
Legally renting equipment prior to buying it. Pay a fixed amount over a
certain period of time, e.g., two years at $500 per month. The asset is not
owned until the final payment is made.
Renting equipment or premises. The asset is never owned but the leasing
company is usually responsible for maintenance and repairs.
A Plc can sell shares in the company to raise additional finance. The
investor’s reward is dividends.
A long-term loan to a business, normally between five to 25 years. Interest
is paid on loan.
Funds given to businesses that do not have to be repaid. Normally
provided by government agencies.
This is when a company sells off its equipment or property to raise money,
and then usually hires them from another company.
Part of the profit made remains in the business for the future accounting
period, e.g., the next year.
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ACTIVITY 3.
CASE STUDY  SOLE TRADER
Small buildings
Chris Davenport was made redundant from his job eight years ago. He used his redundancy payment to set up a
business making wooden outdoor buildings. These are more substantial than just garden sheds; they are
properly insulated, permanent structures, which can be used for anything from an office to a classroom. They are
built to be an attractive feature in say, a garden. Because they are well designed using high-quality materials,
they are more expensive than a typical prefabricated temporary building.
Chris has built up his business over time. In the first year, he sold $53,000 worth of products. Today, sales
turnover is averaging $300,000 per year. This has not been without its problems. Three years ago, orders
seemed to dry up and the business made a loss of $20,000. Without a sympathetic bank manager, who
increased the overdraft by $15, 000, the business would have been in serious trouble.
However, Chris has never thought of giving up. He enjoys running his own business and being his own boss,
even if he does have to work long hours. His six workers are highly valued. Without them, he would not be able
to deliver the quality product that he guarantees to customers.
One problem facing the business is Chris’s age. As he gets older, he knows he might have a period of long
illness or even die. None of his family work in the business.
Use examples and evidence from the case study to answer the following
questions.





List TWO advantages for Chris of being a sole trader.
List TWO disadvantages for Chris of being a sole trader.
During the period when sales ‘dried up’, Chris considered cutting his prices by reducing
the quality of his structures. Discuss whether this would have been a good strategy for
Chris to adopt.
Suggest how Chris can deal with the potential problem for his business of illness or even
death.
Are there any potential disadvantages to your suggestions?
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ACTIVITY 4.
CROSSWORD ON ‘PARTNERSHIPS’
1
2
3
4
5
6
7
Across
2 The owners of a partnership
4 The maximum number of people in a partnership
Down
1 The legal contract that states how a
partnership is organised
3 The type of partner who is not involved in the
day-to-day running
5 These will be distributed according to the Deed of
4 The minimum number of people in a
Partnership
partnership
6 Another word for the money invested by each
partner in the business
7 If there is no deed of partnership, the law states
each partner is this
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