Sectors of Economy
There are lots of different businesses and they provide a range of goods and serves. We can split up business into three different sectors of the economy based on who owns them and how they make money/are funded. The three different sectors are:
- Private
- Public
- Third/voluntary
Types of Business
When an entrepreneur is deciding to start up a business, they have many different options. They can decide to manufacture goods or provide services or both!
They can also choose to set their business up in many different ways. They can be:
- A Sole Trader
- A Partnership
- A Private Limited Company
There are other business types that a business may be; these will be explored at N5 and Higher level.
Sole Trader
A sole trader is someone who owns the business on their own. They are responsible for the operation and running of the business.
Examples of this types of business include:
- Local newsagents
- Hairdressers
- Plumbers
- Electricians
Partnership
A partnership is made up of at least two people (but less than 20) who are in business together. A partnership agreement is a legal document, which is drawn up between the partners. It details how the partners will share the profits and losses made, and how the business will operate, for example, who is responsible for what.
Examples of this types of business include:
- Accountants
- Solicitors
- Dentists
Private Limited Company (LTD)
This is a company whose shares are owned privately, i.e.; shares are not available to the public on the Stock Market.
Sometimes they are family owned companies where all members of a family are shareholders
There must be at least one director and a secretary who keeps all company records. Shareholders have limited liability meaning they can only lose the value of their shares and not their private assets or belongings.
Examples of this types of business include:
- Tunnocks
- Ramsay of Carluke
- R&W Scott
