What Are the Different Types of Business that Exist in the UK - Essay Example

What are the different types of business that exist in the UK Complete business scenario of the United Kingdom can broadly be ified into four categories, Sole Trader business, Partnership Franchise business, Private Limited Company and Public Limited Company. The British companies that fall in the respective categories basically follow the main principles of management but in the very system the companies have oriented business management strategies in such a way that it has emerged as separate discipline of study among social scientists, economists and new age business thinkers. In case of public enterprises, the business research and studies are mainly aimed at introducing further development in the arena of competition in British business as well as economy. These studies, at the same time, focuses over both internal-external management of the companies and steps taken by the companies to develop perfect social relationship with the customers. In case of public enterprises these studies concentrate over both internal and external management system of the companies and at the same time those studies also discuss the scope of policy development by these companies. (Mort, 2003; Jones, 2007) Sole Trader business: The sole trader business is considered as simplest business form of the United Kingdom. Small business are very popular. In this simple type of business set up, a sole trader owns a business and tries to operate it accordingly, standing on the foundation of capital that he has invested by himself. As a sole trader, the business owner enjoys the complete control of the business. Most of the UK citizens, who wish to start their entrepreneurial ventures, generally incline to start as a sole trader, as an individual is required to invest a lower amount of money to initiate and run the business and at the same time he is also required to less numbers of legal norms and obligations in comparison with other types of business in the country. Apart from all these positive aspects of sole reading business, there are certain disadvantages to it also. The most frequent problem that an investor faces is the problem of investment. It is really a problem arising issue when it comes to increase in the rate of investment to the business. Basically in a sole trade business system total amount of invested capital is limited. Thus if the business person invests more money to it, it does not always provide the expected level of profit. In addition to this, there is always a fear that the investor may have to suffer irreparable monetary loss and it becomes really tough for him to revive out of such condition. (Storey, 2000; Duckenfield, 2006) Partnership Franchise business: Partnership franchise business is standing over almost the same foundation as that of the sole trader but the only difference is, in this type of business at least two partners or more people are responsible for growth and development of the business. Starting from decision making, distribution of total revenue and risk taking, every single aspect related to the business is shared by the partners. Each partner is equally responsible for every action that is related to the business that they are pursuing. Unlike the sole trader business the partnership franchise business requires mandatory registration at the Companies house. Liability of the partners associated with the business is Limited Liability sort of and it has only single difference with the ordinary partnership. In case of partnership franchise business the distinction of limited liability is determined over the amount of investment made by the partners during inception or later part of the business. (McTavish, 2005; Flower, 2004) Private Limited Companies: The private limited companies of the United Kingdom receive funds from various organization and individuals. During the time of industrial revolution corporation was the only form of businesses in Europe. All businesses except the ones which are extremely small are business enterprises (Flower, 2004). Mainly the banks and individual suppliers play the leading role in sponsoring the companies. The amount of sponsor money these companies is liable to receive are dependent over certain factors, including, total size of the company and its ability to provide business, leasing, hiring or capacity to purchase other companies for the sake of business growth and factoring. Other sources that play leading role in development of such companies are loans from the government, aid from different capital institutions and money generated from public shares. There are several factors that can emerge as hindrance for the growth of the private limited company, including, difference of opinion among shareholders of the company, financial instability among existing share holders and shortage in guarantee money when it comes to lending of funds. There are several such conditions when a company does not find proper shareholders, who can sponsor the company for its growth. (Deloitte, Haskins & Sells. 1983; Fox,1997) Public Limited Companies: Definition of public limited companies, like that of the other nations, is also same in Britain that a certain percentage of the company’s share can be sold out to the public. Sponsors or investors for the growth of a public enterprise is almost the same like that of a private limited company, that is, private suppliers, banks, government loans, capital institutions that provide money for various business venture and issues from public share available from the national stock exchange. When it comes to main considering issues for growth of company, differs considerably from that of the private limited companies. All UK companies need to follow the organization related laws framed under the European Company law. In case of public limited company maintenance of good relations with third parties and appropriate decision making and delegation of tasks are very essential. (Grundmann, 2007) UK followed a system of registration of the companies before starting to operate with the Limited Liability Act of 1855 (Calder, 2008). In case of a public limited company, factors that can create problem against the growth of a company are, condition of national economy and stock market, reaching to the area that will give the company to seek for government financial help, performance of the company for the economy and for people and finally, goodwill of the company as well as its managers to the market. References 1. Calder, A. 2008, Corporate Governance: A Practical Guide to the Legal Frameworks and International Codes of Practice, Kogan Page 2. Deloitte, Haskins & Sells. 1983 , Doing business in the UK: types of business organisation‎, Deloitte Haskins & Sells, UK 3. Duckenfield, M.E. 2006, Business and the Euro: Business Groups and the Politics of EMU in Germany and the United Kingdom, Palgrave Macmillan 4. Flower, J. 2004, European Financial Reporting: Adapting to a Changing World, Palgrave Macmillan 5. Fox, S. 1997, The European Business Environment: UK, Thomson Business Press 6. Grundman, S. 2007, European Company Law, Intersentia 7. Jones, G. 2007, Enterprise, Management and Innovation in British Business, 1914-80, Taylor & Francis 8. Mort, D. 2003, Business Information Handbook 2003, Walter de Gruyter 9. McTavish, D. 2005, Business and Public Management in the UK 1900-2003, Ashgate Publishing, Ltd 10. Storey, D.J. 2000, Small Business: Critical Perspectives on Business and Management, Taylor & Francis Read More