 A business is always owned by someone. This can just be one person, or thousands.

So a business can have a number ofdifferent types of

ownership depending on the aims and objectives of the owners.
 Most businesses aim to make profit for their owners. Profits may not be the major objective, but in order to survive a business will need
make a profit in the long term.

 Sole Proprietorship

A sole trader is a business that is owned by one person

Often succeed –why?

 Can offer specialist services to customers.
 Can be sensitive to the needs of customers –since they are closer to the customer and react more quickly.
 Can cater for the needs of local people –a small business in a local area can build up a following in the community due to trust.

ADVANTAGES

 Total control of business by owner

 Cheap to start up
 Keep all profit
DISADVANTAGES
 Unlimited liability
 Difficult to raise finance
 May be difficult to specialize or enjoy economies of scale Problem with continuity if sole trader retires or dies
 Partnership

An association of at least two persons to engage in business.

 ADVANTAGES
 Spreads the risk across more people, so if the business gets into difficulty then there are more people to share the burden of debt
 Partner may bring money and resources to the business
 Partner may bring other skills and ideas to the business, complementing the work already done by the original partner
 Increased credibility with potential customers and suppliers – who may see dealing with the business as less risky than trading with
just a sole trader
 DISADVANTAGES
  Have to share profits
 Less control of business for individual

 Disputes over workload

 Problems if partners disagree over of direction of business

 CORPORATION
Requires a charter or articles of incorporation, formed by at least 5 organizers and has:
 legal personality
 continuous life
 Limited liability – a most important feature because corporations can become very large; limited liability is the feature that
has made corporations grow
 greater capacity to raise capital
Raising Capital in a Corporation
 Common stock – represents ownership capital – “risk” capital
 Preferred stock – stocks with higher claims on income distribution over common stock holders
 Borrowing

From financial institutions

Bonds (from the general public)

 COOPERATIVE
 Association of at least 15 persons.
 Established for common services for its members – mutual benefit & self-help.
 Patronage is usual result of mutual benefits.
 Each member with equal voice in cooperative, one-man one vote.
 Has attractive social organization features often promoted by governments.
Examples of Cooperatives

 Retail cooperative societies Credit cooperatives

 Farmers cooperatives
 Student cooperatives Condominium cooperatives (building owners)
 Transport cooperatives (Jeepney operators, jeepney drivers, etc.)
 Land reform beneficiary cooperatives