Retail Business Ownership

Types of Retail Business Ownership

Sole Traders

  • Sole traders are business entities owned and managed by one person.
  • As a sole trader, the owner has unlimited liability, meaning if the business can’t meet its debts, the owner’s personal property could be used to cover it.
  • Examples in retail could include small, independent shops or market traders.

Partnerships

  • A partnership is when two or more people come together to run a business.
  • Like sole traders, partners often have unlimited liability but this responsibility is shared.
  • Retail examples could include a joint venture between two designers setting up a boutique.

Limited Companies

Private Limited Company (Ltd)

  • A Private Limited Company (Ltd) is owned by shareholders and run by directors.
  • The owners have limited liability, meaning they only stand to lose the amount they invested.
  • This type of business ownership is common in high street retail chains.

Public Limited Company (PLC)

  • Public Limited Companies (PLCs) can sell shares to the general public and are often listed on a stock exchange.
  • Like Ltds, PLCs have limited liability.
  • Major retail chains, like Tesco or Marks and Spencer, are often PLCs.

Franchises

  • A franchise is a business model where a franchisee buys the rights to use an existing business’s brand and model.
  • The franchisor receives a percentage of the franchise’s profits in return for providing branding, supplies, and business advice.
  • Many fast-food outlets, like McDonald’s, operate as franchises.

Cooperatives

  • Cooperatives are owned and operated by their members, who have equal decision-making power.
  • Profits are often reinvested into the business or distributed among members.
  • Some agricultural providers and food retailers, like The Co-operative Food, operate as cooperatives.

Understanding the diverse forms of business ownership is crucial to comprehend the retail industry’s structure and how decisions are made within these businesses. Different ownership structures have different benefits and drawbacks, impacting business operations and overall success.