Lesson Notes By Weeks and Term v5 - Grade 8

Lesson Video

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Performance objectives

• Distinguish between Sole Proprietorships, Partnerships, and Private Companies.
• Identify the key functions: Marketing, Production, Finance, HR, and Administration.
• Explain how each function contributes to success with SA examples.
• Analyse a business to identify its ownership and functions.
• Understand the importance of compliance (CIPC, SARS) and ethics.

Lesson summary

This week, we delve deeper into the exciting world of entrepreneurship, specifically focusing on different forms of ownership a business can take and the essential business functions that keep it running. Understanding these concepts is crucial for your future, whether you dream of starting your own spaza shop, developing the next big app, or simply being a valuable employee in any organization. In South Africa, with its diverse economy and entrepreneurial spirit, knowing how businesses are structured and operate is a powerful asset. It allows you to identify opportunities, understand the challenges faced by business owners, and make informed decisions about your own career path.

Lesson notes

Forms of Ownership The form of ownership determines the legal structure of a business, which affects its liability, taxation, and operational procedures.

Sole Proprietorship: A business owned and run by one person. The owner is personally liable for all business debts. This is the simplest form of ownership.

Advantages:* Easy to set up (minimal paperwork), owner receives all profits, owner makes all decisions, low start-up costs.

Disadvantages:* Unlimited liability (owner's personal assets are at risk), difficult to raise capital (funding), limited lifespan (ends when the owner dies or decides to close). South African

Example:* A street vendor selling vetkoek, a freelance photographer.

Partnership: A business owned and run by two or more people who agree to share in the profits or losses of the business. There are different types of partnerships, including general and limited partnerships.

Advantages:* Easier to raise capital (more owners contributing), shared workload and responsibilities, diverse skills and expertise.

Disadvantages:* Unlimited liability for general partners (partners are jointly and severally liable), potential for disagreements between partners, profits are shared, business can dissolve if one partner leaves or dies. South African

Example:* A group of doctors forming a medical practice, a legal firm.

Private Company (Pty Ltd): A separate legal entity from its owners (shareholders). The company is liable for its own debts. Ownership is divided into shares, which are held by shareholders. This is a common structure for small to medium-sized businesses in South Africa. Registering the business with CIPC (Companies and Intellectual Property Commission) is essential.

Advantages:* Limited liability (shareholders are only liable up to the value of their shares), easier to raise capital (by selling shares), continuous existence (company continues even if shareholders change), perceived as more credible than sole proprietorships or partnerships.

Disadvantages:* More complex and expensive to set up (registration and compliance requirements), more regulations to follow, profits are shared among shareholders, can be difficult for a single shareholder to make quick decisions. South African

Example:* A local construction company, a boutique clothing store, a technology start-up.

Worked example

Sipho wants to start a car wash business in his township. He has very little capital but is good at washing cars. Which form of ownership is most suitable for him initially?

Solution: A sole proprietorship. It requires minimal capital and is easy to set up. He can start washing cars immediately and build his business. As the business grows, he can then consider forming a partnership or a private company.

Worked

Example:

Thandi and Zola want to start a catering business together. They have some savings but need more capital. They are worried about being personally liable if the business fails. Which form of ownership is most suitable for them?