Question and Answers - Essay Example

With regard to ownership, a business can be owned by one individual, a small group of individuals and it can be owned by the public at large as a publically traded company. For privately owned companies, the main advantage is control since these companies do not have to keep the wishes of the shareholders in mind while making large business decisions. Additionally, the profits earned by them are taken by the owners and not divided amongst the shareholders. However, they may not have access to large amounts of capital which publicly owned companies can generate from issuing shares.

Publicly owned companies also have the advantage of limited liability in case the business fails or the company hits the ground regarding the investments made by the company. The primary source of capital for privately owned businesses are investors such as venture capital companies, individual investors and banks which give out loans to privately owned company. For companies under a partnership, several individuals may bring their assets together and use that as a capital base for the company.

The relationship between a business and its investors may be defined by ownership where the profits made by the company are owned by the investors until their liability has been paid up. The two most important factors which must be understood well before a business is started are the business plans and the value chain which the business seeks to provide to its clients. In the first instance, the business plan shows investors and company owners the method by which the company plans to make money over a period of time.

The value chain shows the process by which the company will deliver a certain value to the customers and how the customers will reward the value given to them with money that can be used by the company. Once these elements are understood, it becomes easy to see if the