The Private sector is part of the national economy that is not under direct state control. The aims of such a business is one that survives by making a profit. But, a private working business can vary in its sizes, as well as its roles. For example, a private sector business could be a single working trader who works alone, or it could be a family run shop such as a newsagents or a takeaway restaurant, or it could be something as big and nationwide as Virgin Trains or John Lewis.
All of these businesses are independent and they will all work towards the same goal, which is making a profit. And to achieve this they will try to widen their reputation as a good business. They will do this by competing with rival businesses. Working to reduce prices to attract customers, and then entice them into using their services again in the future, trying to win their loyalty with a great service and a healthy customer relationship, or maybe even offering discounts on repeat sales. But, all the private sector businesses vary in legal terms and how they are structured.
Private Sector – Sole Trader
A sole trader is a person who is the exclusive owner of a business, who is entitled to keep all profits after paying their taxes, but they are also responsible for all losses. A sole trader could and may employ workers. For example, an electrician or a joiner may start off working on their own, but as their business builds up, they could employ a worker to help with the work load.
Also, as a sole trader, this does not mean legally the individual and ‘sole trader’ business are not separate. In the eyes of the law, the business and the person are the same person. Because of this, the owner of the business is personally responsible for the debts of the business and if they begin to make losses due to their business, they will have to start paying from their own pocket.
One of the reasons a business may start to make losses is because the owner has no one to share the responsibility with, as they are the sole owner of the business. So, the business could deliver a top quality service, but if the owner is not good with handling the accounts, they could start to make a loss due to not being able to manage the financial side of the business to the best of their abilities. Also, due to them being the sole owner, and in some cases, the sole worker. It can be very stressful on a sole trader business as they are their own source of income, meaning they may have to work longer hours, they may have to work weekends and it also means they will find it difficult to take time off work if they are ill or suffer an injury and it also means finding time to have a break from work as well, because that time off, is money being lost. But, if the sole trader continues to keep on making losses, in which there is no capped maximum amount. If the business is not able to meet the financial obligations, then the owner’s personal assets can be repossessed to satisfy the debts that have to be paid. Which only adds more problems on top of the Sole Trader. This is called Unlimited Liability.
However, setting up a Sole Trader business is fairly easy, mainly due to the fact that there is no formal legal paperwork that is required to set up a business as a Sole Trader. Also, due to this, there is only a small amount of money, or other assets required by a person to start a company and to invest in building it, so the overall initial start-up cost is lower. And, due to being the sole owner, you can make decisions as you see fit, and you do not have to consult anyone else if you do not want to, and you do not have to wait for a second opinion and approval.
Private Sector – Partnership
If you would want to have a partner though, then your business would become a partnership, and partnerships are rather simply, a business which is owned by two or more people. So, basically, the next step up for a business after a Sole Trader. And another form of a business in the private sector.
A typical partnership could vary, for example, there are numerous contractors such as Plumbers and Electricians who enter into Partnerships. But, there are also other fields such as Doctors, dentists and even solicitors who enter Partnerships to work with one another to build their business. Due to being able to share the responsibility and seeing to more people who are interested in their services, meaning they have a bigger, and potentially, more steady flow of income into their business.
A partnership can be very beneficial due to the chance to have someone to share your expertise with, and vice versa. The partners could begin to bounce ideas, experience and knowledge and the group of owners all benefit from this. And this does not just mean in the area they practice, when it comes to running the business, it also means that one person is not making the decisions, which could potentially be bad. But, it also means more thought goes into decisions due to the partners being able to consult one another, and they are able to fully discuss and go through business decisions to help the business grow, or become more stable before a growth.
However, this can also lead to problems. People can talk and discuss what direction they want the business to go into next. But, this does not mean the partners are going to agree with one another. This can lead to arguments and disputes within the business, people could be stubborn or people could have very contrasting opinions upon the direction the business should go next. It could even be one partner doing more work, and they are aware of the fact, and maybe their partner, or partners are not stepping up to the plate, and they are willing to allow the majority of the businesses weight to fall upon their shoulders.
This could be especially bad for a Partnership, as like Sole Traders, Partnerships have unlimited liability. Meaning, if the business begins to make losses and they are not able to meet these losses with what is due then they could begin to have their personal assets seized. And this could only cause further Discord among the partners if they are not in agreeance. Or, it could be the start of bad tension and a breakdown in the Partnership of owners. As the owners could begin to panic about what can be done, and while a decision is not being made the business could keep on making losses making the amount owed even higher as it could grow with time.
However, if the owners in the Partnership are able to be diplomatic, and if they are all able to compromise, if they are all able to share the weight among themselves and if they all work to keep the business stable and steadily growing, then the issue of Unlimited Liability and the disputes can be easily avoided, or they can be stopped from becoming out of hand. A partnership has its strengths, one of the main strengths being communication with others upon the matter of the business, and if the owners are able to communicate efficiently and formally with one another, then there is no reason why the business should not be stable.
Private Sector – Limited Companies
A limited company is a business where the owners are legally responsible for the debts of the business, like the previous two kinds of business structures, however, they are only responsible for the amount of money or assets they have invested. Usually, this is in the form of how many ‘shares’ they own of the business.
A limited company is also viewed differently in the eyes of the law, and is not perceived in the same manner as Sole Trader and Partnership businesses. That is because limited companies are formed into a legal corporation, meaning they are incorporated. What this means is that these limited companies have their own legal identity and they can also sue, or even gain assets in their own right, meaning the owners of the business and the business itself are not viewed as one and the same, so the owners are exempt from unlimited liability.
Instead, the ‘owners’ of the business are called Shareholders, as they own shares of the company. The shares are split into different parts and they can be bought or sold if the owner of the shares wishes to do so. And, as I said before, this exempts them from unlimited liability, and instead the shareholders of the company had limited liability, which is one of the major legal advantages of this business structure.
However though, just because someone is a shareholder within a company, this does not mean they are involved in the running of the business. They are not like partnerships where they can discuss and make actions to move the business in a certain directions. If a shareholder is to make any decision in running the business, they must have been elected to a position to do so. This is usually in the form of being elected to the Board of Directors. This is usually a body of appointed shareholders who together work to oversee the activities of the company.
So, for example, there could be a small independent retail store, or a small contractor firm in a town. Which is a limited company, with various people owning shares. However, these shares are not traded on the Stock exchange, which is something many people would think of when someone brings up shares. But they are involved in another form of limited Company.
Shares are only traded on the Stock exchange, a stock exchange is somewhere where stocks and/or securities are traded. Where people either buy stocks in companies, or they start to sell their stocks to earn a profit from a successful and growing business, or selling their stocks to avoid too big of a loss in their investment. When a limited company has stocks on the Stock exchange then this limited company is considered a public limited company, instead of a private limited company.
Public limited companies are usually large, well established and fairly big or famous businesses. So, this could vary from manufacturers such as Toyota or Apple, or it could even be a bank such as HSBC. Where there are branches in most cities around the globe. Or, there product can be bought from various locations.
Public Sector #2
However, just as the private sector makes up part of the national economy which is not under the control of the state. There is another part of the national economy which is controlled by the state, and this is called the Public Sector. For example, public sector company’s establishments are most likely in some way, controlled by government ministries and/or government departments.
Public sector organisations for the most part are funded and financed not only by any revenue they bring in, but also by public and business tax revenue. And this money is like a cycle, as the money that goes into the services funded by the public and the businesses, then goes to provide a service to the taxpaying public. And the public sector does provide services which are basic, but important for the public, but they are services that a non-taxpayer cannot be excluded from, such as street lights in a town or city, these are services which are there to benefit society as a whole, rather than an individual who needs a public service, such as the Police or a healthcare service.
Some of the services which are provided by the Public sector are blue light emergency services such as the Police, and the Fire and Rescue service. And then there is also the blue light emergency services of the Ambulances and Paramedics which also falls under the National Health Service (NHS). The tax revenue also goes to the Military which also falls underneath the public sector.
The Public Sector also provides the NHS as mentioned before, so the public sector provides health care to the public. And the NHS is one of the services that many people in the UK hold as one of the country’s best qualities, as it provides numerous forms of healthcare to the public, and it is found across the entire nation, and information is easy to gather in terms of local NHS services, especially because of the ease of internet access.
Some of the healthcare services include urgent and emergency care, but with this the NHS also provides services for major trauma and even walk in centres. There are also pharmacy services provided by the NHS, meaning the public always has pharmacists and chemists to help provide for their needs, and to help give information and advice upon medical services and prescription costs. On top of this there are also GP services which are provided for the public as they are usually the first person someone will see when it comes to a medical problem, and then the GP may refer them to a pharmacist to pick up their prescription.
The NHS also provides other services outside of GP’s, Pharmacies, Hospitals and other various means to aid people who need aid, even those with urgent and emergency needs. The NHS for example also provides dental services, mental health services, eye care services and sexual health services.
The Public Sector also covers local councils as well as the basic structures and facilities that many people take for granted, but they are important facilities provided by the public sector that allow the easy operation of society, some of these basic but important local, and national facilities include the maintenance and construction of public roads, bridges and tunnels. The provision of water supplies, sewers, electrical grids and telecommunications. It also covers the public transit of many local council areas.
There are also numerous forms of public sector organisations and businesses. There is the public sector organisations I have covered, which are run by a more direct administration and they are funded through taxes. The organisations has no real specific requirement to meet a success criteria commercially. But, the production decisions are determined by the government.
There are also publicly owned corporations, these organisations have more freedom when it comes to commercial criteria over other forms of businesses, and the production decisions are generally not taken by government. However, this does not mean there are not goals set by the government, as the government may give more control to these organisations, and more freedoms, but with this they have to meet goals set by the government. Examples of some of the publicly owned corporations in the UK are the BBC, the Bank of England and even more locally, Network Warrington is a publicly owned corporation.

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