Classification and Types of Business

Executive summary

This report has been prepared to provide a sufficient amount of information that will outline the types of businesses how they operate in the Ashfield area on Liverpool Rd which is located approximately 10km away from the city.

Businesses can be classified in many different ways such as their size, location, their operations and legal status. Ashfield is a great example of a business area with a good classification status as it provides a number of successful businesses that have been around quite a long time such as coffee shops and family bakery stores.

Classification by legal structure

There are many different legal structures when deciding how a business is to be owned and operated. The four main legal structures are:

• Sole trader
• Partnership
• Private company
• Public company

These four classifications are divided into two categories:

Unincorporated businesses- This classification illustrates that all the debts of the business must be paid by the owner. For example, a sole trader that has unlimited liability like “sims kebab” is owned by one person as that he must employ, provide for all staff and to also pay finances. Another good example is a corner café near Ashfield station also has unlimited liability which means that if the shop doesn’t demonstrate a successful amount of sales, then the owner may have to sell personal assets to pay back the debt that he owes, so that in some cases could result the business to close down.

While that may be the case as most businesses in Ashfield are sole traders they also receive many advantages such as, low cost of entry and all the money that goes into the business is for the owner to keep. Bust since some businesses fail to operate on a single sole trader, partnership will tend to exist in some businesses to keep them running as they are usually owned by 2-20 people which makes it easier for the owners to employ staff and provide all finances. For example, spectrum spec savers.

Although having a large business would also mean that there are a lot of debts to pay as the business owners would have to sell personal assets to pay back debts and keep the business running.

Incorporated business- This classification exposes that as the business owners are separate, the owners are not liable for the debts of the business. For example, a private company like “Real Estate Agency” is usually owned by 2-50 people and they are often small to medium enterprises that have limited liability protection so that shareholders can only sell their shares to people approved by the other directors, similarly a public company would have the same advantages but only differences are that, there no restrictions on the transfer of shares or raising money from the public by offering shares which leaves the general public to buy and sell shares in those companies.

Classification by industry

The classification of industry would fall into 3 main sectors:

• Primary
• Secondary
• Tertiary

Tertiary- Ashfield would fall into the tertiary category as there are many coffee shops in each corner and bakery stores that mostly sell in the morning as there are people going to work and lots of school kids that buy breakfast from these stores and the amount of school buses that drop kids off for school.

Classification by size.

The businesses in Ashfield are mostly Small to medium enterprises for example Coles, Woolworths, Kmart and Big W are all small to medium enterprises as they are the most selling businesses in the area which leaves an estimate of approximately 70% of Ashfield are (SMe).

Classification by geographical location

Ashfield has a wide range on businesses that are:

• National
• International
• Local

Some of the most popular businesses and companies such as Woolworths and Coles are only national since there origin was in Australia, sims kebab is local since it’s a very small business and the owner is a sole trader, and lastly ANZ is one of the most popular banks that supports international payments and bank transfer.

Business Life cycles

Business life cycles refers to the stages of growth and development a business can experience in four important changes in a business:

• Establishment
• Growth
• Maturity
• Post maturity
• Renewal

Ashfield was established in 1838 so did the businesses and as the population grew, rapid growth of business sales also increased dramatically but once Ashfield hit a stable population stage the maturity of the businesses started manifesting as all the business sales were almost the same, until the suburb has reached post maturity which resulted in many businesses closing down which was the cause of:

• Poor location choosing
• Products that attract no interest
• A lot debts to pay
• Not having enough employees to run the business
• Horrible customer service may cause customers to flee.

Which all leads to the businesses dying and closing down. Which leaves the businesses that have interesting products, have high demands with a good steady location that may attract customers to stay and grow during the renewal stage.

Contributions made by the businesses in Ashfield to the Australian Economy

The contributions made towards the businesses in Ashfield have helped society both socially and financially as there has been many successful businesses in Ashfield that have been able to:

• provide products that customers cannot make themselves.
• Provide new opportunities for young and old to get a job and provide either for their family or for themselves.
• Increasing the Australian standards towards all the citizens.
• Growth and change in technology.
• More and more new products are coming out in the market that have had high demands by customers.

Which is why large businesses make a significant contribution to the Australian economy. Because of their size, large businesses are efficient producers of goods and services. According to the statistics, large businesses contribute a large amount of total revenues in Australia. Large businesses also play the following important roles:

• Provision of employment
• Economies of scale and high levels of production
• Improvements to Australia’s industrial base
• Research, development and innovation
• Export earnings

Conclusion:

This report has well addressed a wide range of information on the normality of a business, types of businesses with their contributions and classifications and how a business runs and survives in Ashfield as there were many obstacles and difficulties a business would have to face to survive.