1.2 Business structure

The primary sector extracts or harvests natural resources; the secondary sector processes materials into manufactured goods; the tertiary sector provides services. One business can span more than one sector.

Sector labels help analyse an activity’s inputs and outputs, but they do not by themselves measure development, profitability or job quality.

A cocoa company may buy beans from primary producers, process chocolate in a factory and sell through retail and delivery services in the tertiary sector.

Calling a firm “service-sector” does not mean it has no physical inputs or production processes.

Sole traders and partnerships are usually owned by individuals, while companies are separate legal entities with ownership divided into shares. Ownership affects decision control, liability, continuity and finance.

Limited liability can protect owners’ personal assets, but incorporation brings reporting, legal and governance obligations. The best form depends on objectives and scale.

A growing design studio may incorporate to separate business debts from owners’ personal assets, but accept more administration and possible dilution of control.

“Limited liability” does not remove every risk, and a company is not automatically more profitable than a sole trader.