Key terms - Planning and Financing a business

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  • Created by: Zoe
  • Created on: 29-12-12 19:06
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  • Key terms - Planning and Financing a business
    • Entrepreneur
      • Someone who makes a business idea happen, either through their own efforts, or by organising others to do the work.
    • Opportunity cost
      • Cost of missing out on the next best alternative;  e.g leaving a full time job to start own business would mean no annual salary
    • Franchise
      • When a franchisee pays a franchisor to trade under its brand name, this may include a percentage profit or startup fees.
    • Copyright
      • makes it unlawful for people to copy an authors original written work
    • Patent
      • provides an inventor of a technical breakthrough with the ability to stop anyone copying the idea for up to 20 years
    • Trademark
      • Protects any image, logo or sign that can distinguish the goods and services of one trader from those of another
    • Business plan
      • a document setting out the business idea, showing how it is to be financed, marketed, and put into practice
    • Sectors
      • Primary
        • Companies and people working to extract raw materials from the earth or sea e.g fishing/farming
      • Secondary
        • Businesses the transform raw materials into finished goods e.g car manufacturing/food processing
      • Tertiary
        • Companties that provide services to the public e.g retailing or  other businesses e.g banking
    • Limited liability
      • Owners are not liable for the debts of the business; they lose no more than the sum they invested
    • Sole Trader
      • A one-person business with unlimited liability
    • Research
      • Primary
        • Finding out information first hand - more specific. E.g making and handing out a questionnaire
      • Secondary
        • finding out information that has already been collected e.g government estimates or mintel
      • Qualitative
        • Open questions involving opinions or feelings about a product- hard to pick out themes and manipulate
      • Quantitative
        • research that can be manipulated easily - usually involves numbers or yes/no questions
    • Venture capital
      • high risk capital invested in a combination of loans and shares, usually in a small, dynamic business.
    • Break even
      • Compares firms revenue with its variable and fixed costs to identify the minimum level of sales to cover costs
    • Margin of safety
      • The amount by which current output exceeds the level of output necessary to break even


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