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Setting up a Business
Why start a Business?
To pursue an interest or hobby
To escape an uninteresting job
To use new technology or ideas for making a product
To work from home
To provide a good or service that benefits others (social enterprise)
To have a big business one day
To make a most of the business opportunity
To be their own boss
Enterprise is about using ideas and related activities to gain a reward such as profit. However
sometimes profit is not enough for entrepreneurs to motivate them to persuade them to take the
risk and put forward the necessary resources to carry out the activity. Some entrepreneurs need
other kinds of motivation such as the belief they are doing something for their community or for the
good of others in their society or even the world. These people are known as social entrepreneurs
and they are involved in social enterprises.
Advantages of franchises:
Able to sell an already recognised and successful product
To take advantage of experience of franchiser
Benefit from central services such as marketing and training
Disadvantages of franchises:
Some of the revenue is paid to franchisor
Lacks complete ownership
Could lose franchise
Business objectives:
Sales growth- once a business has made its first sale it will attempt to increase the level of sales to
the maximum level it can achieve.
Making a profit ­ this is typically measured both as an amount of profit or as a percentage which is
known as the profit margin.
Survival ­ keeping the business open is likely to be one of the most important objectives in the first
years of trading. A business will only survive if sufficient sales are being made to cover its costs.
Otherwise it will need to borrow to cover costs which ultimately it may not be able to pay.

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Market share ­ depending on the number and type of competitors the business faces it will have
control of a share of the total market. E.g. coca cola and Pepsi each have almost 50% of the total
market for cola. Achieving a greater market share is a common objective for a business.
Customer satisfaction ­ achieving high levels of customer satisfaction will not only result positively in
terms of sales but also in terms of customer loyalty, repeat business and word of mouth advertising.…read more

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Resources ­ what resources the business currently has available and what it needs in the
future.…read more

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Partnership benefits:
Very few procedures to set up
Expertise of a number of people combined
More sources of finance as more people are involved
Unlimited liability for owners
Profits are shared amongst owners
Decisions of other partners must be honoured
Maximum of 20 people can join the partnership
Partnership ends when one partner leaves
Factors affecting business location:
Costs- rent or buy? Impact on business image - cost of utilities - transportation costs - wage
levels in area - cost of sourcing materials
Infrastructure…read more

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Franchise ­ the legal right to use the name and logo of an existing firm and sell the same products
Business aim ­ a stated target for the future for example a new business may have the aim to
survive its first year of trading
Business objective ­ a clearly defined target for a business to achieve over a certain period of time
Growth ­ an increase in turnover (sales) market share or profit
Profit ­ what is left after costs have been deducted from…read more


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