BS starting a business

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  • Created by: zuljupri
  • Created on: 14-02-17 16:05

basic economic problem

need- something essential for human survival- food, water etc

want- something you 'desire but dont require'

basic economic problem- wants are unlimited but resources are limited.

opportunity cost- loss of the next best alternate when making a choice.

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entreupeuners

entreupeuner- people who start businesses. They have a business idea that they develop.

bad entrepeuners- rush in to bring somethig new. Ignore risks. Expect things will go as planned.

good entreupeuners- take calculated risks. Launch new ideas. Accept mistakes will happen.

skills- organisation, leadership skills, hard-working, Creativity, persuasion, calculated risk taker.

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business ideas.

advantages of own business- own money/profit. own hours. own boss.

disadvantages- no guaranteed income. consequences if business fails. stressful. long hours.

source of business ideas- observation, market mapping, spotting trends, hobby, market research, previous job experience, identifying a niche market.

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stakeholders

stakeholder- an individual/group who can either affect or be affected by the actions of a business.

examples- CEO. local community, owner, banks, founder, employess, customers, industry, competitors, suppliers, shareholders.

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business planning

a report describing the marketing strategy,operational issues and financial implications. it includes what the business is going to do, what the objectives are and how you will achive it all.

executive summary: the intro to the plan. who you ar, the problem being addressed capital needed

details of product/service- outlines your idea and explained from customer's perspective.

objectives- the SMART targets of the business that allows it to achieve its aim.

the market- outlines the market and its competitors. resulyts of market research and target market.

marketing plan: how you will communicate with customers and how they can buy the product.

organisational plan- explains who is in the business, management. CVs for all key managers.

operational plan: how the product will be produced and delivered. supplier info and premises.

financial plan: the finance needed, speed of repayment. cashflow forecast.

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business planning

benefits- helps with continuity of the business. Help get bank loan. Ensures all aspects of the set up have been considered.Clarify objectives. Helps identify possible weaknesses. Can judge success and outcomes.

negatives- wastes time, opportunity cost, spend too long it could have been used to start planning to trade. Doesn't guarentee success even if you have a good business plan. Forecasts may be too rigid,not flexible enough to cope with unforeseen events. Often too optimistic about the perfomance of the business.  

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sole traders

a person who owns a business by himself/herself without the use of company structure or partners. they have full responsibilty of the business. it has unlimited liabilty.

main aims- survival, profit, market share, growth, customer satisfaction

advantages- 100% profit. Control over business. Own hours. Easy to set up. No corporation tax. No conflict of interest.

disadvantages- unlimited liabilty. Increased pressure. Low business status. No partners. Lack of continuity. No specalisation from other owners.

financial provider- bank loans, personal savings.

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partnerships

a form of business ownership where 2-20 people own the business. unlimited liability

main aims- survival, sales, profit, growth, market share.

ownership- partners, depends on how much stake in the business

financial provider- investment from patners. bank loan.

control- partners depends on stake.

ordinary partnership each partner plays an active role in the bsuiness so are responsible for debts.

limited partnersips- have sleeping partners whih provide capital but play not active role in thebusiness, so are not responsible for debts.

advantages- easier to raise finance. shared decision making, less pressure. losses are shared. contunuity is possible. specialisation from new partners.

disadvantages- profits areshared. unlimited liability. conflict of interest. dilution of ownership.

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private limited comapany

LTDs are registered companies that are not incorparated. seperate legal existence frpm that of their owners who are shareholders. limited liability.

main aims- profit, growth, market share

ownership- shareholders

control- board of directors

financial provider- shareholders, shares, bank loans

advantages- limited liability. easier to expand business. money raised by shares. specialist managers can be employed. no min investent needed before trading can start.

disadvantages- can only sell shares to family/friends. cannot sell shares on the stock market. annual reports have to be produced by law. expensive admin reports have to be produced.

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Franchisee

An individual/group who buys the right to trade under the name of an existing business and use their business model. liabilty depends on how you set up.

main aims- profit(keep most of it). customer base. growth. renewal of franchise licence.

ownership- for period of licence but accountable to the franchisor.

control- run the day to day control but follow rules of the franchisor.

financial provider- same as sole trader.

advantages- tried+tested product. keep most profits. well-known brand name. no marketing needed. easier to get bank loan. major decisions already made for you. given support, advice, training.

disadvantages- lack of decision making. have to give royalty payments and licence fee. if franchisor goes out of business so does the franchisee. franchise licence is automatically renewed.

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franchisor

the existng business selling the right for franchisee's to trade under their business model + name. limited liabilty.

main aims- growth, profit, increase brand awareness and market share.

ownership- depends on setup, larger limited companies owned by shareholders.

control- if a limited company it has a board of directors. individual franchises run themselves.

financial provider- bank loan. shares. royalty payments and licence fee from previous franchisees.

advantages- recieve a royalty payments without doing work. recieve a licence fee that covers start up cost. increases brand awareness/market share. quick way of growing business, important in fast growing markets, without havng to raise money.

disadvantages- badly run franchises can damage entire brand(McHead). royalty payments are small amount. have to provide support and training to franchisees.

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Location- factors

Factors Influencing location:

  • cost of land
  • visibility when customer facing.
  • room for expansion
  • close to target market?
  • accessibilty- employees, customers, suppliers.
  • availabiltity and cost of supplies.
  • competitor location
  • availability and cost of labour.
  • parking facilities.
  • wealth of area.
  • local population
  • transport links.
  • government help?
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