Business Revision

  • Created by: AM6200
  • Created on: 09-04-16 18:50

Short Term Finance


Delayed Payments

Trade Credits

Bank Overdraft

Credit Cards

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Long Term Finance

Venture Capitalists

Bank Loans

Share Capital (Ltd or Plc Only)



Retained Profit



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Cash Flow

Cash flow forecasts aim to anticipate problems

A poor cashflow means there is a lack of working capital

You can improve cashflow three ways

1) Sell atained stock

2) Be less generous with customer credit terms

3) Get a better credit term with your supplier

Inflows/Receipts: Money from owners, bank loans or cash from sales

Outflows/Payments: Money leaving the business, wages, bills or advertising

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Revenue, Costs & Profits

Fixed Costs: Costs that do not vary with the output of the business e.g. Salaries

Variable Costs: Costs that change with the number of products or services sold e.g. raw materials

Variable Costs = 1 unit cost X Quantity produced

Total Costs: Fixed costs + Variable costs

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A franchise is the right given by one business to other businesses to sell goods or services by using it's name

A franchisor is the business giving the rights

'OR' - Originates

A franchisee is the business that agrees to the license by the franchisor


Well known reputation

Higher chance of survival


Lack of control & Start up costs

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Motivation Theory

Maslows Hierarchy of needs


Physical Survival - Basic wage

Safety - People to feel safe and secure

Love & Belonging - Encouraging teamwork

Self-esteem - Feel valued by others

Self-actualisation - Set staff target

  • Training & Motivated staff is good for a business
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The Marketing Mix

Price - High quality, good value

Product - Has attributes and features customers want

Place - Where the business is located and where the product/service is distributed

Promotion - Communication between business and the customers

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Interest Rates

If interest rates fall:

Consumers are more likely to spend their money

More likely to borrow money

If interest rates rise:

Consumers are less likely to spend their money

Borrowed money costs more

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Just In Case (JIC)

Process you follow to maintain a minimum stock level

Just In Time (JIT)

A business holds no stock and relies upon deliveries of raw materials and components to arrive exactly when they are needed

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Owners - Make profit if successful

Shareholders - delegate responsiblity (directors)

Employees - Interested in job security and promotion prospects


Customers - High quality

Suppliers - Cash flow issues

Government - Receive taxes

Community - Noise and pollution

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Added Value

Added value is the increased worth that a business creates for a product e.g. USP (Unique selling point), Branding

Added value goes towards paying off a companies costs, this will make the business more profit

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Business Cycle

This cycle repeats

Boom - Increase in economic activity

Downturn - Economic activity slows down

Recession - Economic growth is negative

Recovery - Economic activity starts to rise

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Commodity Markets - Raw materials i.e. Oil, Wheat, Steel

Normal Markets - Everyday products i.e. Clothes, Food

Marketing - Promoting a business/product

Market Research - Finding information from consumers in society

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Employment Legislation

Employees pay is equal

No discrimination at recruitment

Working hours are a limited amount of hours

Employees are protected from unfair dismissal

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Recruiting Staff

1) Draw up recruitment documents

2) Receive applications

3) Short listing

4) Selection

5) Training

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Customer Satisfaction


Repeat purchase, Premium prices

Unique selling point, Loyalty, Business reputation

Repeat Business:

Easy and convinient

Effective customer service

Good communication


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Tax Issues

Small businesses:

Income tax - Tax on income earned by workers

Corporation tax - Paid by Ltd on profits of company

National insurance contributions - Tax on earnings of workers

Value added tax - a tax on the value of sales of a business

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Sole Traders/ Ltd

Sole trader

'Increased risk'

100% control

100% of profits



'Reduced Risk'

Control is shared on proportion of shares

Profits are shared

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Legal responsibility of business so the owner may lose personal belongings


Owners and the business are seperate legal entities

They can only lose what has been invested into the business

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Profit, Loss, Price & Cost

Profits - Revenue of business is greater than the total costs

Loss - Total costs of business is greater than the revenue

'Revenue - Costs = Profit or Loss'

Price & Cost - Charge set or price to pay for products

Impacts of a loss?

Unable to repay loans, bills

Less likely chance of survival

Cash flow issues

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Market Mapping


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Ways to compete

Higher quality product/service

Special features

Stronger brand image

Better aftersales service

Wider range

Better design

Enjoyable experience

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Calculated Risk

A numerical value or probability on a risk


Wider target market

Lower costs

Automated ordering


Customer experience

Website costs


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Financial objectives:


Profit & Income


Financial Security

Non-Financial objectives:

Independence & Control

Helping Others

Personal Satisfaction

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Entrepreneurial Skills

Planning - Plan of action

Initiative - Pro-active & get the job done

Taking risks - Invest time & capital

Determination - Not giving up

Decision-making - Good judgement

Persuasion - Convinence banks

Leadership - Lead others

Luck - Luck e.g. High sales

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Invention & Innovation

Invention - Making new items or finding new ways of making items

Innovation - Bringing a new product to the market, that turns an invention into a product

Patent - Rights of ownership of an invention, design or process

Copyright - Legal ownership of material e.g. books, music & films which prevents copies

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Boston Matrix


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Branding & Differentiation

Strong branding creates customer loyalty

High quality - premium price

Advertise heavily - large consumer awareness

Product Differentiation

Distinctive design





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Blue Skies Thinking - Many ideas to solve a problem e.g. brain storming

Lateral Thinking - Thinking differently to find and get new unexpected ideas e.g. thinking outside the box

Deliberate Thinking - Intentional creation e.g. Mindmaps, lists

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Market Research & Data Types

Primary/Field Research - Information no one else has collectes e.g. questionnaires and surveys

Secondary/Desk Research - Information that is collected and already published e.g. reports, newspapers and government publications

Quantative Data - Data that can be expressed as numbers statistically e.g. stock, revenue

Qualitative Data - Data that can be expressed as opinions, judgements and attitudes e.g. Why do people like Heinz Beans?

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Exchange Rates


Exporters, tourism, businesses - good

Importers - bad


Exporters, tourism, businesses - bad

Importers - good


'Strong pound imports cheaply, exports dearly'

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Product Life Cycle 1


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Product Life Cycle 2

Extension Strategies?


Price reduction

Adding value

Exploring new markets

New packaging

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Bushra Patel


These are wonderful, and perfect and amazing and not too heavily based cards. Thank you loads. THIS IS WHAT REVISION IS SUPPOSED TO LOOK LIKE EDEXCEL REVISION BOOK


Seriously, though, lol, thanks. 

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