What is a business? An organisation which produces goods or provides services.
What is an entrepreneur? A business man or women that takes risks to try to create a successful business e.g. Richard Branson
Aims and objectives
What is a business objective? A goal that the owners of the business want to reach or achieve.
Why are aims and objectives important? So the owners and workers know what they need to do and can see their progress. this will give motivation and determination.
Some example may be:
- To survive for one year
- To obtain a good customer base (Reputation)
- To at least break even
- To only take calculated risks
- To be ethical
- To be sustainable
What is a stakeholder? A person or group of people who have an intrest in a business.
The different stakeholders will want different out comes from the business.
Some of stakeholders and their outcomes examples include:
- Owners - Max. profit, good reputation
- Managers - High salary
- Employees - High pay, Job security
- Government - High payment from taxes
- Customers - Low prices, High Quality
- Neighbours - Minimum impact on lives
- Local Community - Low profile, Benefit community
- Suppliers - consistent and large orders
The aim of a business is what it wants to achieve in the long term, its purpose. an important object for a new business is to survive, to to this the business at least needs to break even over time. this means neither a profit or a loss is made. once a business survives it is likely to set targets for growth in Profit, sales and their market share. the stakeholders will have different aims for the business and where these clash a conflict of intrests will form.
Business plans set out out what a business wants to do and how it will do them. Producing a business plan makes euntrepreurs think about what might happen and what they need to do. Business plans can be used to help get finance.
A business plan should be regularly reviewed and updated as conditions change.
A Good business plan should include:
- Business objectives
- Business history
- Ownership of the business
- Management - responsibilities and experience
- Products the business sells
- Market conditions and size
- Sales plan - marketing methods
- Suppliers - quality, reliability and price
- Competion - how it will compete
- Financial analysis
Business Plans - Difficulties
Creating a business plan can be difficult and if improperly done, not very useful. These are some of the main difficulties:
- Uncertaincy - it is not easy to predict what will happen in the future and what the economy is going to be like. because of this plans may not be totally accurate and if the sales are completely different the plan is invalidated.
- Lack of experience - people starting up a business may not have the necessary skills to plan ahead effectively. The entrepreur may be great at their chosen proffession but usless at looking ahead and imagining future changes. Bigger businesses have access to resources to help them when planning ahead.
The business can reduce these risks by:
- Researching the market thoroughly.
- Talking to experts and consultants (if they can afford it)
- Planning for a variety of outcomes
- Regularly reviewing and updating the plan to keep it relevant.
What is a sole trader? Someone that sets up a business by themselves; they run and maintain the business. They are the only owner and control the whole business. The sole trader has to withstand the losses but they can keep all of the profits. They are easy to set up and run.
Sole traders usually run businesses such as: Plumbers, Electricians, Plaasterers, Hairdressers, Bakers, etc.
Aims and objectives The main aim for a sole trader is to survive and at least break even. They want to create a good reputation for them selves and establish repeat customers.
Disadvantages The sole trader has unlimited liability. This means everything they own including cars and houses can be used to pay off debts. also they have to do all of the paperwork themselves.
Fianance The money for the business can come from a variety of places including the traders savings, bank loans, loans from friends and family, etc.
Partnerships are a type of business organisation which can have between two and twenty partners. the partners are the joint owners of the business. in a general or ordinary partnership the partners have unlimited liability for debts of the business. Partnerships often draw up a deed of partnership. this is a legal document which sets out agreements such as how profits will be distributed and how much money each partner will put into the business.
Partnerships have many of the advantages of sole traders. they are simple to run and set up. but they also allow partners to raise more capital and each partner may have particular skills to bring to the business. the main problems faced by partnerships are how decisions and profits are to be shared. If there are disputes, partnerships may end.
Private Limited Company - Ltd.
This type of business is owned by the shareholders, the people who have put money into the business. They own a percentage of the business based on how much money they put in. If one person holds more than 51% of the shares they have complete control.
- limited liability
- The business has comtinuity
- Large amount of capital
- Easier to borrow money
- Legal Documentation needed to set company up
- Legal regulations on how the business is run
- The company must produce accounts which are available to the public
- Divorce of ownership from control
The practice of using another firm's successful business model, this means that if someone sets a business up people can buy the name and use it. this is good because you can gain an instant customer base and good reputation. You have to sell the company's produicts and/or services and use their colour scheme and logo.
The franchisor will provide support to the franchisee. It will offer training, provide products and equipment and will promote the products. Furthermore, the franchisor will make sure that the franchisee maintains the quality set by the business.
- Ben & Jerry's
- Burger King
- Domino's Pizza
- Kentucky Fried Chicken
A variety of factorscan influence the location of a business. Businesses may try to find land which can be built on at low cost such as greenfield sites. The wages paid to employees may also be important as they can raise labour costs. Businesses may also try to locate in areas where workers have appropriate skills. Transport costs can be high for businesses that have heavy raw materials delivered or have bulky final products.
Businesses that provide direct services, such as hair salons, need yto bee located near their customers. But other businesses can locate anywhere, particularly if they can sell through the internet. These businesses are said to be footloose businesses. Help and grants are available the businesses locating in certain areas. In England, businesses that move to assisted areas and create jobs can be awarded selective fianance for investment grants.
The location of competitors will be taken into account.