Enterprise and entrepreneurs
Entrepeneur: someone who makes a business idea happen, either through their own effort, or by organising.
Innovations: New ideas brought to the market
Mentor: an experienced advisor, to be there when needed
Identify business opportunities
Franchisee; a person or company who has paid to become part of an established franchise business. (such as Subway)
Franchisor: the owner of the holding company (e.g KFC)
Geographical mapping: plotting on a mpa the locations of all the excisting business in your market to show where all your competitors are.
Market map: A grid plotting where each existing brand sits on scales based on two important features of a market (e.g in the car market: luxurary/ economy and green/ gas guzziling).
Market niche: a gap in the market (i.e no one else is offering what you want to offer).
Protecting business ideas
Copyright: makes it unlawful for people to copy an author's original written work.
Mono-oploy power: the ability to charge high prices because you are the sole supplier of a product.
Patent: provides the inventor of a technical breakthrough with the ability to stop anyone copying the idea for up to 20 years.
Trademark: any signs that can distinguish the goods and services of one trader from those of another.
Developing business plans
Competitive advantge: features of your product/services that make it stronger in the marketplace that your competitors.
Executive summary: brief highlights of a report, placed at the front, so that top executives can glance at the main points without having to read the whole report.
Key concepts in business start-up
Food miles: how far food has travelled before it reaches your plate.
Goal-setting: setting targets that are challenging yet realistic.
Primary sector; companies and people working to extract raw materials from the earth or sea.
Secondary sector: business that transforms raw materials into finished goods.
Tertiary sector: companies and people who provide services, either to the public or to businesses.
Legal structure for business
Bankrupt: when an individual is unable to meet personal liabilites, some or all of which can be as a consequence of business activites.
Creditors: those owned money by a business (e.g suppliers and bankers).
Incorporation: establishing a business as a separate legal entity from its owners and therefore giving the owners limited liability.
Limited liability: oweners are not liable for the debts of the business; they can lose no more than the sum they imvested.
Registar of companies: the government department which can allow firms to become incorporated. Located at COmpanies House, where articles of association, Memorandums of Association and the annual accounts of limited companeis are avaliable for public scrunity.
Sole trader: a one-person business with unlimited liability.
Unlimited liability: owners are liable for debts incurred by the business, even if it requires them to sell all their assets and possesions and become personally bankrupt.
Bias: a factor that causes research findings to be unrepresentative of the whole population (e.g bubbly interviewers or misleading survey questions).
Primary research: finding out information first hand (e.g Coca - Cola, designing a questionaire obtain information from people who regularly buy diet products).
Sampling method: the approach chosen to select the right people to be part of the research sample (e.g random, quota or stratified)
Sample size: the number of people interviewed; this should be large enough to give confidence that the findings are representative of the whole population.
Secondary research: finding out information that has already been gathered, e.g the government's estimates of the number of 14-16 year olds in Wales.
Inferior goods: products that people turn to when they are less well off and turn away from when they are better off ( e.g tesco value and tesco finest)
Luxury goods: products that people buy much more of when they are better off ( e.g jewellery, sports cars and holidays at luxury hotels.)
Normal goods: products or services for which sales change broadly in line with the economy (i.e if the economy grows by 3 percent, sales of say travel and fast food rise by 3%).
Sources of finance
Collateral: an asset used as security for a loan. It can be sold by a lender if the borrower fails to pay back a loan.
Overtrading: when a firm expands without adequate and appropriate funding.
Public limited company (plc): a company with limited liability and shares which are avaliable to the public. Its shares can be quoted on the stock market.
Share capital: business finance that has no guarantee of repayments or of annual income, but gains a share of the control of the business and its potential profits.
Stock market: a market for buying and selling company shares. It supervises the issuing of shares by companies. It is also a second-hand market for stocks and shares.
Venture capital: high-risk capital invested in a combination of loans and shares, usually in a small dynamic business.
Location factors for a business start up
Bulk reducing/ bulk increasin: a firm that uses large bulky materials to produce smaller end products/ a firm that uses small materials to produce larger end products.
Footloose: a business that is not tied to a particualr location as it relies on technology and comminication links.
Infrastructure: the network of utilites such as transport links, telecommunications system, health and education services.
Just-In-Time: a manufacturing system that aims to minimise costs of holding stocks of raw materials components and work in progress by producing goods in repsonse to a definite order. It requires efficent ordering and delivery systems.
Labour intensive/ capital intensive: a process in which labour costs represent a high proportion of the total costs. Small business and business in the service sectors are likely to be labour intensive. By contrast, a capital intensive porcess relies more on machinery in the production of its products.
Leave-cost site: a business location that allows a business to minimise its costs.
Contract of employment: a legal decument setting out the terms and conditions of an indiviual's job. These include the responsibilities of the employee, rates of pay, working hours, holiday entitlement, etc.
Employment agency: an organisation that supplies workers with particular skills, on a short- pr long - term basis, to other businesses, in return for a fee.
Employment tribunal: an informal courtroom where legal dispute between employees and employers are settled.
Full-time employees: staff who are under contract to work the normal basic full time hours of a business.
National minium wage: the lowest hourly wage rate that an employer can lagally pay to an employee.
Part-time employees: staff who are contracted of employment less than what is considered normal basic fill time hours of a business.
Permanent employees:workers with a contract of emplyment with a businessthat is open-ended (i.e. there is no time given at which the contract is due to end).
Tempory employees: employees on fixed-term contracts of employment, either for a predetermined time, or until a specific task or set of taks is completed.
Calculating revenue and costs and profit
Fixed costs: do not cary as output (or sales) vary.
Piece-rate labour: paying workers per item they make (i.e with no regular pay)
Total costs: all of producing a specific output level (i.e fixed costs + total variable costs)
Total variable costs: all the cariable costs of producing a specific output level (i.e variable costs unit x the number of units sold).
Variable costs: the costs of producing one unit ( also known as unit variable costs).
Break-even chart: a line graph showing total revenues and total costs at all possible levels of output demand from zereo to maxium capacity.
Contribution: total revenue less variable costs. The calculation of contributionis useful for businesses which are responsible for a range of products,
Fixed costs: fised costs are any costs which do not vary directly with the level of output, for example, rent rates.
Margin of safety: the amount by which current output exceeds the level of output necessary to break even.
Variable costs: those costs which vary directly with the level of output. They represent payments made for the use of inputs such as labour, fuel and raw material.
Break even output = fixed costs/ contribution per unit
Contribution per unit = selling price - variable costs per unit
Margin of safety = sales volume - break even output
Total contribution = contribution per unit x unit sales.
Cash flow management and forecasting
Best case: an optimistic estimate of the best possible outcome (e.g if sales prove much higher than expected).
Cash flow forecast: estimating future monthly cash inflows and outflows, to find out the net cash flow.
Negative cash flow: when cash outflows are greater than cash inflows.
Overdraft: short-term borrowing from a bank. the business only borrows as much as it need to cover its daily cash shortfall.
Worst case: a pessimistic estimate assuming the worst possible outcome (e.g sales are very disappointing)
Expenditure budget: setting a maximum figure on what a department or manger can spend over a period of time; this is to control.
Income budget: setting a minimum figure for the revenue to be generated by a product, a department or a manager.
Profit budget: setting a minimum figure for the profit to be achieved over a period of time.
Assessing business start-ups
Business model: the precise way in which profit will be generated from a specific business idea.
Floated: making a public company's shares widely available for purchase on the stock market.
Social entrepreneurs: strictly speaking, this should mean people who start up an organisation in pursuit of purely social objectives; but some profit-seekers dress themselves in social or environmental clothing.