Business Studies AQA - Unit 1 Starting a Business

Definition: An organisation that provides goods and services to customers who want and need them.

Goods: Tangiable Items (televison)

Services: Activities that a business' do (hairdressers)

Defintion: A marketing arrangement that allows a business to trade under the same name and style as an exisiting business.

A franchisor is the owner of the established business that offers the grant.

A franchisee is the is the person who takes the grant.

Advantages:

- No industy expertise required

- Easier to build customer base

- Franchisor provides key equiptment

Disadvatages:

- Franchisee has to pay substanial inital fees and ongoing royalties

- Restrictions on marketing activities

- There is a risk that the franchisor will go out of business

Specific Measurable Achievable Realistic Time-bound

Finacial:

- To survive

- Earn a profit

- Sell nto a large enough market

- Personal Wealth

Non-finacial

- More control over working life

- Want to use skills

- Personal satifaction

Defintion: a written document that describes a business, it's objectives, it's strategies, the market it is in and it's financial forecasts.

Advantages:

- Investors can understand how the business is run.

- Focus' on the business idea

- Provides a logical structure to the business

Disadvantages

- The market could change

- Doesnt take the unexpected to account.

Main sectors of a business plan: Aims, Objectives, Market Environment, Competition, Product/Service, Marketing, Distribution, Funding, Forecasts.

Defintion: an individual who owns and operates their own business and who has unlimited liablitiy.

Unlimited liablity means that the owner has a legal obligation to pay for losses made by the business.

Oppertunity cost: passing up the next best choice when making a decision.

Advantages:

- Profi 2

-Tax Advantages

- Flexible

Disadavntages:

-Unlimited liablitiy 

-Long Hours

Definition: a group of people who come together to share workload and responsibility of running a business. Maximum:20 Minimum:2

The deed of partnership states: equal ownership, equal management, equal share in profits.

Advantages:

-Extra Capital

-Easy to set up

-Shared liability

Disadvantages:

-Lack of continuity

-Unlimited liability

-Decision making more complex

Definition: a type of company that offers limited liability to its shareholders but that places certain restrictions on it's ownership.

Only family and friends can be shareholders in a private limited company.

The legal protection to the shareholders under which the financial liability of each shareholder for the company's debts and obligation is limited to how much they invested.

Advantages:

- Unlimited liability

- Continuity

Disadvantages:

- High administration costs/ corporation tax

- Dilutes ownerships

Definition: the desire to do something.

Monetary techniques: bonus', commission on items they sell,piece-rate-pay.

Advantage:

Loyal Staff 

Disadvantage:

Less profit

Non-monetary techniques: job enlargement, job enrichment, empowerment.

Advantage:

Doesn't cost the owners

Disadvantage:

Might not motivate

Fixed costs: don't vary with output (e.g. rent, wages, insurance, software)

Variable costs: costs which change as the output (e.g. raw materials, stock)

Loss: when total costs are more than total revenue.

Cash flow: movements of cash into and of a business

A cash flow problems arises when a business struggles to pay its debt on time.

To improve cash flow:

-cut costs by identifying savings in in non-essential costs.

-cut stocks by reducing cash tied up buy buying and holding stock.

-delay payments to suppliers

-reduce credit period offered to customers