Making a business effective

Limited Liability - the level of risk is limited to the amount of money that has beeninvested in the business

Unlimited liability - the level of risk goes beyond the amount of money invested so personal assets of the owner can be used to pay business debts

Assets -property such as a house or car

Incorporated - a business that is registered as a company so the business and the owner are seperate in the eyes of the law

Unincorporated - a business that is not registered as a company so the owners and the business are the same in the eyes of the law

Private sector - businesses that are owned by individuals or groups of people

The nature of the business will influence what they prioritize when choosing the location.

• Location of raw materials - If located nearby, lower transport costs for bulk reducing

• Labour supply - If located nearby, good selection of ppl available

• Competiton - advantage = skilled labour and supplies available

                        - disadvantage = lose sales or reduce prices leading to low profit

• Location of the market - If nearby, low transport costs for bulk gaining

• Using the internet - location is more flexible if using for sales. No need for fixed premises.

Price war - where businesses compete with each other by reducing prices

Market share - the percentage of the market a certain business has

Undercutting - where a business sells the same product but for a lower price

Product differentiation - making your product stand out

Product - identify customer needs, then come up with a product to fill these needs

Price - Penetration pricing - initial low price until product established  e.g. biscuits 

  - Skimming (premium pricing) - high price to begin with as product is unique e.g. iPhone

  - Competition pricing - pricing products in line with competitors e.g. petrol

Promotion - Advertising - Tv, Radio, Newspaper

                         - Sales promotion - offers, product samples, vouchers

                         - Public Relations - press releases, public appearances

                         - Personal selling - door to door, showrooms

                         - Direct mail - e-mails, letters (junk mail)

Place - Retail outlets 

           - Internet

           - Door to door

           - Mail order 

A business plan is a an outline of what a business will do and how it aims to do it.

It should include:

                             - the business idea

                             - business aims and objectives

                             - target market

                             - marketing mix

                             - location

                             - finance (including a cash flow forecast)