Planning and Financing a Business

  • business opportunities
  • protecting business ideas/business plan
  • business start up/ location
  • market research
  • types of market (local & national)
  • sources of finance
  • legal structure
  • employement
  • revenue, costs and profit
  • break even analysis/cash flow and forecasting
  • budgets
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business opportunities

Generating business ideas

  • observation
  • brainstorming can be useful between two people to come up with ideas
  • thinking ahead
  • ideas from a personal or business experience such as 'in my company we need quality sandwiches delivered at lunch time'
  • INNOVATIONS

spotting an opportunity requires:

  • thinking about changes in society
  • changes to the economy
  • market mapping (identyfing consumers taste, market niche)
  • franchises- advantage of not having to go through the risk of starting from scratch and also not having the risk of failure cause the franchise is already established. disavantage- the business idea may not be good enough

 

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protecting business ideas/business plan

protecting business ideas

PATENT- provide the inventor of a technical breakthrough with the ability to stop anyone copying the idea for up to 20 years.

adv- acts as an incentive to the inventor

disav- higher prices for the consumer, expensive to get.

COPYRIGHT- applies to original written work such as music or books. mainly used in the music industry.

adv-applies immediately without any costs.

TRADEMARKS- any sign that can distinguish the goods and services of one trade from those of another. such as smells, logos, colours.... makes a trademark 'badge of origin'.

developing business plans

business plan- working document setting out the business idea and showing how it is to be financed, marketed and put into practise.

purpose-

  • think things through
  • solve/answer problems before the arise
  • 'where does the plan say I should be after 2 months...'
  • use to help get some finance

details of what it should include..

  • executive summary- what is the product? who you are? what is your risk? capital needed?
  • details of the product- how its produced?
  • market- market trends
  • marketing plan- how will you attract the market? financial plans projected costs + revenues. forecast, profits. pricing policy
  • organisational plan- employees, how it will be managed
  • operational plan- how/ where product/service is produced
  • financial- cashflow forecast
  • conclusion-long term plans of the business
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business start up/ location

OPPORTUNITY COST

cost of missing out on the next best alternative.

New business most important resources are money and time. They can only be spent once.

  • dont tie up too much capital in stock, cash could be used elsewhere.
  • dont overstretch- good decisions take time.
  • take care of every decision that takes time
  • 

INPUTS INTO OUTPUTS

primary- growing, fishing farming...raw materials come from these which is the output

secondary- turning raw materials into finished, processed products.

tertiary- service sector...wholesaling/retailing.

RISK

financial and emitional risk. real entrepeneurs deal with risks on a day to day basis. decisions are about the future

LOCATION

 

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legal structure

UNLIMITED LIABILITY - finances of the business are treated as inseparable from the business owner. e.g if business looses money that was owed creditors can get their house sold, cars etc to pay up.

SOLE TRADER- Individual who runs and operates their own business.

  • adv- no rules to follow or administrative costs to pay
  • accounts dont need to be published.
  • disavd- limited resources of finance available.
  • long hours of work (no holidays).

PARTNERSHIPS- two or more people start a business without forming a company. Unlimited liability.

  • adv- additioal skills A new partner may have abilities that the sloe trader does not have...help strengthen the business.
  • more capital- extra skills and makes expansion easier.
  • shared strain- worries of the business is shared between the two owners...helps reduce stress and workload.
  • disadv- sharing profit could lead to disagreements of 'fair' distribution between workload and profits.
  • loss of control as decision making has to be shared.
  • unlimited liability could cause problems if your partner makes a mistake then both have to suffer. 

LIMITED LIABILITY- to pay off debts and if the company hasnt got enough cash to pay them off, company assets would be sold e.g computers, cars etc. if it comes to worse company would then closed.

advantages

  • shareholders experience benefits of limited liability, with confidence to expand.
  • gain access to a wider range of borrowing opportunities. funding towards expansion can be potentially easier.

disadvantages

  • must publish accounts
  • costs are greater than those of unlimited liability

Private limited companies- LTD's

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Comments

Tiffany

make sure your work does not need to be scrolled otherwise it will be cut off

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