Unit 1.1

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How do entrepreneurs get inspired for a new busine

A completely ne business idea...

  • complete market research
  • Solving a problem
  • Noticing a new trend or fashion

Using an existing idea, but differentiating it...

  • Selling an existing product cheaper
  • better customer service
  • updating and improving an existing product
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Why might an entrepreneur be attracted to franchis

  • good national advertising - guarenteed success
  • Strong customer base
  • more sales revenue because that business is well known
  • help and support
  • less risks
  • easier and quicker from starting from fresh
  • already got desgned products and a supplier
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what are the disadvantages of buying a franchise?

  • You pay royalty fees to the franchisor (a percentage of the sales revenue)
  • Other franchises of that business might give you a bad reputation if they're poorly run.
  • You don't have any control over the products your business sells.
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What are the advantages and disadvantages of being


  • you don't share the profits with anyone
  • The owner has sole control over decisions
  • They can work flexible hours that suits them


  • one person may not have all the expertise needed to run the business
  • There is only one person to invest finance into the business
  • The owner has unlimited liability, which can be stressful.
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What are the advantages and disadvantages of a par


  • More finance can be raised as each partner can invest in the business
  • Partners can cover for each other if one is absent
  • More owners means more expertise that can be drawn on


  • Multiple owners means there is potential for conflict
  • Partners have unlimited liability
  • The profits must be split between more people.
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What are the advantages and disadvantages of a ltd


  • All shareholders are protected by limited liability
  • New shareholders can be brought into the company, raising extra finance
  • There is no limit to the amount of shareholders in an ltd


  • Profits are split between more owners
  • There are more laws and rules that affect ltd's
  • There is the potential for conflict and power struggles between shareholders
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What are the requirements of a private limited com

  • they must send a yearly financial record to the government.
  • They can only sell shares privately, they can't sell them to the public on the stock exchange
  • All the shareholders have a say in the running of an ltd
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What are the typical objectives for new businesses

  • Survival - make sure the business survives its first 12 months without taking on too much debt.
  • Sales Growth - increase the number of sales the business makes each month by a certain percentage.
  • Profit - To achieve a target amount of profit by the end of the year.
  • Market Share - increases the amount of sales the business has compared to competitors.
  • Customer Satisfaction - Develop a reputation for good customer service so that customers are loyal and spread word of mouth publicity.
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What can stakeholders do to influence the objectiv


  • Employees - could stop working (strike) or not do their job properly. Depends how much pay they want.


  • Customers - not buy the products(go to competition) or may not come very often. Depends on how much they are willing to spend.
  • Local Community - may not be enough people in the local community to fund and buy products from the business or they could sign petitions.
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Who would look at a company's business plan?

  • The Entrepreneur - can use their business plan to know where they are going and measure how their business is performng to help them make decisions about the future.
  • Banks - When lending money to an entrepreneur they would demand a business plan before so that they can decide whether the business is realistic enough to earn a profit to pay back the loan.
  • Investors - If you were considering investing money into a particular business you would want to see the business plan to see if the business is worth investing into.
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