Unit 1.1

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

• 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

• 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.

Advantages...

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

Disadvantages...

• 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.

Advantages...

• 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

Disadvantages...

• Multiple owners means there is potential for conflict
• Partners have unlimited liability
• The profits must be split between more people.

Advantages...

• 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

Disadvantages...

• 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

• 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

• 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.

Internally...

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

Externally...

• 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.

• 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.