Unit 3: Building a Business

Brand: A named product that consumers can see as being different from other products and which they can associate and identify with.

Branded Products: 

• Consumers are more willing to trial products in the brand range
• Brands encourage customer loyalty
• Consumers trust brands, leading to repeat purchases
• Brands can often charge premium prices
• Consumers have greater awareness of brands
• Brands can lead to increased sales and markets share

Cash Flow: the movement of money into and out of the business

Cash Inflows Comes from: 

• customers who buy their products
• interest in bank accounts
• renting out of factory units 

Cash Outflows Comes from:

• wages paid to workers
• raw materials
• admin - heating, insurance 
• taxes - VAT, income tax

Financial management: deliberately changing monetary variables like cash flows to achieve financial objectives such as improved cash flows

Changing cash inflow

Increasing sales revenues:

• Usually most desired way to improve cash inflow
• Sales revenue - average product price x quantity sold

Destocking:

• Make a one-off reduction in stocks of finsihed products