UNIT 1- Introduction To Small Businesses

?
What is a supplier?
A business that sells products to another.
1 of 67
What is a production?
Using raw materials, labour and machinery to make products.
2 of 67
What is a customer/consumer?
A customer is a person/organisation that buys the product or services. A consumer is the person that uses the product.
3 of 67
What is the purpose of a business?
To provide goods and services.
4 of 67
What can market reasearch tell a business?
-What FEATURES a customer wants, how much the customer is willing to PAY, where they SHOP, AGE and their GENDER, who the main COMPETITOR is, if the MARKET is growing or sinking.
5 of 67
What is PRIMARY research?
- Collecting data that DIDN'T EXIST.(e.g- conduction a survey)
6 of 67
What is SECONDARY research?
- Collecting data that ALREADY EXISTS. (e.g- internet research)
7 of 67
What is QUALITATIVE data?
infromation about OPINIONS, judgements and attitudes.
8 of 67
What is QUANTATIVE data?
Data that can be expressed as NUMBERS and statistically analysed.
9 of 67
How can businesses analyse customer buying habits?
Finding out information about customers, using their own experiences, looking at competitors products and reviewing them, observation and surveys.
10 of 67
What does Market segmentation allow?
Allows businesses to: meet specific customer needs, differentiate their products, focus on a specific group of customers, target market activity, develop a unique brand idea, build closer customer relationships.
11 of 67
Ways to compete with competitors?
Wider product range, Stronger brand image, more enjoyable experience, better designs, higher quality, better product features, better after sales service.
12 of 67
Ways to add value to products?
- USP, better DESIGNS, more CONVINIENCE, great SPEED of service, improved QUALITY, better BRANDING.
13 of 67
Why is it important to add value?
The added value of a product goes towards the paying off a company's costs. the HIGHER the ADDED VALUE the SOONER COSTS can be paid off.
14 of 67
Whats a Unique Selling Point?
another way to add value and make your product DIFFERENT from any competitors products.
15 of 67
How can a USP be developed?
By understanding customer needs and market mapping.
16 of 67
Whats a FRANCHISOR?
-The business that gives franchisees the rights to sell its goods or services. (e.g mcdonalds allows smaller businesses to set up mcdonalds shops)
17 of 67
Whats a FRANCHISEE?
A business that agrees to manufacture, distribute or provide a branded product uner license by a franchisor.
18 of 67
Whats a FRANCHISE?
The right given by one business to sell anothers goods or services using its name. The Franchisee&Franchisor still remain as an independant businesses.
19 of 67
What does the (Smaller mcdonalds) Franchisee get from a franchise?
an established brand name, training, ongoing support, Equipment, Advertising and promotion, Access to goods and services, opperate in an exclusive area.
20 of 67
Negatives of buying into a franchise?
Expensive start-up costs, Royalty payments, Complicated application process, lack of control, limited flexibility to make decisions.
21 of 67
Whats an Entrepreneur?
A person who runs their own business & takes risks.
22 of 67
What's an Enterprise?
The starting idea for your business, the willingness by an individual to show initiative, take a risk.
23 of 67
What are Enterprises?
Another word to say "BUSINESS"
24 of 67
Skills an Entrepreneur should have?
Showing initiative, Risk-taking, Willingness to undertake a new venture.
25 of 67
Why is thinking creativly important?
Thinking creativly leads to ... Unique ideas and products, improvement of customer services, new opportunities identified, better products created, cheaper production techniques.
26 of 67
What is Blue Sky thinking ?
Coming up with as many ideas as possible to solve a problem.
27 of 67
What is lateral thinking?
Thinking differently to try to find new and unexpected ideas (e.g- bono's six thinking hats)
28 of 67
Invention vs Innovation?
invention is creating the product, while innovation is developiing the product to make it ready to sell to customers.
29 of 67
Patents?
Right of ownership of an invention, design or process when it is registered with the government.
30 of 67
Copyright?
Legal ownership of material.
31 of 67
How can business' calculate risk?
through market research to reduce negative outcomes.
32 of 67
Important enterprise skills?
PDTDS- Planning, Drrive, Thinking ahead, Determination, Seeing opportunities.
33 of 67
Using blue sky thinking to see new opportunities- Marketing mix 4 P's=
-Promotion -Place -Product -Price
34 of 67
Product=
The deisgn, packaging, Function, specifications.
35 of 67
Promotion=
Promoting your product using; advertisement, PR Brochures, Sales promotion, Direct mail.
36 of 67
Place=
Place of sales: Direct/online retailer or Wholesaler.
37 of 67
Price=
Price= Premium (HIGH), Price match (SAME), Discounted (LOW.)
38 of 67
List a business' Financial objectives?
Survival, Wealth, Profit and income, Financial security
39 of 67
List a business' Non-Financial objectives?
Personal satisfaction, Independance and control, Helping others ( Social Enterprise.)
40 of 67
Defnition of sales revenue/ Turnover?
The amount of income received from selling goods or services over a period of time.
41 of 67
Formula for sales revenue?
Sales revenue= Price x Quantity
42 of 67
FIXED COSTS?
Fixed costs do not vary with output of business e.g business sales dont change this cost.
43 of 67
VARIABLE COSTS?
Variable costs change depedning on the number of products made by the business e.g- cost of raw materials or labour - e.g- £5 cost/product made
44 of 67
Formula for TOTAL COSTS?
FIXED COSTS + VARIABLE COSTS= TOTAL COSTS
45 of 67
Ways to INCREASE profit?
-Lower variable costs, Lower fixed costs, Increase sales prices, Increase the quantity of sales.
46 of 67
Loss of profit could lead to ...
The business being unable to pay back loans, unable to pay bills/wages, experiencing cash flow problems, unable to surrvive - leading to the ultimate failure of the business
47 of 67
Whats CASH FLOW?
The money flowing into and out of a business on a day to day basis.
48 of 67
Whats a CASH FLOW FORCAST?
Predicts how much cash will flow into a business over time. Its used to identify periods where the business could have CASH FLOW PROBLEMS( Not having enough money flowing into the business to pay its day to day bills.)
49 of 67
Inflow/receipts of the business examples...(gain of money)
money from owners, bank loans or cash from sales.
50 of 67
outflow/payment examples... (loss of money)
Wages, rawmaterials, intrest on loans, advertisment costs or bills.
51 of 67
Net CASH FLOW?
The inflows-outflows = Positive/Negative net cash flow
52 of 67
Opening Balance?
The amount of money in a business at the start of the month.
53 of 67
What impacts CASH FLOWS?
Change in stock levels, Change in costs, Business EXPANSION or CONTRACTION, Seasonality in sales (e.g-suncream), Change in sales revenue and demand.
54 of 67
What does insolvant mean?
When the business is without sufficient cash within the business, business is unable to pay debts, repay bank loans, pay wages to employees, buy raw materials and promote the business.
55 of 67
What is a business plan?
A plan for the development of a business, giving forecasts of items such as sales, costs and cash flow.
56 of 67
Purpose of a business plan?
To convince a bank to loan the business some money, forecast financial projections, identify the needs of customers, formulate market research into important information, provide imformation, provide owners with "plan of action" that minimises risks.
57 of 67
What goes into a business plan?
Overview: name,location,products of business, Objectives: What business wants to acheive, Market research: size+growth of market, Personnel: Business employees, Finances: cashflow, revenue, profits, Production:Info on suppliers+ how products made.
58 of 67
Long-term sources of finance?
Sharing capital, personal savings (from owner), Venture capitalist( external investor wanting a fast growth + return on their investment.), Grants, Loans (bank), Mortgage (loan secured against a property), retained profit, leasing( renting equipment)
59 of 67
Why sell shares?
A share is a part-ownership in a business, a company can sell shares to investors to raise capital. These investors are SHAREHOLDERSand are entitled to a share in any of the business' profits generated.
60 of 67
Whats security(COLLATERAL?)
When money is borowed the lender will be given soem form of security or COLLATERAL against the loan. For example in case of a MORTGAGE this is the property.The banks incentive for loaning money is interest % they will receive.
61 of 67
+ on from the previous card?
The rate of interest or the nature of the security determines the level of risk associated with lending the money. Thats why entrepreneurs are risk takers !
62 of 67
short-term finance sources? ( to temporarily solve cash flow issues)
Trade credit, Bank overdraft, credit cards( short-term borrowing), delayed payments, factoring ( receiving cash immediatly from a factor such as a bank instead of waiting to be paid.)
63 of 67
Whats overdraft?
An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn".
64 of 67
Whats trade credit?
Trade credit is the credit extended to you by suppliers who let you buy now and pay later. Any time you take delivery of materials, equipment or other valuables without paying cash on the spot, you're using trade credit.
65 of 67
3 Stages of being customer focused?
1) IDENTIFYING NEEDS: e.g- by using market research, 2) ANTICIPATING NEEDS:e.g- using the identified needs in advance to give the business a competitive advantage, 3) Meeting customer needs: providing these needs wether its high quality, low prices..
66 of 67
Examples of these 3 stages of customer focus being put into practice?
1) A business asking customers to complete a survey while leaving the store. 2)A pub opening a beer garden, anticipating warm weather. 3) business' adapting elements of the marketing mix e.g-recycled packaging for environmentally conscious customers.
67 of 67

Other cards in this set

Card 2

Front

What is a production?

Back

Using raw materials, labour and machinery to make products.

Card 3

Front

What is a customer/consumer?

Back

Preview of the front of card 3

Card 4

Front

What is the purpose of a business?

Back

Preview of the front of card 4

Card 5

Front

What can market reasearch tell a business?

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all Starting a business resources »