1.4 Business Flashcards
(22 cards)
What is unlimited liability?
The business owner is liable for all the debt a business has. The debt the owner is liable for is unlimited.
Why is the owner have unlimited liability?
Business and owner i seen as the same entity.
What is limited liability?
Business owner is not liable for the debt because business and business owner are seen as separate entities.
What is a sole trader?
Just one individual owning a business.
What are the advantages of being a sole trader?
- Quick and easy to set up.
- Simple to run because you have 100% control of the business.
- Minimal paper work.
What are the disadvantages of being a sole trader?
- Owner has full liability.
- Can be harder to raise finance.
- Can pay a higher tax rate than a company.
What is a partnership?
Business that have multiple owners.
What are the advantages of having a business partnership?
- Quick and easy to set up
- Raising funds are easier
- More skills, expertise and more people to discuss important decisions.
What is a private limited company?
When business owner is not liable for the debt the business has following the incorporation process.
What are the advantages of having an LTD?
- Owners only risk losing investment.
- Business continues to exist even if owners want out.
- Access lots of different skills and experience of multiple owners.
What are the disadvantages of having an LTD?
- Lengthy process to set up
- Finances must be made public.
3.Difficult to find a buyer if one owner wants out. - May have disagreement between shareholders.
What is a franchise?
A large company allows a smaller business or individual to buy the right to use their business name and associated branding.
What are the advantages of doing franchises?
- Already successful.
- Get unlimited support from professionals.
- Fairly lower risk.
What are the disadvantages of having franchise?
- Set up costs are usually very high.
- Revenue or profits has to be shared with franchisor.
- No control over business decisions.
What are the factors when deciding the location of a business?
- Proximity to market.
- Proximity to labor
- Proximity to materials.
- Proximity to competition
- Nature of the business
Why is product important element in the marketing mix?
A business must have a product that sells to survive.
What is price?
The amount of money that a customer needs to pay to receive the product.
Why is price important to a business?
- Business must cover costs.
- Must charge enough to make a profit.
- Still offer “value for money” in the eyes of the customer.
What are the factors that influence price?
- Costs of producing or buying the product.
- Costs of running the business.
- Quality of product being sold.
- Whether product being sold has a U.S.P
- Competition
How can someone promote their business?
- Advertising.
- Social media
- Special offers
- Sponsorship
What is a business plan?
A working document produced to help make business decisions or to attract investors.
What are the purposes of business planning?
- Provide direction to employees
- Help measures the businesses progress.
- Attract investments
