business activity Flashcards
(46 cards)
what is a entrepreneur
A person who takes the risk of starting and running a business enterprise
State characteristics of a entrepreneur
creativity
confidence -ability to make things happen
risk taking - for example risking their own money on the business
determination - to see things through
what are risks and rewards in a business
rewards - the benefits and entrepreneur seeds from starting up and running a business they may be financial or non-financial
drawbacks -the possible losses that an entrepreneur may suffer from starting up and running a business
what are three rewards of a entrepreneur?
finance- they potential can make a lot of money
independence -can be their own boss and not told what to do.
self satisfaction-seeing their new idea work and feeling good about the business because it’s successful
what are three risks of a entrepreneur?
financial- could lose a lot of moeny go bankrupt if the business fails
health -the strain of running a business can cause mental and physical illness
strained personal relationships - due to long hours or less/no holidays
what is a business plan
A simple plan which sets out details of the product or service being sold and it will be financed market and detail details of market research findings
What are aims and objectives?
statements of what the business trains to achieve such as grow larger or make profit
why is a business plan good?
It reduces the risk of failure and help should be as successful as possible
What are the five steps of developing a business plan?
The idea - what will the business produce and sell and what are the resources it will need?what is it ? will it succeed
people - identify who will be involved? who will run the business
market research- identify the markets that the business will target
this will include the 4 ps product place promotion and price
finance - identify how much finances needed and more for
competitors - identify and state how it is intended to beat the competition? Identify how the product or service will be better to those of competitors.
what are the roles of a business plan
identify the market-who is it aimed at for example age ,gender
identifying the resources -stuff needed to operate the business for example type of equipment or machinery to be used
finance - how much you need to start to grow the business and how it will be achieved for example selling shares or obtaining a loan
achieving the business aims and objectives - for example making a profit
What’s a sole trader
The business owned by one person
What’s a partnership?
A business owned between two and 20 partners
What’s a private limited company?
ltd
usually a smaller business it can sell shares to invited people only
What is a public limited company?plc
it can sell shares to anyone who wants to buy
can sell its shares to the general public on the stock exchange.
What are shares?
Part ownership of a business
advantages of a sole trader ?
easy to set up
receives all the profit
the owner makes all the decisions
All information relating to the business remains private
cheap
disadvantage of a sole trader
unlimited liability – a sole trader is personally liable (responsible) for all debts of the business
Illness of sole trader – may be no one else to run the business in his/her absence
it’s long hours
Shortage of skills – one person may not have all the skills the business needs – have to employ others (more
advantage of a partnership
• more than one person – easier to raise capital (money/finance)
• easy to set up
• more skills available
• able to share out work.
• financial information remains private.
disadvantage of a partnership
Profits shared between all partners.
• Unlimited liability – each partner is liable (responsible) for the debts of the business and may lose personal assets.
• Shortage of capital even though more owners
• Disagreements between partners – slower decision-making
The partners cannot sell shares to raise finance
advantage of a private limited company
shareholders can restrict who can buy shares the business continues even if shareholders sell their shares or dies
Limited liability – limits risk
• Continuity – the business continues after the death of any shareholder because the company has a separate existence.
• Company can Raise money easier.
• Shareholders can control who buys
the shares in the company
Disadvantages of private limited company
the public can see information about the business
The register of companies requires legal documents which take time to produce
More expensive to set up/operate – must comply with regulations/ filing of documents and accounts, etc
Dividends (share of profit) required to be paid to shareholders – may reduce money for other purposes.
what’s a sleeping partner
provide capital (money) for the business but are not involved in running of business.
advantage of public limited company
the owners have limited liability
Able to raise large amounts of capital from general public
• Easier to borrow money
• Limited liability
• Continuity
disadvantage of public limited company
managers are employed to make decisions
the public can see the information about the business
anybody can buy shares
No control over who buys it shares – possibility of a takeover
• Costs – more complex more regulation – minimum share capital (total money invested by shareholders) must be £50,000
• Problems of size – complex management structure – inefficien
• Even more financial information is available to the public, including competitors – risk of takeover
