business ventures Flashcards
(56 cards)
1
Q
FACTORS THAT MUST BE CONSIDERED when choosing a form of
ownership.
A
LEGAL PERSON
CONTINUITY
LIABILITY
OWNERSHIP
TAX IMPLICATIONS
LEGAL
REQUIREMENTS
CAPACITY
2
Q
qualities of an entrepeneur
A
QUALITIES DESCRIPTION
-Desire for responsibility
-Good leadership/management skills
-Clear vision
-Willpower to overcome
-Risk takers
-Self-confident
-Organisational skills
-Efficiency in time and resources
-Innovative
-Perseverance
-Strong work ethic
3
Q
legal person definition
A
the legal rights of a person/business to own property, enter contracts or sue/be sued
4
Q
continuity definition
A
the ability of a business to continue after the owner/s die or retire
5
Q
liability definition
A
- the responsibility of the owner to pay the debts of the business
- limited liability = owners will not lose personal assets paying it back
-unlimited liability = may lose personal assets to pay business back fully
6
Q
ownership definition
A
- the amount of control the owner wishes to have
7
Q
TAX IMPLICATIONS
A
- consider tax laws, some businesses are taxed more than others.
- These fluctuations affect the amount of tax a company
pays to the government.
8
Q
LEGAL
REQUIREMENTS
A
- Legislation for the establishment/starting a business.
- The establishment costs and time before a business can
legally do business.
9
Q
CAPACITY
A
- Refers to the ability/potential of management to start and
operate a business as planned. - The ability to expand by adding owners / partners /
shareholders.
10
Q
DIFFERENT FORMS OF OWNERSHIP
A
Forms of ownership refers to the type of business selected by the business owner
11
Q
Explain the DIFFERENCE between PROFIT & NON-PROFIT organisations/companies
A
PROFIT
- Objective is to make profit for the
owner. - Capital contributed by the owners.
- Responsible for paying tax.
NON-PROFIT - Objective is to promote a social cause.
- Funds from donation and government
grants are the main source of capital. - Exempted from paying tax.
12
Q
ADVANTAGES AND DISADVANTAGES OF A SOLE PROPRIETOR:
A
ADVANTAGES
* Easy & cheap establish.
* Quick decision-making.
* Owners receive all the profit.
* In contact with customers, suppliers and
employees.
DISADVANTAGES
* Unlimited liability.
* No legal personality
* No continuity.
* Owner accepts all risks.
* Owners are overworked.
* Capital is limited.
* No job security.
13
Q
ADVANTAGES AND DISADVANTAGES OF A PARTNERSHIP:
A
ADVANTAGES
* easy & cheap to establish.
* More capital than sole proprietor.
* Easier to get credit.
* Expenses, responsibilities and tasks are
shared.
* All benefit from profit.
DISADVANTAGES
* Unlimited liability.
* No legal personality
* No continuity.
* Partners disagree.
* Decisions take time.
* A partner’s dishonesty affects the rest.
14
Q
ADVANTAGES AND DISADVANTAGES OF A CC:
A
ADVANTAGES
- Limited liability.
- Legal personality & continuity.
- Easy & cheap to establish.
- None AGM necessary.
- Financial statements need not be audited.
DISADVANTAGES
- Capital limited to 10 members.
- If a member acts without expertise and care,
the member shall be liable for losses. - Banks require a financial audit for loans.
- Decisions take time.
- Could lead to conflict
15
Q
ADVANTAGES AND DISADVANTAGES OF PRIVATE COMPANIES:
A
ADVANTAGES
- Limited liability.
- Legal personality & continuity.
- Number of shareholders allows for more
capital. - No AGM necessary.
DISADVANTAGES
- Complex establishment process.
- Can only rely on capital contributed by
members. (Cannot get money from the
general public for capital.). - Subject to double taxation.
- Annual financial statements must be
reviewed by a qualified person, which is an
extra expense for the company.
16
Q
ADVANTAGES AND DISADVANTAGES OF A PERSONAL LIABILITY COMPANY:
A
ADVANTAGES
- Limited liability.
- Legal personality & continuity.
- Number of shareholders allows for more
capital. - No AGM necessary.
DISADVANTAGES
- Complex establishment process.
- Can only rely on capital contributed by
members. (Cannot get money from the
general public for capital.). - Subject to double taxation.
- Annual financial statements must be
reviewed by a qualified person, which is an
extra expense for the company.
17
Q
ADVANTAGES AND DISADVANTAGES OF A PUBLIC COMPANY:
A
ADVANTAGES
- Limited liability.
- Legal personality & continuity.
- Can obtain large amounts of capital.
- Can attract skilled personnel because
they can pay them well. - Provides job security.
- Strict regulatory requirements to protect
shareholders.
DISADVANTAGES
- Complex establishment process.
- Certain information must be published under
the law e.g. financial statements. - AGM must be held.
- Failure could lead to large scale
unemployment. - Shareholders may have little or no input in
the affairs of the company.
18
Q
ADVANTAGES AND DISADVANTAGES OF STATE OWNED COMPANIES:
A
ADVANTAGES
- Limited liability.
- Legal personality & continuity.
- Supporting of government.
- Greater power in negotiating contracts.
- Profits can be used to finance other
government departments. - Unnecessary duplication of services is
eliminated.
DISADVANTAGES
- Not a true form of ownership because the
government controls all decisions. - Difficult to raise capital because stock is
limited. - May lead to poor management because the
government is not as effective as the private
sector. - Rely on subsidies from the government.
- Losses must be paid by the taxpayer.
19
Q
ADVANTAGES AND DISADVANTAGES OF NPOs/NPCs:
A
ADVANTAGES
- Members have limited liability, but
directors can be held liable for loss /
damage. - Legal personality & continuity.
- Donors receive tax deductions.
- Can get funding from national lottery trust
and other agencies. - Exempt from paying tax to SARS.
DISADVANTAGES
- They are not allowed to pay bonuses to
members. - Assets to be transferred to a similar type of
company if company be dissolved. - Must keep financial and accounting records.
- May make a profit, but may not distribute
property or profits to its members. - Must hold an AGM.
20
Q
ADVANTAGES AND DISADVANTAGES OF CO-OPERATIVES:
A
ADVANTAGES
- Limited liability.
- Legal personality & continuity.
- Facilities of members are combined to
achieve common goals. - Better production due to loyal and
dedicated members because they work
for themselves. - Decision-making by a group which is
democratic and fair.
DISADVANTAGES
- Unable to pay high salaries.
- Success depends on loyalty, commitment
and support of its members. - Can be difficult to obtain loans, because the
main objective is not always to make profit. - To reach a decision is often difficult and time
consuming. - Auditing of financial statements compulsory.
21
Q
Explain the meaning of a BUSINESS OPPORTUNITY and give practical EXAMPLES
A
A business opportunity is an idea for a product or service that will meet needs or desires,
and that can be sold or leased to earn an income.
22
Q
IMPORTANCE OF ASSESSING NEEDS AND DESIRES
A
- distinguish betw the needs and wants of target market to take advantage of business opportunities.
- Needs and desires are key to business opportunities.
- Every need/desire are a possible business opportunity.
- a need not met is a guaranteed market.
- easy to find something that people want, bc desires are unlimited.
- Sometimes an entrepreneur will invent a new product w/ no desire/market
- In such a case entrepreneur has to create a desire
through clever advertising
23
Q
MARKET RESEARCH to assess needs and desires
A
Market research is the systematic gathering, recording and analysing of data about the
marketing of goods and services.
24
Q
Discuss/Explain the IMPORTANCE OF MARKET RESEARCH for businesses:
A
- Conduct market research regularly because people’s taste, habits, behaviours and
desires change constantly. - Gathers facts and opinions in an objective way to find out what goods and services
people want to buy.
25
Explain/Describe PROTOCOL AND ETHICS for conducting research
Ethical issues and protocols to be adhered to when doing research:
* The research should be conducted with the willing cooperation of participants.
* If research is taking place within an organisation, it must be approved first.
* The person conducting the research should not try to influence the opinions of the
participants.
26
Explain/Discuss ETHICAL business opportunities
When pursuing a business opportunity, ensure that:
* It does not break any law or infringe on any copyright.
* It does not harm the environment.
* The product or service should be safe.
* The product or service should not be bad for people's health.
27
Explain the DIFFERENCE between INTERNAL & EXTERNAL MARKET RESEARCH
INTERNAL MARKET RESEARCH
- factors within your business
-your strengths and
weaknesses.
EXTERNAL MARKET RESEARCH
-the broader business
environment affecting your
business.
28
Outline/Mention/List the STEPS FOR DATA COLLECTING
1. Identify potential MARKET/S.
2. Identify WHERE markets are.
3. Mail or EMAIL the questionnaire.
4. interview will be FACE TO FACE or via telephone?
5. HOW MANY people you want responses from.
6. TRAIN PEOPLE to interview potential customers without influencing the
answers.
7. Plan a TIME LIMIT for collecting the data.
29
whats a SWOT ANALYSIS
* planning tool used to help make decisions
* used to identify possible challenges in all three business environments
30
SWOT ANALYSIS
STRENGTHS
* Strengths refer to anything that the
business and its resources are good at,
and that can be used to its advantage.
* Ask yourself:
What are my advantages?
What do I do well?
WEAKNESSES
* A weakness is something the business
lacks or cannot perform very well. It's an
internal factor that hampers
development.
* Ask yourself:
What do I do badly?
What could I improve?
OPPORTUNITIES
* Opportunities refer to the external
options that can be used to the
advantage of the business.
* Ask yourself:
What are the market trends?
How can I exploit them?
THREATS
* Threats are factors outside of the
business that threaten the existence or
success of the business.
* Ask yourself:
Which external factors hamper my
success?
How can I overcome these factors?
31
Use a SWOT analysis to analyse the viability of a business opportunity
1. Conduct a SWOT
analysis
* List your strengths, weaknesses, opportunities and threats
2. Analyse the impact
of the strengths
3. Analyse the impact
of the weaknesses
4. Analyse the impact
of the opportunities
5. Analyse the impact
of the threats
6. Compare the positive and negative rankings
* Add up the positive scores
* Add up the negative scores
7. Compare the results
8. Make a decision
32
Discuss/Explain the RIGHTS & RESPONSIBILITIES of the LESSEE and the LESSOR
LESSEE/ LESSOR
1. Must pay the rent on time.
1. Must make sure the goods or property
are available on the agreed date.
2. Must take care of the goods or property
while on lease.
2. Must see that goods and services are in
the condition agreed to.
3. Must leave the goods or property in the
same condition as when taking
possession of it
3. May not disturb the lessee without good
reason.
4. May be responsible for the
maintenance of certain aspects of the
goods or property.
4. May be responsible for the
maintenance of certain aspects of the
goods or property.
33
Discuss/Explain the concept of a RENTAL CONTRACT
* an agreement between a tenant and a landlord for the renting of property.
.
34
Discuss/Explain the RIGHTS & RESPONSIBILITIES of LANDLORDS and TENANTS
LANDLORD /TENANT
1. give tenant occupation and
control of the property on the agreed
date
1. Must pay rent on time.
2. Must maintain the property.
2. Must use the property in a reasonable
manner for the purpose for which it was
let.
3. Must not disturb the tenant
unreasonably
3. Must leave the property in the same
condition as when taking possession of
it
35
Explain the IMPORTANCE of BUSINESS REPORTS
* key to decision making
* Senior management needs business reports to keep track of what is happening in the business to make decisions.
* tells seior management what each dept is doing
* Business reports must be to the point and effective.
36
Outline/Discuss/Explain the GUIDELINES FOR EFFECTIVE BUSINESS REPORTS
* Prepare an overview.
* Write concisely and to the point.
* Use regular language.
* Use visual summaries, such as tables, graphs, diagrams and drawings.
* Edit your report
* Get someone to look at the report and make suggestions on how to improve it.
37
VISUAL SUMMARIES
* Visual Summaries create visual pictures that summarise what has been read. It shows
the main idea through a visual representation such as graphs and diagrams.
e.g tables, bar graphs, line graphs, pie charts, flow charts
38
Explain THE IMPORTANCE OF VISUAL AIDS
* People learn in different ways, utilising their eyes and ears effectively will help to
convey your message.
* Visual aids also help maintain the audience's interest during the presentation as it
engages the audience with the presentation, thus making them remember it
afterwards.
* Good visual aids are interesting, relevant and support the presentation, but never
dominate it.
39
Discuss/Explain the ADVANTAGES & DISADVANTAGES of GRAPHS/DIAGRAMS
ADVANTAGES
* A lot of information can be displayed in
an easy to understand format.
* Requires little explanation.
DISADVANTAGES
* Too many diagrams and graphs can be
confusing to the audience.
* Information can be manipulated easily,
causing false interpretations.
40
Outline/Explain/Discuss FACTORS that must be considered when PREPARING FOR A
VERBAL PRESENTATION.
* Write down the purpose and the objectives of presentation.
* Consider the audience.
* Write introduction, body and conclusion.
* Create visual aids
* note how long it takes.
* Practise in front of an honest person
* ensure that your visual aids are appropriate to the venue, and that equipment provided is working and suitable.
41
TYPES of visual aids
* Hand-outs
* Transparencies
* Slides
* Charts
* Models
* Posters
42
Explain the concept of AUDIO-VISUAL AIDS
any apparatus using sound or sight to convey
ideas.
43
EXAMPLES OF AUDIO VISUALS
DATA PROJECTOR
INTERACTIVE WHITEBOARD
VIDEO CONFERENCING
VIDEOS
FLIP CHARTS
44
The designing of HAND-OUTS
1. The key is SIMPLICITY.
2. RELATE the hand-out to your presentation.
3. Make your hand-out appealing to the eye
4. Don't let the hand-out DISTRACT your audience.
5. Know WHEN to distribute your hand-out.
45
Explain the IMPORTANCE OF A BUSINESS PLAN
* a document outlining all the important facts, processes and procedures of the business.
* The plan maintains business focus.
* used to secure financing from investors.
* evaluates the viability of a business idea;
* evaluates success/weaknesses of a business
46
Analysis of ENVIRONMENTAL FACTORS IN THE MACRO ENVIRONMENT
* influence the success
* It is essential to look at the factors influencing your business before you start writing the business plan.
* The best way is to do a PESTLE analysis.
* The PESTLE analysis examines each of the external factors that could impact on the business.
* PESTLE analysis assesses whether impact is negative or positive.
* PESTLE analysis examines to what extent the impact will affect the business.
47
Outline the COMPONENTS OF A BUSINESS PLAN
1. COVER PAGE
2. INDEX PAGE
3. EXECUTIVE SUMMARY
4. DESCRIPTION
5. SWOT ANALYSIS
6. MARKETING PLAN
7. OPERATIONAL PLAN
8. MANAGEMENT PlAN
9. FINANCIAL PLAN
10. ADDITIONAL DOCUMENTS
48
1. COVER PAGE
* Name of the entrepreneur, name and logo of the business
* Address and contact details of the business
49
EXECUTIVE SUMMARY
* Summary of the entire business plan
50
DESCRIPTION
* Describes the product or service and the unique features of the
business
* Outlines the vision, mission, goals and any legal requirements
51
SWOT ANALYSIS
* Identifies strengths, weaknesses, opportunities and threats
52
MARKETING PLAN
* Description of the marketing analysis
* Includes the target market, customers and competition
* Explains the marketing mix and provides the marketing strategy
53
OPERATIONAL PLAN
* Includes the location of the business
* Describes the manufacturing process
* Details of the equipment and suppliers
54
MANAGEMENT
PLAN
* Outlines the hierarchy and roles of the employees
55
FINANCIAL
PLAN
* Detailed description of the entrepreneur's financial contribution
* Funding requirements, projected budgets and cash flow
statement
56
ADDITIONAL DOCUMENTS
* Annexure contains additional documents
* A contingency plan (when unexpected things happen)
* Time schedule
* Legal registration documents
