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Year Nine Business > General > Flashcards

Flashcards in General Deck (48):

What is an entrepreneur?

An individual with the ideas, skill, commitment, risk taking abilities and passion to establish and maintain a business


What is an enterprise?

Another name for a business. The word enterprise describes the actions of someone who shows some initiative by taking a risk setting up, investing in and running a business


What are the entrepreneurial characteristics?

-Passion and knowledge
-Goal setter
-Sound judgement


What is the purpose of a business?

To provide services and/or goods to others. It does not have to be profitable, but it usually is. The goods and services can be provided using different methods.


What is a business?

Any organisation that produces or supplies goods or services


What is profit?

The amount of money a firm has left from selling its products (goods or services), after it has paid all its expenses


What is the social environment?

The way in which changes in society affect a business e.g. high sugar in foods, more people joining the gym, more immigrants or a new trend


What is franchising?

Buying into an existing business and acquiring the right to use an existing idea.


What is a franchisor?

The person who sells the business idea in a particular location


What is a franchisee?

The person who buys the right from a franchisor to copy a business format


What are some common examples of franchises?

McDonalds, Subway, Krispy Kreme Doughnut Corp, Pizza Hut, Ben and Jerry's


What is a sole trader?

A sole trader describes any business that is owned and controlled by one person - although they may employ workers. They put the money in to start the business and no legal formal paperwork is needed. Common examples are hairdressers, photographers and plumbers


What are the advantages of sole traders?

-It is easy to set up as no formal legal paperwork is required.
-Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost.
-As the only owner, the entrepreneur can make decisions without consulting anyone else


What are the disadvantages of a sole trader?

-The sole trader has no one to share the responsibility of running the business with. A good hairdresser, for example, may not be very good at handling the accounts.
-Sole traders often work long hours. They may find it difficult to take holidays or time off if they are ill.
-They face unlimited liability if the business fails.


What is limited and unlimited liability?

-Unlimited liability means the owner of the business is personally responsible for the the firm's debts and may have to pay for losses made by the business out of their own pocket
-Limited liability means the owners are not responsible for the business' debts, they can only lose money they invested in the business


What is a partnership?

Partnerships are a similar route to the sole-traders to set up a business. They are the combining of two or more people to set up a business. Partnerships do not have a separate legal status and the partners are usually self-employed. Some common examples are solicitors, dentists and doctors. The profit is shared between the partners and they are all taxed on it


What legal documentation is needed in a partnership?

Each partner and the partnership must be set up with self-assessment tax. A Deed of Partnership agreement must also be set up which details how the business will be run, including how much each partner invests, how they intend to work together, and how to deal with changes to the partnership. The partnership dissolves if a partner dies, goes bankrupt etc. as there is no legal status consequently.


What are the advantages of a partnership?

-More capital (money) can be put into the business.
-More people can share the workload.
-More ideas can be generated.


What are the disadvantages of a partnership?

-Like sole traders, partnerships are unincorporated and have unlimited liability.
-Each partner is legally responsible for what the other partners do.
-Disagreements are more likely to occur, as partners may want the business to go in different directions.


What is a private limited company (ltd)?

-Private limited companies are an incorporation
-In a limited company, shareholders' liability is limited to the capital they originally invested. If such a company becomes insolvent, the shareholders' personal assets remain protected.
-A private limited company is its own entity (independent)
-The company is owned by shareholders which have been sold the shares privately
-At least 1 shareholder, 1 director and 1 secretary


What is an incorporated business?

An incorporated business (also called a corporation) is a type of business that offers many benefits over being a sole proprietor or partnership, including liability protection and additional tax deductions. Forming a corporation also allows you raise capital through sale of shares of your company.


What is a Public Limited Company?

-Public limited companies are an incorporation
-In a limited company, shareholders' liability is limited to the capital they originally invested. If such a company becomes insolvent, the shareholders' personal assets remain protected.
-The company is owned by shareholders. The shares have been sold to the public via the Stock Exchange
-The company is usually run by an elected board of directors
-Minimum share capital is £50,000
-At least 2 shareholders, 2 directors, qualified Company Secretary


What legal documentation is needed for limited companies?

-Memorandum of Association
-Articles of Association


What is included in the Memorandum of Association?

-The Memorandum of Association is a document that regulates a company's external activities and must be drawn up on the formation of a registered or incorporated company.
- As the company's charter it (together with the company's articles of association), it forms the company's constitution.
-The memorandum of association gives the company's name, names of its members (shareholders) and number of shares held by them, and location of its registered office. It also states the company's objectives, amount of authorized share capital whether liability of its members is limited by shares or by guaranty, and what type of contracts the company is allowed to enter into.


What is included in the Articles of Association?

-The Articles of Association are the internal rule book that every incorporated organisation must have and work by. It forms a part of the constitution of an organisation.
-The articles of association are a contract between the members (stockholders, subscribers) and the organisation and among the members themselves.
-It sets out the rights and duties of directors and stockholders individually and in meetings. Certain statutory clauses (such as those dealing with allotment, transfer, and forfeiture of shares) must be included; the other clauses are chosen by the stockholders to make up the bylaws of the organisation


What is Divorce of Ownership of Control?

Divorce of ownership from control is a situation where although a firm is owned by its shareholders it is actually controlled by the firm's management (the board of directors, appointed by the shareholders at the annual general meeting) to run the business on their behalf.


What are the advantages of a Private Limited Company?

-Member's liability is restricted to the amount of shares they own. They have limited liability
-Additional capital can easily be raised by selling shares
-The company can continue to trade even if one of its members dies
-Shares can be bought and sold with director's approval
-The private company has a separate legal existence from that of its owners. It can own property and sue and be sued.
-This type of organisation has a much higher business status than a sole trader
-No minimum share capital


What are the disadvantages of a Private Limited Company?

-Audited annual returns and accounts have to be made to the Registrar of Companies. All these documents are available for public inspection
-A private limited company is more expensive and time consuming to set up than a sole trader or partnership
-Professional help will be needed to set up a private limited company
-There is separation of ownership and control which means that the owners no longer make all the decisions
-There are limited opportunities for economies of scale (a proportionate saving in costs gained by an increased level of production)
-Less status than Plc, loans are more difficult


What are the advantages of a Public Limited Company?

-Raising capital through public issue of shares
-Widening the shareholder base and spreading risk
-Other finance opportunities
-Growth and expansion opportunities
-Prestigious profile and confidence
-Limited Liability
-Quick exit
-Transferability of shares
-Banks are more prepared to finance plcs


What are the disadvantages of a Public Limited Company?

-More regulatory requirements
-Higher levels of transparency
-Ownership and control issues
-More vulnerable to take-overs
-Short termism (pressure from market, short-term -results)
-High initial financial costs


What are social enterprises?

A Social Enterprise is a business model that puts the interests of people and planet before shareholder gain


Where does the finance come from for a Sole Proprietors?

-Bank loans
-Own resources
-Government grants(if available)


What are the basics to setting up a sole trader or partnership business?

-permission to trade in an area
-registration to pay VAT if turnover is above a certain level
-profit and loss accounts and a balance sheet so that the business can be assessed for tax and insurance contributes
-A knowledge of health and safety laws and a willingness to obey the rules


What is the public sector?

Organisations run by the government


What are the external influences on a business' success?

-Business rivals
-Pressure groups
-Global economy


What are the main roles in a business project?

-Completer finisher
-Resource investigator
-Monitor evaluator


What is a brand?

A type of product manufactured by a particular company under a particular name


What is an umbrella brand?

It is the main brand concept which has different product lines under the same family stemming off


What is break even?

The point at which a business makes no profit or loss: total costs = total revenue


What is revenue?

A business' total income from customers


What are total costs?

the expenses the business has to pay (fixed costs +variable costs)


What are variable costs and fixed costs?

-Variable costs are the expenses that vary in direct proportion to output (e.g. raw materials)
-Fixed costs are the costs to a business that do not vary with output (e.g. rent or utilities)


How do you calculate profit?

Total revenue-total cost


How do you calculate market share?

A firm's total sales/revenue
-------------------------------------- x 100
Total sales in market


What is the difference between a company and a brand?

A company is a limited business that provides/ sells products whereas a brand is the name for a line of products. The brand is manufactured by the company


What is secondary research?

Research to find out information that people have already found out themselves


What is a brand identity?

The visible elements of a brand (such as colours, design, logo type, name, symbol) that together identify and distinguish the brand in the consumers' mind


What is the target market?

The particular group of consumers at which a product or service is aimed