SECTION III-ESTABLISHING A BUSINESS Flashcards
(22 cards)
What are the reasons for establishing a business
To make a profit .
To achieve self actualization of achieving their lifelong dream of being their own boss.
To achieve satisfy the needs of their customers.
To achieve financial independence
To create employment for persons in the community that need it.
What is ENTREPRENEURSHIP
The art of organizing and operating a successful business.
What are the 8 functions of an entrepreneur
- Conceptualizing
2.Planning - Organizing
- Access Funds
5.Operating the business
6.Evaluating the business
7.Bearing Risks
8.Entitlement to profit and loss
What is Conceptualizing
To come up with ideas of the type of business to start
What is Planning
Deciding the aims of the business and the strategies needed to achieve those aims.
What is Organizing
Making sure all the resources within the firm are in their proper place and appropriate.
What is Access Fund
Required capital to successfully start the firm.
What is Bearing Risks
taking responsibility for what might go wrong with the firm.
What is Evaluating the Business
Analyzing the performance of the firm to determine if its likely to succeed or not.
What are the QUALITIES /TRAITS OF AN ENTREPRENEUR
Creative
Innovative
Flexible
Goal oriented
Ability to take calculated risks
Persistent
What are the steps in establishing a business
1.Conceptualize Ideas
2.Do Research
3.Identify Resources
4.Create a Business Plan
5.Access Funds
6.Start Operations
7.Evaluate Performance
Why is the business plan created
To determine the feasibility of the firm or its likely success.
To attract potential investors.
To search for financing sources.
To assist in the decision-making process.
What’s the parts of a business plan
Operational Plan (name, goals, structure, staff, products)
Marketing Plan (pricing, target customers, competition, promotion)
Financial Plan (income, expenses, profits, cash flow)
Executive Summary (quick summary of everything)
What is FEASIBILTY STUDY
A complete evaluation of the activities of a business to determine its ability to remain in
business.
What does the feasibility study indicate
The viability of the business
Costs associated with the firm
Potential sources of financing
New strategies to use
What is a plan
A course of action designed to achieve a given outcome.
What is short term plans
The most immediate of plans set by a firm. The plans a firm
expects to achieve within the first five (5) years including making a profit and survival.
What is medium term plans
plans the firm hopes to achieve between five (5) and ten (10) years such as
expansion and increasing profits.
What is long term plans
plans the firms hope to achieve throughout its existence such as becoming market
leader and being able to export
What is collateral[security]
Anything of value that must be temporarily given up to secure a loan.
What things can be used as collateral
-property
- equipment
-stocks
- appliances
-bonds
- money
-motor vehicles
- life assurance policies having a cash surrender value
Why is collateral important
It is establishes the financial situations of the borrower
The ability of the borrower to repay
It represents what the lender can seize and sell to recover what is lent.
