Flashcards in starting a business Deck (76):
what is an enterprise ?
a profit seeking business that exists to achieve social objectives
what is an entrepreneur ?
someone that sets up a business in hope of a profit
positives of sole traders ?
- easy to set up
- your youre own boss
- take all the profit
negatives of sole traders ?
- work long hours
- unlimited liability
positive of partnerships ?
- more orders means more ideas and specailised skills
- shared workloads
- more capital
negatives of partnerships ?
- legally responsible for what the other partner does
- unlimited liability
- can be disagreements
positives of a private limited company ?
- limited liability
negatives of private limited company ?
- expensive to set up
- legal information is not kept quiet
2 documents private limited companies have to fill out ?
- memorandum of association ( who and where they are based)
- article of association ( how the business will be run )
pros of franchises ?
- less risk of the business failing
- wider market
- they might be given training or help on things lime staff management
cons of franchises ?
- cant create your own products
- has to run business according to franchises rules so freedom is limited.
7 goals a business might have ?
- market share
- enviroment sustainability
- ethical considerations
- customer satisfaction
how are objectives different to aims ?
objectives ten to be more short term and are more measurable
2 different types of stakeholders ?
what is a business plan ?
is an outline of what a new business will do and how it aims to do it
7 sections of a business plan ?
what can affect a good business plan ?
- the economy at the time
- actions of the competitors
location of production factors ?
location of raw materials
economies of concentrations
location of market
4 Ps in marketing ?
product - that people will want to buy
price - that customers think of good value for money
promotion - so that potential customers are aware
place - coventiant for customers
what is a gap in the market ?
there is a group of customers thats needs arent being met.
what does market research do ?
finds out want the customers wants and what price they are willing to pay
what is field/primary research ?
carrying out your own research and work
examples of primary research?
questionaires, telephone surveys, customer/supplier feedback, and focused groups
what is desk/secondary research ?
looking at other peoples work and research
examples of secondary research ?
newspapers, magazines and internet
when the demand for product rises as the price ..... ?
when the supply of a product rises the price ..... ?
what is equilibrium ?
where the producers and consumers agree
different media promotion ?
posters or billboards
leaflets or business cards
what determines where firms advertise ?
- target audience
- size and location of the market
- size of budget
what determines where the product will be sold ?
- convenient for potential customers
- suitable shops that are easily avaliable to target market
what is revenue ?
income earned by a business
what are costs ?
money a business pays out to run the business
what is a direct cost ?
costs that are needed for making a particular product e.g labour, raw materials and machinery
what are indirect costs ?
overheads of running the business e.g salaries and telephone bills
what are fixed costs ?
costs that do not vary with output e.g rent
what are variable costs ?
costs that will increase as the firm expands output e.g factory costs, raw materials.
how to calculate profit ?
revenue - costs
5 main sources of start up finance ? and definitions ?
do they pay interest ?
grants - money given to a company mainly by goverment, they dont have to be repaid.
trade credit - they do not have to pay straight away for materials etc. they are given an invoice and time to pay after
overdrafts - firms are allowed to take more money out of the bank then they have in your account. but pay interest.
loans - (bank) easy money to take out but interest is repaid, (family + friends) borrowing money on agreed terms, (mortgages) long term loan for buying properties
venture capital - money invested by people who specialise in giving finance to new or expanding small firms, often then take a stake in the company
what is cash flow ?
the flow of all money into and out of the business
what is net cash flow ?
the difference between cash in flow and cash out flow
why are cash flow forecasts used ?
its a good way of predicting when the firm may face liquidity problem. the firm can then plan to put measures in place in thoses times
what are credit terms ?
what tells you how long after buying a product the customer has to pay.
3 main reasons for poor cash flow ?
- poor sales - lack of demand
- overtrading - takes too many orders
- poor business decisions
what does poor cash flow mean for the business ?
- staff wont be paid on time
- creditors may not get paid on time
- creditors may not wait for payment (legal action)
3 ways cash flow can be improved ?
- reschedule their payments
- negotiat better credit terms
- make customers pay upfront
pros and cons of full time staff ?
- expensive to pay
- but are avaliable the whole working week
pros and cons of part time staff ?
- less expensive
- more motivated
what is a personal recommendations ?
when a job vancancy is filled out by someone that has been recommended by a friend or existing worker
pros and cons of internally recruiting ?
- cheaper and quicker , the worker already knows the firm
- no new ideas put into the business and the promotion means that there is till a position to fill
pros and cons of externally recruiting ?
- wider range of applicants
- expensive and takes a long time
tests to select the right employee ?
skills test - whether they are the abilities or not
aptititude - whether they have the potential to learn or not
personality tests - personal qualities e.g handwriting
group tests - whether they work well in a team or not, leadership etc
what is paying commissions ?
paid to sales staff, they earn a small basic contract and then earn more for every sale they make
what happens when you pay a bonus ?
a lump sum added to pay to a worker who has met their performance targets
what 3 things determine how much someone is paid ?
what is job enlargement ?
a productive member of staff is given more tasks to do so their job is more interesting
what is job enrichment ?
involves giving a worker greater responsibilities to motivate and work harder
what is fringe benefits ?
any reward that is not part of a workers income e.g company car
5 main employment laws ?
- employment rights
- minimum wage
- anti - discrimination
- health and safety legalisation (all staff need health and safety training)
- leaving employment - no unfair dismissal
what is job production ?
and decription ?
making one thing at a time, individual products which are each unique
require high skilled labour and are expensive amd take a long time to make but are high quality.
but can be sold for a high price
what is batch production ?
and description ?
producing a batch of indentical products. when complete thet reorganise and make a batch of something else.
suitable for products on produced in limited quantities or for limited amount of time.
what is CAD ?
computer aided design - can be used to create a 3 dimensional computer models to make instant changes
what is CAM ?
computer aided manufacture - can improve quality and productivity and reduce human error
what do computers do for businesses ?
they make it possible to get more done in shorter time so they reduce costs and increase efficiency
can also work away from work
3 parts to expecting quality ?
- product - materials and production
- customer service
- promotional material
- quality assurance
what are quality awards ?
evidence of high standards
what is trade associations ?
membership of a certain trade associations can signify that the firm meets particular standards of workmanships
examples of good customer service ?
- accurate product information
- dealing with customer complaints and concerns
- fulfilling the order requirements
- delivering on time
- after sales support and warranties
benefits of good customer service ?
- customer satisfaction lead to repeated purchases
- good word of mouth
- wont be desperate to find new customers
sales of goods legalislation makes sure products are what 3 things ?
- fit for purpose
- match the description
- satisfactory quality
consumer protection laws affect business how ?
if the products dont meet legal requirements, customers can ask for their money back or replacements etc that cost the business
or they can get into legal troubles
what does ecommerce do to a business ?
reduce costs and increase sales
they can reach international markets
pros of buying online ?
- shop from home anytime anywhere
- easy to compare numerous products
- credit card details can be secure online
- you can track your order
cons of buying online ?
- cant tell if website is trust worthy
- credit and debit card details can be used illegally
- products cant be physically seen before buying
- difficult to exchange products
- customers tend to receive lots of direct emails which can be annoying
pros of websites ?
- can provide customer service 24/7
- easier for customers to buy
- purchases can be made 24/7