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Topic 3 Flashcards

1
Q

Definition of SME size

A

ABS: Businesses with fewer than 200 employees- 99.8% of businesses

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2
Q

Definition of SME turnover

A

ATO: $10 million or less- 98.4% of businesses

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3
Q

Employment by industry

A

Construction- 950000 employees
Professional, scientific and technical services- 860000
Accommodation and food services- 775000

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4
Q

Roles

A

Produce around 55% of all the products produced yearly

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5
Q

Economic growth

A

when a nation increases the real value of goods and services over a period of time

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6
Q

GDP

A

the total money value of all goods and services over a period of time- $705b, 55% of Australia’s total GDP

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7
Q

Employment

A

2018-19: 66% of employment
7.6m employed by SMEs

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8
Q

Tax revenue

A

2017-18: 36% of total tax revenue

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9
Q

Balance of Payments

A

a record of a country’s trade and financial transactions with the rest of the world over time, usually one year- 87% of exporters of merchandise

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10
Q

Innovation

A

the development or introduction of new or significantly improved goods and services
- small: 87.6% of all innovating businesses
- 2017-18: 49% of total R&D spending

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11
Q

Keys to success

A
  • Flexibility
  • Reputation
  • Focus on adopting a niche marketing strategy- avoids the threat of the ultra-competitive and over-advertised global marketplace
  • Entrepreneurial abilities
  • Access to information
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12
Q

Reasons for failure

A

managerial inexperience and incompetence, undercapitalisation, lack of planning, economic downturn, leadership crisis, negative cash flow

60% in first three years

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13
Q

Qualifications

A

refers to official records of a completed formal training course

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14
Q

Motivation

A

refers to your personal drive, determination and desire to achieve a goal or objective

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15
Q

Entrepreneur

A

someone who starts, operates and assumes the risk of a business venture in the hope of making a profit

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16
Q

Cultural Background

A

Cultural influence can arise from a community’s traditions and beliefs, as well as centuries of experience in certain trade/services

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17
Q

Gender

A

Governments realise that employment growth will come from expansion of small business sector –> policies to assist small businesses + change in social attitudes

Proportion of female owners (June 2020)= 35.4%
2000-20: Full-time increased from 21% to 25%

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18
Q

Professional advisors

A

can examine the business more objectively and provide an independent analysis of the organisation

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19
Q

Accountants

A

provide advice on financial management issues and taxation obligations

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20
Q

Solicitors

A

provide information on business formation and structures, registration, contracts, leases, partnership agreements, patents and legislation

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21
Q

Bank managers

A

provide information and advice on financial services, sources of finance and basic business management

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22
Q

Management consultants

A

assists with business management issues that the owner cannot deal with

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23
Q

NSW State Government

A

have established agencies to provide support and advice to business owners e.g., Department of Planning, Industry and Environment

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24
Q

Business Connect

A

supports small business by providing general and specialised advice, supports digital readiness, regional business development and promotes growth through innovation + boosting resilience

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25
Boosting Business Innovation Program
$18 million investment that gives small business access to research organisations to promote innovation and stimulate economic growth
26
Federal Government
delivers assistance, programs and services that support business | ATO, Austrade, Business.gov.au
27
ATO
main revenue collection agency- provides info about running a business as well as taxation
28
Austrade
provides information, advice and services to help businesses connect to international markets
29
Business.gov.au
offers access to government info, assistance, forms and services
30
Local Government
encourages business through creating employment
31
Technological advice
establishing an online business presence, networking a number of computers within the business premises, or making maximum use of mobile devices can all improve business efficiency
32
Chambers of Commerce
local associations of businesspeople who provide legal and financial advice, taxation advice, explanation of legislation + industrial relations
33
Small Enterprise Association of Australia and New Zealand
Not-for-profit organisation dedicated to research, policy development and dissemination of ideas related to small business management for the SME sector.
34
Trade Associations
offer specific industry information (about product development and industry trends) and assistance
35
ABS
provides valuable data on social, political and demographic trends, and on business activities - information obtained from: census on population and housing, household expenditure surveys
36
Business Mentors
owners may seek advice from an experienced person in the field who can provide invaluable advice and strategies
37
Libraries and Reference Material
access to vast amounts of reference material and databases- subscription to trade and industry journals
38
Business idea
describes the core activities of the business, and the specific features and value of the goods or services it provides
39
Business opportunity
something an entrepreneur can see as an avenue to success. It is often identified when a person believes they can provide goods or services in a better or different way from those already on the market
40
Competition
rivalry among businesses that seek to satisfy a market | achieved through cost or differentiation
41
Goodwill
the monetary value attached to the reputation of a particular business
42
Purchasing a franchise
people buy franchises in order to make use of an existing brand and reputation, staff training & development and operations processes
43
Franchise
buying the rights from another business to distribute its products under its name
44
Franchisor
an individual or business that grants a franchise
45
Franchisee
an individual or business that purchases a franchise
46
Feasibility study
an assessment of the business idea's potential for success. This involves determining how practical the idea is and if it would successfully translate to the market
47
Market research
the process of systemically collecting, recording and analysing information concerning a specific marketing problem
48
Debt finance
relates to the short-term and long-term borrowing from external sources by a business
49
Overdrafts
when the bank allows a business to overdraw their account up to an agreed limit for a specified time to overcome a temporary cash shortfall
50
Commercial bills
short-term loans issued by financial institutions for larger amounts (over $100,000) for a period of generally between 30 and 180 days
51
Factoring
the selling of accounts receivable for a discounted price to a finance or factoring company
52
Mortgage
a loan secured by the property of the borrow
53
Leasing
involves paying for the use of equipment owned by another party
54
Debentures
a type of bond issued by a company for a fixed rate of interest and for a fixed period of time
55
Unsecured notes
a loan from investors for a set period of time. It is not secured against the business’s assets
56
Equity finance
funds contributed by the owner(s) of a business to start and expand the business
57
Self-funding
funded purely from personal finance
58
Private investors
the investors may contribute funds to the business in return for a share in the business's profit and equity
59
Shares
public companies can access capital through issuing shares
60
Crowdfunding
raising finance by using online and social media networks
61
Business name
you have to register a business name with ASIC unless you are a sole trader using your own name
62
Zoning
a means by which local councils allocate land for different uses, such as residential, commercial, recreational and industrial
63
Food Act 2003 (NSW)
Councils and NSW Food Authority conduct regular inspections to ensure that good food safety practices are in place (temperature control, cleanliness, hand washing, labelling)
64
Consumer and Consumer Act 2010 (cwlth)
a law that protects both consumers and businesses. It protects consumers from deceptive or misleading practices, and it regulates the trade practices of businesses
65
On-costs
payments for non-wage benefits
66
Superannuation
a scheme set up by the federal government. It requires all employers to make a financial contribution to a fund that employees can access when they leave or retire from a job. The percentage an employer must contribute will increase gradually from 10.5% to 12% by 2025.
67
Taxation
the compulsory payment of a proportion of earnings to the government
68
ABN
a single identifying number that a business uses when dealing with government departments and agencies
69
Income tax
tax on the wage/salary of employees taxed at a progressive rate (the higher you earn, the higher tax you pay)
70
Fringe benefits tax
tax on the provision of a benefit to an employee (private use car, entertainment, housing)
71
GST
a broad-based tax of 10% on the supply of most goods and services consumed in Australia
72
Company tax
tax on the earnings of a company
73
Capital gains tax
Tax on profit made on the sale of assets
74
Stamp duty
a tax on the transfer of property
75
Land tax
a tax on land owned by individuals or businesses over a certain value (excludes primary production or individuals’ primary residence)
76
Payroll tax
for payrolls that exceed $1.2m, employers pay a tax rate of 5.45%
77
Rates
a system of property taxation usually based on the value of the land (main local government charge)
78
Business Plan
a written statement of the goals for the business and the steps to be taken to achieve them. It is a summary and an evaluation of a business concept in written form.
79
SWOT analysis
the identification and analysis of the internal strengths and weaknesses of the business, and the opportunities in, and threats from, the external environment
80
Vision statement
a broad statement about what the business aspires to become in the future
81
Objective
a specific statement detailing what a business (or individual) needs to achieve in order to accomplish its vision
82
Strategic goals
Goals that focus on long-term, broad aims and apply to the business as a whole
83
Tactical objectives
objectives that focus on mid-term, departmental issues and describe the course of action necessary to achieve the business’ strategic goals
84
Operational objectives
objectives that focus on short-term issues and describe the course of action necessary to achieve the tactical objective and strategic goal
85
Long-term growth
the ability of a business to continually expand
86
Resource allocation
the efficient distribution of resources to successfully meet the goals that have been established
87
Forecasts
the business’ predictions about the future
88
Total revenue (TR)
the total amount received from the sales of a good or service P x Q = TR
89
Total cost (TC)
(of producing a certain number of goods or services) the sum of the fixed and variable costs for those units FC + VC = TC
90
Break-even analysis
used to determine the level of sales that needs to be generated to cover the total cost of production Q= total fixed cost/unit price-variable costs per unit
91
Fixed costs (FC)
costs that do not vary regardless of how many units of a good or service are produced
92
Variable costs (VC)
costs that depend on the number of goods or services produced
93
Cash flow projection
shows the changes to the cash position brought about by the operating, investing and financial activities of the business
94
Monitoring
the process of measuring actual performance against planned performance
95
Performance standard
a forecast level of performance against which actual performance can be compared
96
Evaluating
the process of accessing whether the business has achieved stated goals
97
Percentage change
% change= difference/(sales quota)×100
98
Budget
the business's financial plan for the future
99
Budget preparation factors
- review of past figures and trends - proposed expansion/discontinuation of projects - proposals to alter price/quality
100
Profit levels
profit levels are an indicator of a business’s performance and should be carefully monitored and evaluated
101
Modifying
the process of changing existing plans and using updated information to shape future plans

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