U2, AOS1 (Business Environment and planning) Flashcards
(178 cards)
1
Q
Business environment
A
surrounding conditions in which the business operates. two broad categories (internal and external)
2
Q
list 6 internal environments (small circle)
A
- employees and managers
- legal biz structure
- type of biz model
- biz location
- source of finance
- business support services
3
Q
list 4 operating environments (medium circle)
A
- customers
- competitors
- suppliers
- special interest groups
4
Q
list 6 macro environments (big circle)
A
- CSR
- global issues
- economic conditions
- legal & gov regulations
- societal attitudes & behaviours
- technological considerations
5
Q
Internal environment
A
factors over which the business has a high degree of control
6
Q
Operating environment
A
Stakeholders the business interacts with. some control over these factors but less than the internal enviro
7
Q
Macro environment
A
General economic and societal conditions impacting the business. No control. (Changes in the macro environment can affect ALL businesses, therefore, businesses have no control over these factors)
8
Q
How does the external environment affect the internal environment?
A
events from external enviro will impact the internal enviro the business and its operation.(Businesses have to adapt to changes in the external environment) (can be pos or neg impacts)
9
Q
list 6 legal structure types
A
- sole trader
- partnerships
- companies (priv and pub)
- social enterprises
- Gov business enterprises (GBE)
10
Q
*Business entity
A
organization independent from its owner, producing and selling goods or services
11
Q
*Incorporated
A
incorporated business has a separate legal existence apart from its owner/s. (public listed company or private limited company)
12
Q
*Unincorporated
A
unincorporated business has no separate legal existence from its owner/s. (sole trader or partnership)
13
Q
Unlimited liability
A
business owner is responsible for all debts of their business
14
Q
sole trader features
A
- Owner makes all decisions, bears all responsibility, even if employing others.
- Owner and business not separate entities
- Owner enters contracts on behalf of business
- Tax paid via personal tax file number
- Personal assets may be sold to cover business liabilities
- small
15
Q
sole trader advantages
A
- Simple to establish; only need to register name with ASIC if different from owner’s name
- Simplest form
- Complete control
- Less costly to operate
- No partner disputes
- Owner’s right to keep all profits (No tax on profits, only on personal income)
- Less gov regulation
16
Q
sole trader disadvantages
A
- unlimited liability
- End of business when owner dies
- Difficult to operate if sick
- Need to carry all losses
- Burden of management
- Need to perform wide variety of tasks
- Difficulty in raising finance for expansion
17
Q
Partnership
A
business owned by min of 2, max of 20 people
18
Q
Partnership features
A
- Like sole trader, not a separate legal entity from partners.
- Partnership can be oral, written, or implied.
- partnership agreements include standard conditions.
- Limited partnerships allow investment without management involvement.
- can be silent/sleeping partners.
- Investment adds finance to existing partnership.
- Profits split according to partnership agreement
- Each partner includes their share of profit in personal income for ATO assessment.
19
Q
sole trader
A
business owned and operated by one person
20
Q
*Silent partner
A
contributes financially to business but takes no part in running of partnership
21
Q
partnership advantages
A
- Low startup costs
- Less costly to operate than companies
- Shared responsibility and workload
- Pooled funds and talent
- Minimal gov regulation
- No taxes on business profits, only personal income
- death of one partner, business can keep going
22
Q
partnership disadvantages
A
- unlimited liability
- Possibility of disputes
- Difficulty in finding a suitable partner
- Divided loyalty and authority
23
Q
Incorporation
A
process that businesses go through to become a registered company and separate legal entity
24
Q
*Transitioning from sole trader or partnership to a company involves
A
- Governed by the Commonwealth Corporations Act 2001, overseen by ASIC.
- Register company name with ASIC for an Australian Company Number (ACN).
- Appoint directors to manage company operations.
- Upon incorporation, company gains separate legal identity; owners become shareholders.
25
Shareholders
Owners of a company entitled to a share of its profits
26
Limited liability
shareholders cannot be held personally responsible for debts of business
27
incorporation features
- limited liability; shareholders only risk what they paid for shares
- Shareholders aren't required to sell personal assets if company goes bankrupt.
- Directors may sell personal assets to pay business debts in certain situations.
- 'Ltd' indicates limited liability company.
- Companies can be proprietary (private) or public.
28
Private limited company
incorporated business with 2-50 private shareholders, and shares offered selectively to individuals business wishes to have as part owners.
29
Private limited company features
- most common type of company structure in Australia
- 2-50 private shareholders, often family-owned.
- Shares can only be sold with approval from other directors.
- Not listed on the ASX.
- 'Proprietary Limited' (Pty Ltd) in its name
- Closing private company needs all shareholders to agree. A liquidator sells assets, pays debts, and distributes funds among shareholders.
30
Public listed company
incorporated business with min of 5 shareholders and whose shares are freely traded on the Australian Stock Exchange (ASX)
31
Public listed company features
- shares listed on the ASX
- Shares traded publicly with no restrictions on buying or selling.
- min 5 shareholders, no maximum.
- Large in size and market a large range of products
- Prospectus required for initial share sales.
- Min 3 directors (must live in Aus)
- 'Limited' (Ltd) in its name
- Annual publication of audited financial accounts (annual report).
32
companies advantages
- Easier to attract public finance
- Limited liability - separate legal entity
- Easy transfer of ownership
- A long life
- Experienced management
board of directors
- Greater spread of risk
- Company tax rate lower than personal income tax
- Growth potential
- Recent legislation allows for a single shareholder and director.
33
companies disadvantages
- Cost of formation
- Double taxation - company and personal
- Personal liability if directors knew the business couldn't repay loans.
- Requirement to publish an annual report of audited accounts
- Public disclosure - reporting of certain information
- Too much growth, resulting in inefficiencies
34
Social enterprise
business with objective of fulfilling a social need, aiming to benefits society rather than the owner.
35
Social enterprise features
- goods/services with primary aim of fulfilling a social need.
- Focus on community/environmental concerns.
- Profits made but reinvested into fulfilling their social need
- Can be privately owned or cooperative.
- Operate similarly to commercial businesses, not reliant on donations like charlities.
- Some receive government funding.
36
*Some examples of social needs that can become a Social enterprise business
- providing opportunities for the unemployed
- focusing on waste minimisation & recycling
- creating accessibility to a better quality life for disadvantaged members of community.
37
Social enterprise advantages
- Can open up new markets
- Meeting a social need can have a positive effect on profit and market share.
38
Social enterprise disadvantages
- Getting startup capital can be tough; finding finance is challenging.
- Significant operating costs (will often take on costs that other businesses wouldn't)
- can be difficult to focus on both social and financial objectives.
39
Government Business Enterprise (GBE)
gov owned and runned (operated) business (Aus Post, NBN Co, Medibank priv and VicRoads)
40
GBE features
- Profit-driven
- run like companies.
- Deliver community services while carrying out gov policies
- Operate at federal and state government levels.
- Aim to increase asset value and returns to gov shareholders.
- Board of directors manages GBEs with gov input.
- Gov closely monitors performance and financial returns.
- GBEs are large employers
41
GBE advantages
- GBEs implement gov policies, providing community services where private businesses may hesitate to invest.
- A GBE can operate with some independence from gov
- GBEs introduce healthy competition, potentially lowering prices in markets they enter
42
GBE disadvantages
- Political interference in the day-to-dayoperation of the GBE
- Inefficiencies caused by government 'red-tape' excessive regulation or rigid conformity to rules
- Management can be less effective than that of the private sector
- less accountability within a GBE, resulting in less productivity and negative attitudes amongst staff
43
*Factors to consider overall when choosing a legal structure
- Size of business
- People involved
- Type of business being run
- Tax and other financial issues
- Finance
- Start up costs
- Degree of risk
- Personal preference
44
6 main types of business models
- online businesses
- brick and motor (physical store)
- direct-to-customer business
- franchise
- import
- export
45
Business model
how the business will run its operations to make profit
46
online businesses advantages
- exist solely on internet
- can reach customers across the globe via internet
- Avoid expenses of having physical store (rent and wages)
47
online businesses disadvantages
- expose the customer to the risk of theft when making payments online
- greater risk of unsatisfied customers who couldn’t inspect the product before buying
- No face to face customer contact
- Relies on a few skilled workers for technical operations
48
*types of online models
- Advertising-based websites (facebook)
- freemium (spotify)
- brokerage (ebay)
- merchant (the iconic)
49
Bricks and mortar business
traditional, store with a physical presence, located on shopping strips and in shopping centres. (Preferred business model for major retail, manufacturing, and wholesale businesses)
50
Bricks and mortar advantages
- face to face customer contact
- physically see what you are purchasing
51
Bricks and mortar disadvantages
- more expensive to establish/maintain than online businesses, making price competitiveness challenging
52
*Retail business
Retail businesses sell goods and services to customers at prices higher than their production or bulk purchase costs
53
*Manufacturing business
produces physical goods, often a factory setting. Sold to wholesalers or directly to retailers
54
*Wholesale business
sells large volumes of goods to retailers. They offer heavily discounted prices on bulk purchases. (Eg Costco)
55
*Bricks and clicks
offers customers the choice of online shopping as well as shopping at the physical store
56
Direct-to-consumer businesses
businesses sells products directly to consumers without any intermediaries
(such as retailers or wholesalers) (Can take the form of bricks and mortar, bricks and clicks or online)
57
Direct-to-consumer businesses advantages
- Strong focus on/connection with customers (builds loyalty)
- Lower costs as they dont have intermediaries to reach customers, or require expensive real estate for shops and warehouses
- Lower costs allow business to be more competitive with pricing
58
Direct-to-consumer businesses disadvantages
- Handling every step to get products to customers can be time-consuming and less efficient than selling to specialized retailers.
- Businesses relying on online sales face risks related to cybersecurity and data protection.
59
*Franchise agreement
franchisor grants the franchisee the rights to use its business name and distribute its products or services
60
Franchisor
owner of original business concept that licenses another business to use its name and distribute its products/services (in exchange for royalty payments and fees0
61
Franchisee
licensed to operate under the name of an existing business and distribute its products/services
62
franchise advantages
- Fastest area of business growth in Aus
- Franchisor provides brand name, training, business method, and support.
63
franchisee features
- Franchisee invests startup funds, operates the business, and follows agreement terms.
- Franchisees seek to avoid startup challenges by joining established brands.
64
Imports
goods and services produced overseas and sold to Aus consumers
65
importing features
- Importers seek overseas goods with competitive pricing, superior quality, or production cost advantages.
- Business models consider costs: purchasing, shipping, and tariffs.
- Ensuring goods meet Aus standards for health, safety, and quality is crucial.
- Aus imports more than it exports.
66
Exports
goods and services produced in Aus to be sold overseas customers
67
Exporting features
- Exporters must understand legal requirements of target nations.
- Exporting reduces dependence on local markets, extends product life cycles, and boosts competitiveness.
68
*Goodwill
monetary value attached to the reputation of a particular business
69
*why's it important for a potential business purchaser to know why the business is for sale
- Bc if business has been struggling, it’s probably not a good purchase (analyse financial health of the business - profits for the last 3 years)
70
benefits of purchasing an existing business
- Sales to existing customers making instant income
- good business history increases likelihood of business success
- proven track record makes it easier to obtain finance
- Stock acquired and ready for sale
- seller may offer advice and training
- Equipment available (immediate use)
- Existing employees (can provide valuable assistance)
71
costs (downfall) of Purchasing an existing business
- Existing image and policies may be difficult to change, especially if there’s a poor reputation
- Previous owner's personality and contacts might have contributed to business success, potentially lost when sold.
- Assessing goodwill value can be tricky; new owners might overpay.
- Some employees may resent any change to the business operation
72
whats it means when u purchasing an established business
business is already operating and everything associated with the business is included in the purchase (eg the stock, equipment, premises, employees, existing customer base, reputation and goodwill)
73
*reasons why some set up a new business
- Common reasons, identifying a market gap, existing businesses are lacking and not developing new products or services.
- Entering a saturated market requires attracting customers from existing competitors.
74
benefits of setting up a new business
- owner has freedom to set up the business exactly as wished
- owner can determine the pace of growth and change
- no goodwill for which the owner has to pay
- If funds are limited, possible to begin on a smaller scale
- layout/price/products/service/emploment
75
costs (downfall) of setting up a new business
- high risk and a measure of uncertainty. (without a previous business reputation, it may prove difficult to secure finance)
- Takes time to develop a customer base, employ staff and develop lines of credit from suppliers
- Start-up period may be slow (profits may not be made for awhile)
76
Resources
people and objects that are needed for the business to function properly.
77
3 main categories of resources
- Natural
- Labour
- Capital
78
Natural resources
items used by business that come from the natural environment. including; land, water, raw materials etc
(use wisely and no harm on enviro)
79
Labour resources
people, providing their skills, effort and knowledge to business
(businesses decisions impact employees and business treat them with respect)
80
*Subcontractor
person not directly employed by business but has been contracted to perform certain tasks
81
*main source of labour for a business is...
its employees and the owner
82
Capital resources
tools and machinery thats used to produce goods/perform services
(Capital resources make labor more efficient)
83
*Factors affecting choice of resources
- Quality: eg quality suppliers, quality staff and quality machinery
- Reliability
- Social responsibility
- Cost and budgeting
84
*what can a businesses location determine
whether or not it will succeed
(thats why its important to invest in finding the right location)
85
4 types of locations where businesses can be located
- shopping centre
- retail shopping strip
- online
- home-based business
86
Zoning
local councils allocate land for different uses, such as residential, commercial, recreational and industrial
87
*why is Zoning designed
to keep business activities (commercial and industrial) separate to residential areas which prevents disturbances
88
*in which zone do most businesses operate in
commercial and industrial
89
advantages and disadvantages of having/buying a businesses in a Shopping centres
adv:
- a great option
- new business, thrives when there are no competitors
dis:
- rent can be very high in shopping centres
90
advantages and disadvantages of having/buying a businesses in shopping strips
adv:
- Along major arterial roads
- located near PT
- benefit from high visibility to passing traffic
- attract restaurants and nightlife due to shopping centres closing at night
dis:
- struggle against shopping centres with parking and air conditioning
- lack of parking or timed parking
91
advantages and disadvantages of having/buying a businesses that's online
adv:
- expand the business online
- avoid many associated costs such as rent, electricity
dis:
- no face to face contact
92
*Businesses with an online presence often undertake the following
- Administrative tasks eg contacting customers & suppliers by email
- Set up and maintain a website
- Use online sales platforms such as ebay
- Accept online payments through PayPal
- Ensure potential customers can easily find their website through paid online advertising
93
advantages and disadvantages of having/buying a businesses that's a Home-based businesses
- Tradespeople and other service providers tend to run their business from home
- Don’t need a dedicated business location (provide services in customer’s home or business)
- Technology allows home-based businesses to use mobiles, internet, computer apps, online ordering and payment
- Traditionally service providers rather than goods retailers
94
list factors affecting choice of business location
- Visibility
- cost
- Proximity to customers and suppliers
- proximity to competitors
- Complementary businesses
95
how does Visibility affect choice of business location
- Businesses seeking high visibility, normally choose prime locations (main streets or shopping centers)
- Manufacturing businesses (transport goods to retail stores) don't need highly visible locations.
96
how does cost affect choice of business location
- Renting/buying in a busy shopping center is pricier than a location with less foot traffic
(eg: cafe/food outlets, passing traffic is a major a source of customers so choosing a less visible location to cut cost may not be wise)
97
how does proximity to customers and suppliers affect choice of business location
- Retail businesses (butchers, florists, and bakeries) thrive in convenient locations with off-street parking, such as shopping centers or strips.
- Manufacturing businesses prioritize proximity to suppliers and transport networks over customer proximity.
- Industrial parks are zoned for manufacturing, transport, and warehousing businesses
98
how does proximity to competitors affect choice of business location
- unwise to start a new business in a shopping center with existing businesses of the same type, unless demand isn't being met.
- first to establish a particular business type in a shopping precinct increases success.
99
how does complementary businesses affect choice of business location
- eg: a pharmacy and a doctor’s surgery are complementary (so they can be next to each other, 'not a competitor')
100
Complementary businesses
offer products or services that are aimed at the same customers
101
Two main sources of finance
- Internal funds (the owner’s own money, known as **equity**)
- External funds
102
equity
- funds contributed by the owner/s of a business to start and build the business (fancy word for savings)
103
list 5 types of Equity Finance (Internal source of funds)
- self funding
- family or friends
- priv investors
- shares
- crowd funding
104
Equity (internal funds) advantages
- Doesnt have to be repaid unless the owners leave the business
- Cheaper due to no interest needing to be paid
- owner who contributes equity retains control over how that finance is used
105
Equity (internal funds) disadvantages
Owners may expect high returns, but limited finances can yield low profits.
106
Self funding 'bootstrapping' (equity finance)
- owner uses personal finance (funds) and business revenue (earnings) to finance operations.
- no borrowing of money
107
Family or friends (equity finance)
- may expect a share of profit in return
- quick and easy way to obtain extra funds
- risks, as relos may suffer
- arrangements should b e in writing
108
Private investors (equity finance)
- give money to business for a share of its profit
- can offer support and advice, as well as investing money
- investors involvement means owner loses control
109
Shares (equity finance)
- Only relevant to companies
- selling shares on the ASX (Australian Stock Exchange)
- public can then buy shares in the business
- Can be expensive, complex, exposes the business’s finances to the public
110
Crowdfunding (equity finance)
- method of raising finance by using online and social media networks
- business may seek this type of funding to launch a new product
- Quick way to raise finance with very few fees (but no guarantee the financial target will be met)
111
External sources of finance overall (Debt) explain
mostly come in the form of debt, requiring repayment with interest over time (So, sourcing funds externally should result in increased earnings and profits)
112
Debt
funds provided by banks, other financial institutions, government and suppliers
113
external debt (Short term borrowing) features
- provided by financial institutions through bank overdrafts, bank bills and bank loans
- used to finance temporary shortages in cash flow or finance working capital
- Short-term borrowing generally requires repayment within 1 or 2 years.
114
Working capital
funds available for the short term financial commitments of a business
115
external debt (Short term borrowing) options, list 3
- Bank overdraft
- Bank bills
- Trade credit
116
Bank overdrafts (external debt, short)
bank allows a business/individual to overdraw their account up to an agreed limit for a specified time, to help overcome a temporary cash shortfall
117
Bank bills (external debt, short)
short-term securities issued by a business and bought by a bank, typically for amounts over $100,000 for 90-180 days.
118
Trade credit (external debt, short)
supplier provides products to a business with an agreement to charge for the goods or services later (with no interest)
119
external (Long term borrowing) options, list 2
- Loan - including mortgage
- Leasing
120
Loan (external, Long)
- business loan can be used to start a business
- taken out as a secure loan or unsecured loan
(Secured loans have lower interest rates but require offering collateral, like a home, as security)
(Unsecured loan does not require any collateral but interest rate is higher)
121
Mortgage
loan on a property, secured by the property of the borrower (the business)
122
mortgage (external, Long)
- Mortgaged property can't be sold or used for more borrowing until the mortgage is repaid
- Mortgage loans are used to finance property purchases eg a new premises, a factory, or office
- Repaid through regular payments over an agreed period (eg: 15 years)
- Before approaching a lender, a business must consider loan amount, type, duration, and affordability of repayments, including interest and fees.
123
Leasing
way of financing the purchase of assets without a large initial capital outlay
124
Lessee
person or business to whom a lease is granted
125
Lessor
owner of an asset that is leased under an agreement to the lessee
126
leasing (external, Long)
- Involves paying money to use equipment that is owned by another party
- business can borrow funds and use equipment without a large upfront investment.
127
Leasing advantages/disadvantages
adv:
- Provides long term financing without reducing control of ownership.
- permits 100% financing of assets
- Lease payments are a tax deduction
- Lease repayments are fixed, simplifying cash flow monitoring.
dis:
- Interest charges may be higher than other forms of borrowing
- Business must have a regular cash flow to make the repayments for the lease
128
External - Government grants
- G’ments can provide finance through grants for business development, especially to promote exports
129
list 5 factors affecting the choice of finance
- Terms of finance
- Business structure
- overall cost
- Flexibility
- level of control
130
Terms of finance
amount of the repayments and frequency at which they must be made
131
how does terms of finance affect the choice of finance
- The terms of finance need to suit the purpose for which the funds are required
(Eg using short term finance to fund long term assets is not logical)
132
how does the business structure affect the choice of finance
- Large businesses have more opportunities for equity capital than small businesses
- Most small businesses have to raise equity from private sources or by taking on a partner
133
how does the overall cost affect the choice of finance
- most important factor to take into account
- Business needs to calculate the projected costs of each source or finance in order to make a well informed decision
134
how does flexibility affect the choice of finance
- A business’s circumstances can change all the time and often outside of their control
- Seeking finance options which allow adjustments to the financial agreement or having the option of exiting the agreement is beneficial
135
how does the level of control affect the choice of finance
- Owners wish to retain as much control as possible
- This control can often be undermined if the business sources its finances externally
- Partners and investors may have other ideas about how the business should run and this could conflict with the original owner
136
Franchise disadvantages
- Little scope for making independent decisions
- share of profits and fees can be quite favourable to the franchisor
- Bound by the terms and conditions.
- Often results in a loss of money
137
list 5 business support services
- legal and financial advice
- technological
- community-based
- formal and informal networks
- business mentors
138
prior to starting/running a business, who do owners need legal and financial assistance and advice from, list 3
- solicitors
- accountants
- bank managers
139
Solicitor
professional, provides advice on legal matters
(they also, stay current on company law changes to advise business owners effectively)
140
Solicitor provide info concerning...
Business formation and structures
Registration
Leases
Partnership agreements
Patents
legislation
141
Accountant
professional, provides advice on all financial management issues and taxation obligations
142
Accountants provide valuable advice on...
- Financial management issues
- Taxation obligations
- Financial costs of particular legal business structures
- access to latest changes in taxation requirements
- access to latest changes in financial reporting requirements
-Know procedures for recording financial events (transactions) accurately
143
bank manager provide valuable advice on...
- Financial services
- Sources of finance
- Basic business management
144
where can an owner get technological advice from for business support
- Buying equipment from a dealer (who provides advice and support)
- Establishing a relo with an ICT consultant
- The government's Digital Business website offers free advice (on online presence, e-commerce, social media, and online marketing for businesses)
145
Whats community-based services
- where business owners can join business service clubs
- clubs focus on giving business people a chance to participate in community service projects.
(Joining can help you network with other local business people and Networking can provide advice, support and info)
146
Formal Networks - Private meaning
Business owners can access info & support from professional orgs
147
list 3 Formal Networks - Private
- Chambers of commerce
- Victorian Employers Chamber of Commerce and Industry (VECCI)
- Trade Associations
148
Chambers of commerce
- These are local associations of business people
- Provide legal and financial help
- Tax advice
- Explanations of legislation
- Industrial relations info
- Organise training seminars
- Arrange industry conferences
149
Victorian Employers Chamber of Commerce and Industry (VECCI)
- Concerned primarily with human resources and industrial relations issues
- Provides support for members who may be in dispute with their employees
150
Trade Associations
- Provide specific industry info and assistance
- Can provide specific details about product development and industry trends
151
Formal Networks - federal, state and local governments meaning
All levels of government provide a range of services to businesses
152
Federal government (formal networks)
- Operate a web, business.gov.au for businesses of all sizes
- Offers access to all g’ment departments with advice on everything from fair trading to taxation
- Advice on research and development of new products
153
State government (formal networks)
- Business Victoria's website offers links to info and support for starting and managing a business
154
Local government (formal networks)
- Local councils offer advice on land zoning
- Assist with subsidised land
- Consider development applications
155
give one Informal network
Mentoring
156
Mentoring for business owners
- Small business owners frequently seek advice from experienced individuals in their field.
- They offer advice for free or might charge for their services (can be considered formal if being charged)
157
what does S.W.O.T stand for
S - Strengths (what are our strengths)
W - Weaknesses (what are our weaknesses)
O - Opportunities (what are our opportunities)
T - Threats (what are our threats)
158
what are internal assessments regarding the S.W.O.T analysis
S - Strengths (what are our strengths)
W - Weaknesses (what are our weaknesses)
*internal to business
159
what are external assessments regarding the S.W.O.T analysis
O - Opportunities (what are our opportunities)
T - Threats (what are our threats)
*external to business
160
S - Strengths (questions to go through)
What are our strengths?
- What is the business good at?
- Is our product popular?
- low staff turn around?
- positive reputation?
- Are our customers loyal?
- Do we have a skilled and motivated workforce?
- Do we function efficiently?
- Are we in a solid financial position?
- Is our equipment state of the art?
161
W - Weaknesses (questions to go through)
What are our weaknesses?
- Do we have capable managers and staff?
- quick staff turn around?
- negative reputation?
- Is our computer system obsolete?
- Have we experienced past failures?
- Have we been upgrading our facilities
to keep pace with others?
162
O - Opportunities (questions to go through)
What are our opportunities?
- What will new technology bring for us?
- Is the national economy strong?
- Are interest rates low?
- What are our possible new markets?
- gap in market?
- What other businesses can we acquire to expand the business?
163
T - Threats (questions to go through)
What are our threats?
- What trends have been evident in our markets?
- Are there new laws regulating what we do?
- Are there new competitors?
- Are current competitors taking over our market share?
164
why is S.W.O.T analysis an important tool for a business
Important tool for a business to use for long-term planning
165
how does S.W.O.T analysis help a business
Helps a business:
- focus on its internal & external business enviro
-identify possible business goals and opportunities for competitive advantage
- identify business goals and opportunity for competitive advantages
- identify areas needing improvement
(overall, helps a business to understand where it stands)
* Helps business owners become more familiar with their business as they make decisions
166
Business plan
written statement of goals and objectives for business, and steps to be taken to achieve them
167
Planning
process/series of actions to achieve an objective
168
Business Plans features
- detailed business plan is key to success
- useful management tool a business owner can use
- helps get money by showing it's worth investing in
- keeps business on track
- helps predict costs, reducing risk
- shows the business is properly organised and managed
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living document...
- can be altered as the business changes
- document outlines goals, directions and strategies.
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benefits of business plans
- help test the viability of the business
- finds businesses strengths and weaknesses
- forces business owner to justify his/her plans and actions
- assist business to be proactive rather than reactive
- A business plan keeps focus on goals, aiding operations
- Indicates owner's ability and level of commitment
- Forces business owner to justify his/her plans and actions
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limitations of business plans
- It is simply a plan (so, it does not guarantee success)
- Owners might spend too much time on the plan, rather than creating/selling.
- Plans are useless if not followed (many owners create one but do not follow it)
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business plans elements
Executive Summary
Operations Plan
Financial Plan
Marketing Plan
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Business Plans - Executive Summary features
- one page doc describing business and its objectives
- first page read by a bank/investor (if poorly written, it’s an instant no)
- Usually prepared at the very end of writing business plan
- This section sells your business, making it appealing.
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Business Plans - Operations Plan features
- outlines how business will be set up and human resources needed
*details;
What the production process will be (using a flow chart), Laws and regulations to consider, Suppliers, Equipment required, Trading hours, Payment methods (eg paywave, cash, online)
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Business Plans - Financial Plan features
- how the business will be financed
*mentions projected;
cash flow, Revenue, Expenses, Profit, Estimated sales
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Business Plans - Marketing Plan features
contains;
- analysis of market (demographic, size of market, if there's gap being filled)
- Industry insights are crucial for business entry.
- Marketing strategies to be used
- target market
- What business’s competitive advantage/s may be
- Statement of current market trends
- Pricing structure
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Corporate social responsibility (CSR) features
- Socially responsible businesses attract and keep customers better
- Consumers boycott non-CSR businesses (sometimes)
- Businesses must treat everyone ethically (suppliers, emplees, stakeholders)
- No CSR hurts morale, raises turnover, and hiring costs
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Businesses can be SR in the internal environment by...
- Providing fair pay (paying above minimum wage)
- Paying employees and suppliers on time
- Providing safe and healthy working conditions (minimal accidents and hazards encountered by staff)
- Equal opportunities and diverse hiring are key.
- Make reliable, safe products.
- Employing disadvantaged groups (eg people with disabilities)
- SR policies: Flexible work, childcare, part-time options, anti-bullying.
- Manage energy better with green energy.
- Waste reduction
- Make safe, reliable products; treat customers fairly, surpass legal
