1.1.3 Putting Business Ideas Into Practice 🎰 Flashcards
What is an aim?
A general goal and set on the purpose of a business existence
What is an objective?
More specific than aims a contribution to help businesses achieve their aims
What are the five business financial objectives?
Profit
Market share
Survival
Sales
Financial security
What are the seven non-financial objectives?
Business recognition
Social goals
Personal satisfaction
Control
Independence
Challenge
Customer satisfaction
What is a social enterprise?
A business which has the main goals of contributing to society - charity’s that rely on cake sales and donations
Aims - Goals - survival contribute 100% of profit to charity
Objective - have personal satisfaction and social goal of reducing poverty by 20% in 5 months time
What varies a businesses aims and objectives?
The type of sector it’s in
Public
Private
Social
How do we find revenue ?
Price * quantity
What are variable costs
Costs that vary due to the businesses activity
What are fixed costs ?
Costs that stay the same
How do we find total costs ?
Fc+Vc
What is profit?
Is the money left over after you pay your TC with your SR
How do we calculate profit?
SR- Cost of sales
Why is profit an objective for most businesses?
Helps survival
Can be reinvested for expansion
Generate wealth for owner
Pay employees
Provides security
How do we calculate interest ?
Total repayments - borrowed amount/ borrowed amount *100
How do we find BEP?
FC/(SR - VC)
How do we find BEP in revenue/cost
BEP in units * sales price
What is break-even?
The amount of sales you need to not make a profit or a loss
How do we find margin of safety ?
Actual/budgeted sales - BEP sales
What happend if a business increase the price of products ? Where will the BEP be?
Lower
How do we calculate receipts ?
Net cash flow + total payments
How do we calculate a payment ?
Total of cash flow - other payments
How do we calculate Total payments ?
Net cash flow - receipts
Or add total payments all up
How do we calculate net cash flow?
Total payments - receipts
Or closing balance- opening balance
How do you calculate closing balance
Net cash flow + opening balance
What are the 4 things that are importance with cash ?
Pay suppliers and other debts
Pay employers
Repay bank loans
Buy raw materials to sell products to customers
What is cash ?
NOT PROFIT
given amount of many available to business to pay existing debt - revenue is recorded before receiving actual cash
What are the short sources of finance ?
Overdraft - getting small sums of money from bank and repaying it’s in a short time
Positive - can be repaid quickly and adds positive cash flow
Negative - high interest
Trade credit- buy now pay later
Negative - could effect good will if fail to pay may ruin relationship with suppliers and you lose best raw materials with good price
Positives- frees up cash flow
What are the long term sources of finance ? What are the positives and negatives ?
Personal savings - you take money from your personal account positives - get it when you want and how much negative - it may effect your life - CANT go on holiday
Share capital - sell shares in return for capital - p- good business exposure n- can dilute ownership
Loan- asking for money from the bank with interest p- secure most banks have start up loans especially for businesses
N- interest may be unable to pay back, reflecting on your credit score
Retained profit - saving money from the businesses profit p- available whenever N- takes a while to make
Crowd funding - setting up a go fund me page for the public to invest small amounts of money into your business p- free
N- takes a while and you may be unable to reach target within deadline - lose all money
