1.3 Putting a business idea into practice Flashcards
- What is meant by a business objective?
- A target a firm is trying to reach e.g. Make large profits. What a business wants to achieve - it’s aim.
2 What does SMART stand for?
- Specific, measurable, achievable, realistic, time-bound
3 Why do objectives need to be SMART?
- So that workers, managers and businesses are more likely to succeed in meeting the objective.
4 Give 4 financial objectives a business may have.
- Profit, survival, market share, sales, financial security
5 Give 4 non-financial objectives a business may have?
- Social objectives, personal satisfaction, challenge, independence and control
6 Why do businesses need to have aims and objectives?
- To provide direction to the business, its workers and managers; so the business can progress forward with its plans.
7 Why might aims and objectives differ between businesses?
- Each business is owned by different people who may have set up/want different elements from the business. Businesses may be different sizes which may cause objectives to differ. Businesses operate in different markets and have different influences.
8 What is meant by survival?
- This is when a business is able to continue operating on the market.
9 What is meant by market share?
- The proportion of sales one business has in comparison to the total sales for the market.
10 What is meant by financial security?
- When the owner of the business is able to gain a steady and stable income from the business.
11 What is meant by social objectives?
- A social objective is a statement that details a specific desired outcome of a project that is related to the interaction of the individuals, groups, and institutions within a society.
12 What is meant by personal satisfaction?
- This is the positive satisfaction that the entrepreneur gets from running the business.
13 What is meant by challenge?
- This is when the entrepreneur feels as though their skills and knowledge are pushed.
14 What is meant by independence and control?
- The entrepreneur has decision making power and choice over their working life.
15 What is meant by revenue?
- The total income from sales.
16 What is the calculation for revenue?
- Quantity Sold x Price
17 How can a business increase revenue?
- By increasing the quantity sold, and maintaining the same price. By increasing the price and maintaining the quantity sold. By decreasing the price and increasing the quantity sold.
18 What is meant by fixed costs?
- Costs that do not change with output.
19 Give two examples of fixed costs?
- Rent, insurance, salaries, advertising
20 What is meant by variable costs?
- Costs that do change with output
21 Give two examples of variable costs
- Raw materials, packaging costs, petrol
22 How do you calculate total costs?
- Total fixed costs + total variable costs.
23 How do you calculate profit/loss?
- Total revenue – total costs
24 If revenue is higher than costs, is the business making a profit or loss?
- A profit
25 If costs are higher than revenue, is the business making a profit or loss?
- A loss
26 How do you calculate interest?
- Total repayment – borrowed amount / borrowed amount x 100
27 What is meant by interest?
- The cost of borrowing or the reward for saving.