1.4: Making the business effective Flashcards
What is limited liability
Where any debts gained by the business belong solely to the business, and money can only be lostv up to how much was invested
Why are companies with limited liability not private
As the accounts are filed in a Companies House
What are some advantages of a sole trader
- Full control
- Quick and easy
- Owner gets all profits
- Finances kept private
What are some disadvantages of a sole trader
- Unlimited liability
- Hard to get finance and grow
- Lots of pressure
- No one to cover
What are some pros of a partnership
- Wider expertise
- Sharing of ideas and decision-making
- Shared risk
- Easier to raise finance and grow
What are some cons of a partnership
- Dissolves if a partner leaves
- Shared profits
- Potential disagreements
What are some pros of a private limited company
- Limited liability
- Trustability
- Can operate no matter the shareholder
- Easier to raise finance and grow
What are some cons of a private limited company
- Complex to set up
- Disagreements between shareholders
- Public finances
- Reported to government
What is a franchise
The right given by one business to other businesses to sell their products with their name, in return for a fee/cut of revenue
What are some pros of franchising
- Brand and reputation pre-established
- Access to popular products
- Established customer base
- Higher survival chance
- Support and training provided
What are some cons of franchising
- Initial investment can be costly
- Franchisee has little freedom
- Fee/royalty needs to be paid
- Restricted
What are factors to a business’s location
- Market
- Materials
- Labour
- Competition
- Transport
Why is the marketing mix necessary
It provides the capability to provide products that meet customer needs while also making a profit
What are some example of adaptations of the marketing mix
- Changing product features to incorporate new trends & tech
- Adjusting prices to respond to competitors
- A new promotion campaign to respond to falling sales
- Selling through popular retailers
- Allowing customers to return products
What is the purpose of a business plan
- Convincing banks
- Forecasting cashflow
- Identifying customer needs
- Formulating market research
- Provide info
- Minimising risk
