1.4.4 The Options for Business Startups Flashcards
What’s the purpose of a business plan?
Provides direction
Supports decision making
Helps establish the viability of the business
To arrange a bank loan
To seek investment
To help the business be successful (More than 50% of new businesses fail in first few years)
Bankrupt
When an individual is unable to pay their debts, even after all personal assets have been sold for cash.
Limited liability
Restricting the losses suffered by owners/shareholders to the sum they invested in the business.
Private limited company:
A small family business in which shareholders enjoy limited liability.
Sole trader:
A business run by one person; that person has unlimited liability for any business debts.
Unlimited liability:
Treating the business and the individual owner as inseparable, therefore making the individual responsible for all the debts of a failed business.
Royalties
Percentage of the sales revenue to be paid to the overall franchise owner.
Franchising
Paying a franchise owner for the right to use an established business name, branding and business methods.
Fixed premises:
Buildings that have to be where they are (for example, the high street); e-commerce buildings can be located anywhere.
Entrepreneur
A person who sets up a business and takes on financial risks in the hope of profit.
Proximity:
Nearness; whether or not a business wants to be close to a factor such as ‘materials’.
Business plan:
A detailed document setting out the marketing and fi nancial thinking behind a proposed new business.
Place:
How and where the supplier is going to get the product or service to the consumer; it includes selling products to retailers and getting the products displayed in prominent positions.
Price:
Setting the price that retailers must pay, which in turn affects the consumer price.
Product:
Targeting customers with a product that has the right blend of functional and aesthetic benefi ts without being too expensive to produce.
