Basic Business Flashcards
What is an entrepreneur
Entrepreneur: A person who sees potential in a business idea, takes the risks and has the initiative to develop the business and attempt to make a profit
What is production
Production: The process of making goods and services
What is risk
Risk: The possibility of something going wrong, for example that a business may not be successful and the owner might loose his funds that were put into the business
What is innovative
Innovative: Being able to invent or introduce new ideas, products, services or methods.
What are set-up costs
Set up costs: Expenses involved in starting a business and getting it up and running.
What is budget
Budget: A plan of expected income and expenditure.
What is marketing
Marketing: . The process of getting a product or service into the hands of the consumer.
What is business
Business: A commercial undertaking to provide a good or service, usually with the hope of making a profit.
What is a sole trader
Advantages and Disadvantages
Sole Trader : This is a business owned by one individual. Common examples are hair dressers, landscapers and builders.
Advantages -
- Own boss
- Keep the profit
- Decides when to work
- Makes all the decisions
- Easy and cheap to set up
Disadvantages -
- No one to discuss decisions with
- Hard to obtain finances – cannot have much money to invest in business
- Hard to have time off – sick days, holidays
- Unlimited liability – you must take responsibility for all debts and losses
- Everything you lose and money loss is all your problem, and you must deal with it without seeking help from other areas.
What is a partnership
Partnership: A Business owned by 2-20 people, where all involved provide finance.
Advantages
- Share the set-up costs so you do not have to pay as much
- Share expertise so one person can deal with something they are good with that you might not be so good with
- Easy to set up
- Risks and responsibilities are shared so it may not be so difficult when there is debt or loss.
Disadvantages
- If the partners do not have limited liability
- If one of the partners die, then the partnership dies
- There could be disagreements
- If one of the partners is inefficient, or dishonest, then the other partners could suffer losses in the business.
What is a private company
Private company: this is a company owned by private individuals they cannot sell shares on the stock market
What is public company
Public Company: This is a company that is trading on the stock market, they raise finance by selling shares to the public
What is unlimited liability
Unlimited Liability: This means if your business fails and you are a Sole trader or partnership, the bank can take your personal possessions to pay back any debt owed.
What is limited liability
Limited liability is when the responsibility of loss and debt is shared around the group of owners so that everyone will not have to pay as much debt so they may not have to sell their properties and valuables. It also means that the loss and debt of the company/business will not have to be paid by the owners’ property. Instead, it is with the business’ finances. This means company finances and personal finances of the owners are different and separated.
Limited liability in a company exists, meaning that the company’s finances are separate from the personal finances of the company’s owners
What is public sector
A public sector is a business that Is owned and ran by the government
