BUS1 Flashcards
What are the motives for setting up a business?
More control over working life Fulfil potential Escape uninteresting job Declare to pursue a hobby Satisfaction Be own boss Earn income
Characteristics of successful entrepreneurs
Passionate, getting things right for the customer Driven Self starting Calculated risk taker Multi tasker Resilient Focused Leadership Initiative
What are the risks of setting up a business?
Unlimited liability
Loss of pay from previous job
Stigma of failure
What are the rewards of starting up?
Potential for significant income and profit
Satisfaction
Freedom of decision making
Control over working life
What are sources of government support?
BIS: dept for business, innovation and skills
DirectGov: advice on tax and business laws
Tax incentives: tax breaks for investments
Other support: online, business networks, professional firms
What is an opportunity cost?
The cost of missing out on the next best alternative
How do opportunity costs affect start ups?
Resources are limited
Significant decisions about spending become risky due to this
What are common sources of business ideas?
Brainstorming Business experience Personal experience Copying an existing idea Invention and innovation
What makes a good business idea?
Something that solves a problem
Cheaper way of providing existing product
Clearly focused on needs of the customer
Patents?
Must be based on inventions that are new, innovative
Given up to 20 years protection
Expensive
Trademarks?
Identifies a product in the eye of a customer
Name, logo, symbol
Prevent others from using something similar
10 years
Copyright?
Important source of protection for any startup in creative or knowledge industries
Lasts for 70 years after authors death
What is added value?
Difference between price of finished product and costs of inputs used in making it
If you add value, can you higher your prices?
Yes
what is a niche market
a smaller, specialist part of a larger market where customers have specific wants and needs organic food produce
what are advantages of niche markets
better to add value
customer needs are defined
charge higher prices
encounter less competition
disadvantages of added value
customers more demanding
competitors have an established customer base
less able to benefit from cost savings with operating at a higher scale
what is a franchise
the business format which a franchisor allows a franchisee to use under licence
what are the two ways to segment a market
geographic based on the countries, reigons
demographic based on class, age, gender
what is market research
information that helps explain the structure size and nature of the market
what is a national market
where customers are spread throughout the country or over a large geographical area with the same product offered everywhere
cadburys
What is demand
how much customers are prepared and willing to buy at a given price
three ways to measure the market
market size
market growth
market share
advantages of a limited company
limited liability
easier to raise finance
stable form of structure