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
disadvantages of a limited company
greater admin costs
public disclosure of company information
what does limited liability do
provides the entrepreneur with significant protection
internal sources of finance
personal sources
retained profit
sales of assets
external sources of finance
share capital friends and family loan overdraft grants trade credit factoring
factors affecting the amount and choice of finance
control
cost
amount
time and flexibility
what is a location
the physical place from which a business is operated and controlled
benefits of a home based setup
very low cost
little travelling
lower business risk
freedom of what to wear
drawbacks of home based setup
requires greater self discipline work often interrupted work never goes away lonley poor impression???
why does cost matter in choosing the location for a startup?
raising breakeven output
low cost doesnt always mean best
try to minimise initially
share location with other startups
why does proximity to market matter in the location for a startup?
needs to be suitable
cut distribution cost
depends on nature of the startup products
why does infrastructure matter when locating a start up?
could rely on external services
ability to recruit right employees may be affected by local infrastructure
why does personal and other qualitative issues matter when locating a startup
location help create USP which could help attract customers and stagg
fit the culture of the start up
what is a consultant
an individual or business external to the business that provides specific advice and service
What is an entrepreneur?
Someone who sets up a business
