Business in the real world Flashcards
What is a good
A good is a physical item
What is a service?
Actions performed by other people to help aid the customer
Give 4 reasons why a business may be set up
.When someone starts making a good or service that they think customers will want to pay for
. To distribute goods e.g. buy products from manufacturers then sell them
.To benefit other people(non-for- profit organisations)
.When a business opportunity is found
What is the primary sector?
Sector which produces raw materials (e.g. natural resources)
What is the secondary sector?
Sector which manufactures goods (e.g. building and construction industry)
What is the tertiary sector?
Sector which provides services (e.g. schools, advertising for another business etc.)
What is the name of someone who wants to start up their own business
An entrepreneur
What is enterprise?
Identifying an opportunity then taking advantage of it
Give an example of an enterprise activity?
starting up a new business or helping with an existing one
Give an advantage of being your own boss
.Flexible working hours
.You decide the tasks which you have to do
Give reasons why someone may decide to be an entrepreneur
.Financial reasons
.When a gap in the market is identified
.Wanting the independence of being your own boss
.Having an interest
.Being dissatisfied with your current job
Give 4 characteristics an entrepreneur must have
. Hard-working
.Organised
. Innovative
.Have a willingness to take a calculated risk
Why should entrepreneurs be organised?
To make a business plan for the business and also plan for the future
Why should an entrepreneur be innovative?
To come up with new ideas and think of solutions to problems
Name the 4 factors of production (4 sections of resources)
.Land
.Labour
.Capital
.Enterprise
Give examples of land resources
. Territory .Non-renewable Renewable .Materials extracted by mining .Water .Animals found in an area
What is labour?
Work done by people who contribute to the production process
What is capital?
.Equipment, factories and schools that help to produce goods or services, different from land as it has to be made first
What is enterprise(factors of production)?
. People who take risks and create things from the other three factors of production.
What is opportunity cost
.The benefit given up in order to do something else
What is an entrepreneur?
Someone who takes on the risk of enterprise activity
Describe a sole trader business?
A sole trader business has just one owner
Give examples of sole trader business’s
Hairdressers, plumbers newsagents and fishmongers
Give 3 advantages of sole trader business’s
They’re easy to set up, which means they’re great for start-up businesses
.You get to be your own boss
.You alone decide what happens to any profit
Give 4 disadvantages of a sole trader business
You might have to work long hours and many not get many holidays
.You have unlimited liability, so if the business goes bust owing 10 million pound you are liable
.You’re unincorporated, so the business doesn’t have its own legal identity so if anyone sues the business they’ll sue you
.It can be hard to raise money, many business’s don’t send loans to sole traders as they are risky
How many partners are there in a partnership?
Usually between two to twenty
Name the agreement made in partnerships
The deed of partnership
Give three advantages of a partnership
.More owners means more ideas, and a greater range of skills and expertise
. More people to share the work
. More owners means more capital(money) can be put into the business, so it can grow faster
Give 4 disadvantages of a partnership
.Each partner is legally responsible for what all the other partners do
.Like sole traders, most partnerships have unlimited liability
.More owners means more disagreements, decision making can be slow and unpleasant
.The profit is shared between the partners instead of being kept to one person
Give examples of partnership businesses
Accountancy firms, solicitors and doctors’ surgeries
What are limited companies owned by?
Shareholders
is a limited company incorporated
yes,
What does it mean for a business to be incorporated?
It means it has a separate legal identity to the owners, so any money property, tax bills, etc. in the company;’s name belong to the company. It also means that the owners have limited liability, so if anything goes wrong the company is liable not the owners, the owners only risk losing the money that they have invested
Give a feature of a limited company
Owned by shareholders, the more shares you get the more control you get.
Give the sign that private limited companies have
Ltd.
What does the private mean in private limited companies?
It means that the shares can only be sold if all the shareholders agree, shareholders are often same members of a family
Give 4 advantages of a private limited company
.Limited liability - so you cant lose more than you invest unlike partnerships and sole traders
.Being incorporated, the company can continue trading if a shareholder dies unlike partnerships
.Its easier for an Ltd company to get a loan or mortgage than sole trader or partnership
.For someone to share, all the shareholder have to agree so the owners still have control over how many people get to share the profits and how the business is managed
Give 2 disadvantages of a private limited company
They’re more expensive to set up due to all of the legal paper work that has to be done
. Unlike sole traders and partnerships the company is legally obliged to publish its accounts every year(they don’t have to be made public
