BUSINESS OPPORTUNITIES (Jauncey) Flashcards
What are needs?
Physical needs for survival
-water, shelter, food, etc
Limited
What are wants?
Luxuries that make our lives more comfortable
-mobile phones, holidays, etc
Unlimited
What is the definition of an entrepreneur?
A person who has an idea for a business, develops the idea and organises necessary resources to see the idea through
What are the roles of entrepreneurs?
- Thinking and researching an idea
- Set up
- Running of business
- Expansion
What are motives of an entrepreneur?
> maximise profit- gain return on investment
job satisfaction- able to be their own boss
recognition- increase self-esteem from success
promote a particular cause (utopian)
What are characteristics of an entrepreneur?
- opportunity spotter
- hard working
- self motivated
- determined
What are skills of an entrepreneur?
- communication skills
- literacy
- numeracy
- team working
What are the importances of SMEs on the economy?
- provide employment
- pay taxes
What is the definition of a stakeholder?
Anybody who is interested in the actions of a business
How can stakeholders be categorised as?
Internal or external
Primary or secondary
-P=directly related
-S=affected by actions but not directly
What is the definition of an enterprise?
A business whose purpose is to produce and sell goods and services.
Involves risk taking by an entrepreneur in order to gain a return on investments
What is the primary sector?
Extraction and use of natural resources and material from land and sea
includes:
-agriculture
-fishing
What is the secondary sector?
Raw materials turned into parts and components and finished products
What is the tertiary sector?
Where the business sells the final product to their consumer
How can you identify business opportunities?
Word of mouth
What are examples of stakeholders?
- owners
- customers
- suppliers
What is a business plan?
A written document that describes a business. It covers objectives, strategies and sales
What are components of a business plan?
> financial forecast- break even, profit, etc
marketing strategy
the business and products or services
What are advantages of business plans?
Attract investments (secure external findings) Ensure firm develops healthy financial structure Monitor progress -Set targets (realistic=motivation)
What are disadvantages of business plans?
Market research costs time and money
Cannot plan for future (unpredictable)
Can provide false hope
What are sources of guidance and information to help make a business plan?
- princes trust
- high street banks
- the government
What is the private sector?
Organisations can take numerous forms of business ownership
Usually exist to make a profit
Eg: Waitrose
What is the public sector?
Organisations owned and controlled by the government
Provide goods and services including street lighting, police and defence
Eg: NHS
In the public sector, what does the central government do?
- provide services to the public, redistribute income from rich to poor (benefits through taxes) and pass laws
- funded by income tax, VAT, corporation tax
In the public sector, what is the local government?
-solely responsible for certain are
Eg: refuge collection, flood defence, education, etc
What is an aim?
What the business aims to achieve in the long term
What is an objective?
A short term specific outcome which allows the business to achieve its aims
What are aims and objectives of the private sector?
- profit
- expansion
- survival
What are aims and objectives of the public sector?
- focussed more on needs than wants
- create a fair and just society
What are features of public goods?
Feature 1- non excludability
-everyone can use them regardless of their wealth or circumstance
Feature 2- non rivalry
-ones persons use does not diminish anothers use
What are public goods funded through?
Tax revenue
What are merit goods
Provided by both public and private sector (although mainly public)
Funded through tax revenue
Eg: libraries, education and healthcare
What is unlimited liability?
Liable for all debts, personal assets may be used to pay off the debt
What is limited liability?
Business owners only liable for the amount they have invested into business
What is an unincorporated business?
The owner has no legal identity
The business has unlimited liability
Whats an incorporated business?
Legal difference between the business
Owner has limited liability
What is a sole trader and what are factors of them?
Business owned and controlled by one person
- can employ people
- owner has decision making power
What are aims and objectives of a sole trader?
Survival, profit and expansion
As a sole trader, where does the profit go?
Reinvestment
Income tax paid on profit
Withdrawn as drawings
What are benefits of being a sole trader?
Quicker decision making
Gain a profit
What are drawbacks of being a sole trader?
Limited capital- rely on own savings
Limited range of skills
Success rate relies on one person
What is a partnership?
Involves joint ownership of a business, usually between 2 and 20
Usually have unlimited liability but can have limited liability
What are objectives of a partnership?
Survival, growth and profit
What are benefits of being in a partnership?
Wider range of skills
Shared decision making
Less pressure=increased job satisfaction, key roles distributed
What are drawbacks of being in a partnership?
Unlimited liability
Conflict- new partners can cause strains
Profit must be shared- smaller income
What is a limited company?
Have limited liability as they become incorporated which involves separating the owner and business legally to form separate entities
What is the incorporation process?
Register with registrar of companies
- Memorandum of association
- outlines business details
- purpose is to prevent fraud - Articles of association
- internal rules of company
What is an LTD?
Shares cannot be bought or sold without agreement of director
What are benefits of an LTD?
Limited liability
More control
What are drawbacks of being an LTD?
Expansion is harder
Profit must be shared with shareholders
What is a PLC?
When an LTD has a share capitol of more than £50,000 it can convert to a PLC
Shares can be floated on stock exchange
What are benefits of being a PLC?
Limited liability
Expansion easier
What are drawbacks of being a PLC?
Distance between customers
Easier to lose control as shares are sold to public
What are reasons for turning from an LTD to a PLC?
- banks more willing to lend (have £50,000)
- growth more likely
What are reasons to turn from a PLC to an LTD?
- reduce number of shareholders
- avoid risk of hostile takeover (51%)
What are charities?
Reliant upon donations
Exist to promote their cause
Spread awareness
Usually rely on volunteers
What are cooperatives?
Organisations owned by its members where a group of people have come together to work, buy, or sell goods and services
What is a consumers cooperative?
Where a group of local consumers get together for mutual benefits. They buy, produce and sell it for a fair price
What is a workers cooperative?
Democratic organisations (everyone has their say) ^motivation
What are advantages of cooperatives?
Increase motivation- all involved in decision making (work harder=better quality=better rep=more customers=more revenue=profit=everyone gets more
More ethically run=improve brand rep-word of mouth=increased awareness
What are disadvantages of cooperatives?
Prefer internal recruitment (limit further growth)
-cant bring about new ideas
Workers may find it hard to find external promotion difficult as its a radical change (different way of working)
What is a social enterprise?
A business with primarily social objectives whose surpluses are reinvested for that purpose rather than to make a profit for shareholders
