Business Plan - Chapter 17 Flashcards
What is a business plan?
A Business Plan is a written description of a business’s aims,strategies, target markets and financial forecasts. It is a roadmap that explains what the business plans to do and how it plans to do it.
What is a SWOT Analysis?
SWOT Analysis: identifies the Strengths, Weaknesses, Opportunities and Threats facing the business.
What headings does a business plan have?
A Business Plan has the following headings:
1. Title: Business Plan for “Business Name”
2. Background of the Business
3. The Business Team
4. Market and Marketing
5. Production
6. Costings and Finance
7. Structure of the Business
8. Signed and Dated
What does SMART stand for?
Specific
Measureable
Agreed
Realistic
Timed
What is a sole trader?
Sole Trader is a person who owns, manages and provides the capital for the business with the aim of making a profit. E.g. hairdresser
Give 2 advantages and 2 disadvantages of a sole trader.
Advantages:
It is easy and cheap to set-up
Sole Trader can keep all the profit of the business as there is only one owner.
Disadvantages:
Shortage of money (Capital) makes it difficult to expand as only one person contributing to the business.
The business will no longer exist when the owner dies.
What does unlimited liability mean?
Unlimited liability means that a sole trader could lose everything. They are personally responsible for all the bills and loans in the business. This is a major Financial Risk
What is a Private Limited Company (Ltd)?
Private Limited Company (LTD) is a business owned by between 1 and 149 shareholders. If only one shareholder, must have two directors.The company is separate from its owners. The company makes contracts, sues and can be sued, not the individual shareholders.
Give 2 advantages and disadvantages of a Private Limited Company.
Advantages:
Limited company can expand more easily as it has more money (capital) - from shareholders
When a shareholder dies the business will still continue (continuity of existence)
Disadvantages:
Profit must be shared between all shareholders
It is more expensive to set-up a private limited company due to legal requirements
What is a Cooperative (Co-op)?
A Cooperative (Co-op) is a business set up by and run for the benefit of the group of people who share a common interest. It involves people working together to help their community. E.g. Swords Credit Union.
Give 2 advantages and disadvantages of a Cooperative.
Advantages:
Each member has an equal say in running the business
Members have limited liability
Disadvantages:
Co-ops are usually too small to compete with large public limited companies.
Management can be appointed due to popularity rather than the best person for the job.
What is a franchise?
Franchise is when one firm sells the right to use its products and its brand name to another business in return for a fee and a share of the profits. E.g. McDonalds
Give 2 advantages and disadvantages of franchises.
Advantages:
Because the brand already exists, the chances of the business being a success is greater.
As the brand name is established, the business will find it easier to attract customers.
Disadvantages:
A negative response to one franchisee might affect all the franchises
Franchises must follow very strict rules when operating the business which results in a loss of control of the business for the franchisee.
What does limited liability mean.
Limited Liability means that the shareholders will only lose what has been invested in the business. They are NOT personally responsible for the bills and loans in the business. This is a smaller financial risk.
