Business Start Up

Question 1

Key choices

Answer 1

Organisational options
Production options
Finance

Question 2

Organisational options

Answer 2

Sole trader
Partnership
Private limited company

Question 3

Sole trader adv disadv

Answer 3

+ 1 person sets up easily with few restrictions, full control, do not share profits or publish accounts, quick decision making, close contact with employees leads to good relationships
- unlimited liability, can have trouble raising capital, no continuity of existence, full responsibility on one person

Question 4

Partnership adv disadv

Answer 4

+easy to set up (2-20 people), deed of partnership avoids disagreements, more people means more access to capital/skills, accounts not published
-unlimited liability, slow decision making, shared profits, no continuity of existence, partners can be sued

Question 5

Private limited company adv disadv

Answer 5

+1-149 shareholders with limited liability, separate legal entity, easy to raise capital, share workload, low corporation tax, continuity of existence
- complicated to set up (cert of incorporation), publish accounts and annual report, must obey legal requirements eg audits

Question 6

Production options

Answer 6

Job
Batch
Mass

Question 7

Job production

Answer 7

For a single product with specific requirements, once off made to order using highly skilled labour
High cost due to skills/labour intensity
Advance payment may be needed
Doesn’t benefit from economies of scale

Question 8

Batch production

Answer 8

Multiples of the same product produced using semi skilled workers
Produced as stock ready for customers to buy
Production is carefully planned, machine may do <1 job
Eg bakery

Question 9

Mass/Flow production

Answer 9

Production and selling price are low using unskilled workers at assembly line
Heavily automated process
Specialised, costly machinery used to produce high volume of identical products
Associated with low quality
Eg kit kat

Question 10

Finance

Answer 10

Short
Medium
Long

Question 11

Business plan

Answer 11

Written document that sets out how the business will operate and succeed
Shows reasons why the firm exists (objectives) and how it will achieve its goals (strategies)
Important for: seeking finance, setting clear goals, bench marketing performance

Question 12

Sections of a business plan

Answer 12

Description of business 
Market analysis 
Marketing strategies
Production
Finance