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Economics > business topic 3 (chap 10-11)) > Flashcards

business topic 3 (chap 10-11)) Flashcards

1
Q

SMEs in AUS have sig contribution to AUS’

A

GDP, balance of payments
employment
invention & innovation
e
generate increasing amt of AUS total exports
-provide wide range of products used by large businesses
-earn more proits and pay more taxes > large bus

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2
Q

wualitative and quantitative measurements to determine SMEs

A

Quantitative measurements
-statistical calculations,
-eg. use no. employees to determine the size of a business

qualitative measurements
-personal observations, description of the business.
-eg. business’s legal structure.

sources of finance
market share

<200 employees

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3
Q

common features of SME (3 most important ones)

A
  1. non-manufacturing, <20 (small) employees
    -manufacturing <100 employees
    -quantitative measurements
  2. locally based
    -diff to have <20 emps spread across range locations
  3. not dominant in industry (small share of total industry output)
    -if limited to max 20 emps in non-manu industry etc, diff to produce outputs = bus with considerably larger workforce

micro <5 INCLUDING OWNER
medium: 20-199
large > 200

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4
Q

why do many SME owners wanna stay small

A

avoid pressures and difficulties experienced by larger businesses
-content knowing offer personalised service to customers

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5
Q

why is it diff to provide accurate no. SMEs operating in AUS 2 reasons

A
  1. no universally accepted definition of SME
  2. SME sector extremely dynamic constantly changing
    -new bus enter sector, size sector increases, –> other bus diff surviving, ^ comp –> bus fails, sector decreases size
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6
Q

SMEs conribution to GDP

A

-produces wide range of g&s
-total output of SMEs range from highly specialised professional & technical firms to local corner store sig contribution to economy

boom: no. SMEs increase but recession: no. failures > no. establishments

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7
Q

SMEs contribution to employment

A

employed ppl use wages to buy g&s to satisfy needs & wants, support businesses and opening more opp for job creation
-major generator of new jobs in AUS eco
-improve living standards and reduces burden on state to provide unemployment benefits while boosting revenue received by GVT (employees pay income tax) for community g&s

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8
Q

economy

A

system determines WHAT to produce, HOW to produce it, how to DISTRIBUTE production

AUS is MARKET CAPITALIST economy
-eco questions answered by private buyers & sellers (market forces)

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9
Q

over last 25 yrs, AUS exporting industries became more/less competitive in global markets

A

more

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10
Q

summarises eco transactions of an eco with the rest of the world

SMEs contribution to balance of payments

exports, international trade

A

increasing awareness to service overseas markets
-SME AUS exporters grow > large exporters (agribusiness, manufacturing, professional services)
-more successful at exporting than large businesses
-adaptability & flexibility of SMEs more responsive to needs of overseas markets
-fed gvt promotes export growth with various programs

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11
Q

BOP Balance of payments

A

record of country’s int trade and monry flows, (financial trans) usually 1 yr

favourable, eco growth maintained: export > import

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12
Q

SMEs contribution to invention & innovation but also why its hard

A

-main source, constantly research, develop and test new ideas & products for improved efficiency and increased productivity
-SME spending on R&D rapidly increasing, can use venture capital (investors take equity position in bus (own some of it) and provide supplementary finance)

difficulties of R&D
-obtaining adequate finance
-banks perceive finance request as high risk

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13
Q

how SMEs can enter global market for long term growth
4

A
  1. selling directly to customers in export territories
  2. marketing products through local distributor
  3. participating in joint venture with local business partner
  4. selling through website
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14
Q

HOW CAN SMEs enter the global market by selling directly to customers in export territories?

A

-easier entry to countries through trade agreements
-rapid expansion in e-business, brought by development of internet, can sell direct to consumers across national borders
-enter by selling directly to customers in export territories, marketing products through local distributor, participating in joint venture with local bus partner/selling via website
-diff lvls cost, risk, control

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15
Q

how can marketing products through local distributor enable SMEs to enter the global market

A

-local presence in markets they wanna export to
-distributors buy products from bus and resell to own customers
-D offer bus benefit of established local contacts & market knowledge
-but bus has minimal control over way D deal with customers/market product

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16
Q

how can participating in joint venture with local business partner enable SME to enter global market

A

with local business partner provides beneits of local market knowledge & contacts
-org sets up business relationship with company in local market

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17
Q

how can SMEs enter the global market by selling through a website

A

simple, low-cost
-global customers can visit any time to place orders
-to improve chances of success, need to prepare website pages specific to diff markets wish to export
-need product info in local language, prices in local currency
-suitable for products don’t require demonstration/explanation by sales representative

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18
Q

psychological and financial pressures of SME owners

A

often be owner, accountant, marketing manager, sales representative, stock clerk, receptionist at once
-long hours, holidays rare
-major challenges juggling home and work responsibilities

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19
Q

challenges of entering global market as business

A
  1. how to export to countries
  2. how to keep up with demand & manufacture large quantities of orders
  3. how to tailor product to suit tastes of overseas consumers
  4. how much to charge, accounting shipping costs overseas
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20
Q

5 keys to SME success EIFNR

A

Entrepreneurial abilities
-drive, enthusiasm, optimism, risk

access to relevantINFO

FLEXIBILITY

focus on MARKET NICHE
**
REPUTATION for quality & service**

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21
Q

access to info for SME success 3 pieces of info u need

A

-diff to choose relevant info and gauge quantity of info needed
-as minimum, operator must have info regarding:
1. profitability
2. quality of g&s
3. employee performance
-accurate, up-to-date info allow owner to make better decisions

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22
Q

flexibility for SME success

A

-small size –> owner adapt quickly to external enviro changes
-fewer lvls management, decisions made quickly
-close contact betw owners and customers allows establishment of personal relationships to respond quick to changing tastes and preferences

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23
Q

focusing on market niche for success of SME

A

can concentrate efforts on small market of consumers to
-fulfil needs
-develop strong, lasting relationship,
-opp for SME to become more specialised
-deliver high lvl service

most likely to succeed if adopt niche marketing strategy
-fundamental threat to SMEs is ultra-competitive and over-advertised global marketplace
-to overcome despite low budget,small market niche to operate in enviro with less comp

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24
Q

SME classified as failure when it is

A
  1. UNINCORPORATED and declared BANKRUPT
    -legal process distributing among creditors the property of bus who can’t pay debts
  2. INCORPORATED and FORCED LIQUIDATION/VOLUNTARILY closs down
    -cant pay debts and faces cash flow problem
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25
Q

is a business considered a ‘failure’ if owner ceases operating bc of ill health/loss of partner/personal reasons NOT associated with FINANCIAL problems?

A

NO

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26
Q

SME failure trends

A

female owned businesses have higher survival rate > men/jointly operated by men and women

failure rate accumulated as years pass
(1 yr –> 20%)
(10 YRS –> 70%)

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27
Q

top reasons for SME failure (ranked)

A
  1. insufficient leadership & management + planing and execution
  2. inadequate market research, marketing, sales
  3. poor financial management
  4. underestimating impact of externalities
  5. poor governance structures regarding partners, family
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28
Q

undercapitalisation towards failure

A

does not have sufficient capital to conduct operations and pay creditors, not generating enough cash flow or is unable to access forms of financing such as debt or equity. without suficient capital, unable to purchase stocks & materials –> lose sales

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29
Q

business plans towards failure

A

Fails to develop business plan –> imminent failure
-no goals no blueprint for bus’ future growth

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30
Q

external bus enviro reasons for SME failure

A
  1. new competitors
  2. eco downturn
    but main reasons for failure from internal bus enviro within direct control of owners, managers
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31
Q

most common causes of small bus failure

A
  1. managerial inexperience & incompetence
  2. undercapitalisation
  3. lack of planning

lack of adequate financial reporting and evaluation

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32
Q

personal qualitiy influences in estrablishing SME
QSMECG

A

qualifications
skills
motivation
entrepreneurship
cultural background
gender

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33
Q

majority of rewards motivating ppl to begin bus are non/monetary

A

non-monetary

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34
Q

personal qualities of entrepreneur
QUALIFICATION

A

commonly 15-29 yrs of age
-over 1/4 small bus owners work excess 50 hrs per week
-dont require academic qualifications, knowledge can come from experience working for other bus
-combine to form desire to create new business
1. motivation
2. entrepreneurship

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35
Q

personal qualities
SKILLS (experience
EXPERIENCE

A

-for management experience, complete management training course/undertaking management role within business, esp work in type of bus they intend to become self-employed

experiences can be
-organisational skills
-time management
-customer service
-leadership

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36
Q

personal qualities
SKILLS for SME owners (education/training)

A

-uni, tafe offer courses eg. degree in bus management or diploma in human resource management, marketing
-some courses expensive and take years to complete (not always available for small bus owners who want knowledge quickly) **
-gvt agencies** provide opp to learn starting (business enterprise cetnres) offerstart-up assistance, bus growth mentoring, business skills training, networking opp

avenues for edu allow owner develop essential skills:
-accounting
-staff management
-bus organisation
-marketing

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37
Q

personal qualities MOTIVATION

A

freedom to choose when and where they work, whom they work and whether to work from home
-no 1 motivator (stats) being boss, passion, better work-life balance, greater control of life, potential for greater financial reward (non/monetary)

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38
Q

personal qualities ENTREPRENEURSHIP

A

-must be confident in decision making and willing to accept all responsibility for their decision
-need determination to recover from poor decisions/mistakes
-creativity to create/seize opp for bus, new niche markets/new g&s
- NO1: ability to set goals and have vision for bus future, adjusting to changing bus, eco and customer markets

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39
Q

burdens of entrepreneurship

A

-work hrs invariably longer than employee’s
-consumes their personal life
-if succeeds, owner may only have little money to spend apart tom salary pay themselves
-need to reinvest profits to generate long term growth

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40
Q

personal qualities
CULTURAL BACKGROUND

A

traditions and beliefs
-many migrants
-cultural influence from experience in trades/services eg. thai food

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41
Q

personal qualities GENDER

A

gvts od feveloped ecos realise employment growth from creation/expansion of small bus sector
-policies to assist small bus & change in social attitudes
-clear upward trend since late 1990s of women owners

women stats
-~1/3 small bus in AUS
-industries are service oriented

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42
Q

problems women face when establishing & operating SMeS

A

-diff finding work-life balance
(family obligations restrict entrepreneurial potential)
-authority is undermined

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43
Q

professional advisers to help SME owners

A

owners needs good relationship with accountant, solicitor, bank manager, regularly
-management consultants to restructure business
-advisers can examine bus objectively and provide independent analysis of org, more aware of legal, eco, financial enviro changes

best advisers
1. accountants
2. solicitors
3. bank managers
4. management consultants

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44
Q

accountants as professional advisers

A

valuable advice on all financial management issues & tax obligations
-access latest changes to taxation & financial reporting requirements

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45
Q

solicitors as professional advisers

A

info concerning bus structures, registration, contracts, partnership agreements, legislation
-up to date with changes to COMPANY law
-advise owner how best to deal with this

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46
Q

bank managers as professional advisers

A

**info and advice on financial services, sources of finance and basic bus management
-wide range of experience
-able to access resources of bank

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47
Q

management consultants as professional advisers

A

for bus management problem that owner cannot deal with, advice
-objective, unbiased perspective
-when outsourcing, check credentials and experiences

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48
Q

federal gvt provision of gvt agencies to help SME owners

A

**ATIC (trade and investment commission)
-trade, investment, edu promotion agency help bus develop international markets by providing info, advice, services

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49
Q

using tech advice to help SME owners

A

establishing online bus presence, networking computers within bus premises/max use of mobile devices improve bus efficiency
-ICT consultant

50
Q

set up vs ongoing costs of online vs physical store

A

ONLINE
set up: website
ongoing: digital marketing, staff

PHYSICAL
set up: shop signage
ongoing: rent, electricity, staff

51
Q

chambers of commerce and how they can help SME owners

A

local associations of businessppl usually centred on suburb/region
-legal and financial help,
-taxation advice
-explain legislation and industrial relations info

52
Q

how trade associations can help SME owners

A

specific industry info and assistance
-AUS Retailers Association
-AUS Medical Association
-each made up of orgs in same line of business to provide specific details abt product development and industry trends

53
Q

ABS help for SME owners

A

valuable data on social, eco, demographic trends
-specialised data on bus activities
-Demographic Trends and statistics
-household expenditure surveys
-owner can analyse changes to external enviro

54
Q

3 inspiration for business ideas of SMEs can be generated by:

A

listening to others
-esp ideas on g/s wanted, but not readily available

research (social media)
-gvt stats and info
-new tech/products from overseas

find improvements could be made on existing product, identify gap in market (demand not currently satisfied)

55
Q

identifying bus opportunities

A

something entrepreneur can see as avenue to success, believing they can provide g/s better/diff way from those already on market
-new products, customers, ways of operating

56
Q

how can entrepreneurs identify a business opportunity

A
  1. analysing parts of market to find opening for certain g/s
    -larger bus unable/unwilling to provide (do things u cant buy in bulk and focus on services)
  2. identifying if many others share certain hobby/interest
    -main catalyst in identifying
    -must have large enough market to sustain sales of g/s
57
Q

after identifying a business opp, the (most vital) next step is to

A

consider compettion

58
Q

steps in considering competition

A
  1. decide which market to compete (mass/niche) broad or specialised
  2. identify lvl comp and main competitors
  3. how to make bus comp?
    -develop customer base/gain market share from comp
    - mass market –> extensive planning to create market share
59
Q

2 ways of achieving competitiveness

A
  1. COST OF PRODUCTION
    -depend on production techniques
    -produce g/s lowest cost possible and sell at lowest price has greatest ability to attract market share
  2. DIFFERENTIATION
    -uniqe/better than rivals
60
Q

3 establishment options for SME

A
  1. setting up NEW BUSINESS from scratch
  2. PURCHASING EXISTING business
  3. purchasing FRANCHISE
61
Q

CONDITIONS more favourable for starting new business from scratch

A

-created sumn unique, to market innovation or invention
-recognise gap in market (customer needs not satisfied by existing bus’)
-market grown and existing bus cant supply all customers

if these conditions don’t exist, starting from scratch more dif cause existing SMEs more competition

62
Q

4 advantages of starting business from scratch

A

-can determine pace of growth and change
-no GOODWILL(monetary value attached to bus reputation) owner has to pay

63
Q

3 disadvantages of starting business from scratch

A

-high risk without revious bus reputation, diff to secure finance
-time to set up, develop customer base, employ & train staff, develop lines of credit
- business may not generate profit for long time

64
Q

when buying an existing business, what is associated with the purchase

A

-stock and equipment
-existing customer base
-staff
-reputation & goodwill
-location

65
Q

what does the potential purchaser need to know before purchasing existing business

A

why business is for sale
-if struggling, bad

examine detailed accs for last 3 years at least
-use accountant to verify financial state

shouldn’t overestimate value of bus reputation
-consultation with accountant to confirm accuracy of value placed on goodwill by seller

66
Q

5 advantages of buying existing business

A

sales to existing customers generates instant incme
-good business history –> increase likelihood of success
-proven track record easier to obtain finance
-stock already acquired and ready for sale

67
Q

3 disadvantages of buying an existing business

A

-existing image of bus may be diff to change esp if bus had poor reputation
-success maybe from previous owner’s personality and contacts, maybe lost when bus sold
-diff to assess value of goodwill with likelihood newcomer pay more than worth

68
Q

franchise

A

buying rights from another business to distribute its products under its name

69
Q

franchisOr and franchisee

A

ind/bus GRANTS franchise (or)
-supplies known bus name, required training and staff development, management skills and materials
:) receive fee & % of profits from each of franchises

ind;bus PURCHASES franchise (ee)
-supplies startup money & labour, operates business and a**grees to abide by terms & conditions of franchise agreement
:) receive benefits of successful bus & reputation

70
Q

why do people buy franchises?

A

avoid problems of starting new business
-for set fee, small bus owner receives benefits of successful bus, well-recognised name and established trademarks
-success rate ~3x independent business bc involves established bus name backed by managerial expertise
-already goodwill
-fastest growth in AUS

71
Q

4 advantages of buying a franchise

A

-leverage benfits of established brand
-opp for franchisor to diversify income streams (and develop additional)
-support from large multinational network to increase market share

72
Q

6 disadvantages of buying a franchise

A

-franchisor controls operations,
-profits shares with franchisor through payment of ongoing franchise fees
-franchisor charges additional service fees for advice
-franchisee cannot shop for cheaper supplies
-contracts can be biased in favour o franchisor
-franchisee shares burden of franchisor’s mistakes

73
Q

3 market considerations when establishing SME

A
  1. g&s
  2. price
  3. location
74
Q

feasibility study

A

assessment of bus idea’s potential for success, determine how practical idea is and if can translate successfully to market

75
Q

feasibility study may include 3

A
  1. ASSESSMENT OF THE MARKET
    -analyse level & type of demand for new/improved product
    -who & where potential customers are
    -strengths and weaknesses
    -what bus’ competitive advantage is
  2. CONSIDERATION OF OPERATIONS
    -describe product that’ll be sold
    -resources needed (plant, equip, materials, staff)
    -location
    -legal     requirements
  3. ANALYSIS OF COMMERCIAL FEASIBILITY
    -consider financial aspects of business idea(how long until 1st sale, how price will be determined, –how much finance needed to start and sustain operations, forecast sales, costs, cash flow, profit)
76
Q

market considerations
g&S

A

-NEED CUSTOMERS, fail without market (c) always MARKET RESEARCH (systematically collecting, analysing info concerning specific market problem)
-w/o reliable info, product fail to sell

77
Q

2 steps for market research (surveys, questionnaires, focus groups)

A

market research: evaluating the viability of a g/s by researching potential customers
2. COLLECT DATA FROM PRIMARY & SECONDARY SOURCES
-1st hand (online, observing customer buying patterns)
-existing data sources gathered by specialise companies

  1. ANALYSING AND INTERPRETING DATA
    -determine what results mean for business

can clearly identify whether gap in market exists, sufficient customers for bus, type of g/s modified to succeed

78
Q

market considerations
price

A

too high, drive away potential customers
too low, diff to achieve profit

recall chapter 8 3 pricing methods (cost based, market based, competition based)

79
Q

market considerations
location

A

-consider all factors affected by location (shopping centre, retail shopping strip, online presence, home-based)

80
Q

zoning

A

local councils allocate land for diff uses (residential, commercial, recreational, industrial)
-determines where some types of bus can operate (LOCATION)
-keep bus activities separate from residential areas and prevent households disturbed by bus operations

81
Q

suburban shopping complex

A

shopping centre complex(suburban) with supermarkets and small specialist stores (hairdressers), full range of specialist retail outlets
-great if no competition
-leasing expensive, remain open during shopping centres hrs (all week)

82
Q

retail shopping strips

A

near public transport
-may struggle to compete with growth of shopping centre complexes offering off-street parking and air-conditioned enviro
-high visibility for passing traffic
-lack of parking

83
Q

online presence

A

no longer limited to dealing with ppl who can physically visit premises
-expand
-avoiding physical associated expenses eg rent
-keep up with competition while retaining retail store

success depends on right investment of time money and resources into setting most effective e-commerce business

84
Q

home based businesses

A

plumbers,dont need bus location, performing services in customers home
-online ordering and payment allow expansion of home based retail businesses
-owner doesn’t face substantial expenditure on rent/purchasing premises

-risk reduced when starting
-flexibility when owner works, reduces commuting time

-**diff **for owner to keep work and home life separate

85
Q

difficulties for SMEs to access finance

A

esp diff for startups,
-banks reluctant to finance startups from high risks
-entrepreneurs bootstrapping (only use existing resources) ventures from personal credit products (credit cards) to finance working capital needs
-MORE diff to access unsecured loans
-bus need to provide security (real estate eg. house) to obtain finance from banks
-delay expansion until funded from retained profits
-interest rates on loans to SMEs higher than mortgage holders/larger businesses

impact growth, employment, investment

86
Q

steps before borrowing finance

A
  1. consider:
    -how much need
    -how much debt can afford
    -what funds available,
    -how much capital to operate
  2. determine most appropriate source of finance
  3. choose appropriate term/length of time (short <1 yr/long term >1yr)
87
Q

options for sourcing finance

A

contribute own funds (equity/capital) INTERNAL
-retained profits
-private investors
-shares

obtain finance (debt) from EXTERNAL SOURCES
-SHORT TERM: overdraft, commercial bills, factoring
-LONG TERM: mortgage, leasing, debentures, unsecured notes

88
Q

debt finance adv & disadv

A

short and long term borrowing from external sources by business
-owner doesn’t have to sell any ownership in business (no 1 advantage)
-owners receive tax deduction for interest payments
-most popular when starting

BUT ^risk if debt from FIs (interest), principal has to be repaid & regular interest payments

89
Q

short term borrowing aka working capital

A

money needed to fund daily operations of business
current assets (cash, accounts receivable, inventory) - current liabilities, (accounts payable, debts).

90
Q

main types of short term finance OCF

A

OVERDRAFTS
-bank allows bus to overdraw acc to agreed limit for specified time to overcome temporary cash shortfall
* (daily op, cheap, but higher IR)
**
COMMERCIAL BILLS
-short term loans issued by financial institutions for larger amts for 30-180 days (>$100 000** usually)
* cheaper, quick, no security needed but only available some companies

FACTORING
-selling accounts receivable for discounted price to a finance/factoring company
* save time & effort collecting debts, no security needed, but customers alerted of bus’ cash flow since notified factor taken over receivables)

91
Q

leasing recommended for

A

eqipment becomes obsolete very quickly
-computers,
-expensive items (land, buildings, new tech, industrial/office equip)

92
Q

main types of long term finance MUD

A

MORTGAGE
-loan secured by property of borrower (business)
* IRs can change during term

DEBENTURES
-type of bond issued by company for fixed rate of interest for fixed period time
* interest tax deductible, cheaper, equity (ownership) not reduced,
* but interest periodically paid to holder & needs security

UNSECURED NOTE
-loan from investors for set period of time, not secured against bus’ assets
* interest tax deductible, cheaper, equity not reduced, no security
* higher IRs periodically

93
Q

equity finance 3 adv and disadv growing (if owners willing to give portion of company)

A

funds contributed by businessowner/s to start and expand business ( eg. selling shares in company to investors)
-money doesn’t have to be paid back with interest (cheaper)
-investors contribute money and become part owners, entitled to a share of profits over time
-owner contributes equity to bus retains control over how finance used

small amt of finance may generate only low profits and returns
-need to sell ownership of bus to raise funds

94
Q

common sources of equity finance SFPSC

A

SELF FUNDING
family/friends
PRIVATE INVESTORS
shares
CROWDFUNDING

95
Q

self funding aka BOOTSTRAPPING(source of equity finance)

A

owner/s use personal finance to fund bus (raised from ppl outside bus)
risk: owner/s lose all investment if fails

bootstrapping: bus finances operations w/o borrowing from external sources
-funded purely from personal finances and revenue made
-SUPER CAUTIOUS BRUH of expenses

96
Q

family or friends (source of equity finance) start

A

-easy, quick for extra finance
-relationships could be adversely affected
-most common for small businesses
-owners may experience diff obtaining debt finance since don’t have track record and high risk of failure

97
Q

private investors (source of equity finance)

A

contribute funds to business in return for share in bus’ profit and equity
-often provide support and advice to ownerand receive ROI

but owner will lose complete control of bus (investors part owners and have say in how business operates)

98
Q

shares (source of equity finance)

A

raise funds by offering shares in bus
-only companies can use
-public listed companies can access more capital > private limited companies (able to issue shares to public) aka IPO

IPO: listing on stock exchange so public can freely trade shares
-expensive, complex option

99
Q

crowdfunding (source of equity finance)

A

raise finance by using social media networks
-crowdfunding platform appeal to ppl for launch of product
-set goal for project, provide details of it and invite ppl to contribute finance
-Go FundMe
-quick to raise finance with few fees
-allows owner connect potential customers and receive feedback

-, no guarantee owner reach funding target
-failed project may tarnish reputation

100
Q

cost of finance depends on TST

A

type of finance
-influence cost of capitl
-debt financing requires money from external source (bank, finance company, building society)
-cost of interest (borrowing money) charged by institution

, source,
-equity finance: no interest charged bc entrepreneur and shareholders invested money
-return paid at end of financial yr if makes profit (dividend if COMPANY)

term (time)

also can be measured in terms of liability

101
Q

liability measuring cost of equity finance

A

unlimited if business operates as sole trader/partnership
-creditors sell all bus and personal assets to recover debt

limited (company)
-limited to just assets of company and all funds from shareholders
-cost of capital depend on term and type of finance used by business

102
Q

financing options available to bus (HARD SHEET)

A

TRADING BANK LOANS

OVERDRAFTS

PERSONAL LOANS

LEASING FINANCE

OWNER/SHAREHOLDER’S EQUITY

103
Q

LEGAL INFLUENCES ESTABLISHING SME
NZHO

A

business name
zoning
health
other regulations

104
Q

legal considerations for businesses and what theyre for

A
  • obey regulations when operating bus
    -risk losing customers, reputation, fines, losing right to continue trading
  • promote fairness, protect consumers and encourage efficiency
105
Q

business name legal consideration

A

ASIC responsible for name registration service
-Pty Ltd, Motors, Associates, Co
-prohibit others from trading under similar name
-doesnt protect/establish rights to name (that’s for trademark with federal agency for intellectual property IP AUS)

ONLINE presence
-domain name (address of bus’ website on internet)
-unique to represent activities, easy to remember and spell
-multiple domains possible for easier search and prevent others from registering similar domain name for confusion

106
Q

health regulations legal consideration

A

local gvt imposes health regulations under Public Health Act 2010 (NSW)
-local council (esp food) w/ requirements to meet to receive licence to operate
-temp for food storage,
-cleanliness, labelling

health inspector assess premises regularly, to ensure standards maintained

107
Q

factors to consider when choosing location

A

fast food outlet:
-zoning regulations
-visibility
-proximity to comp
-car parking

dental surgery
-cost of premises (rent)
-zoning reg
-parking facilities

demographic factors, proximity to target market, public transport access,

108
Q

other regulations legal consideration

A

Competition and Consumer Act 2010 (Cwlth) protects consumers & bus
-consumers from deceptive/misleading practices
-regulates trade practices of bus that can restrict comp (monopolistic power) (affects price and quality of goods)

109
Q

misleading practices illegal under competition and consumer act 2010

A

MISLEADING/DECEPTIVE CONDUCT
-ads cant use deceptive words/claim product has quality doesn’t have

REFERRAL SELLING
-bus offers customer special deal/price if refers other potential customers to seller
-illegal, encourage consumers to spend more money than planned,

110
Q

employment regulations legal considerations

A

tax payments for employees, welfare( health and safety )
- discrimination and equal employment opp

111
Q

human resources (skills and costs [non/wage]) in establishing SME

A
  1. staff employed
    -ads
    -universities,     schools, tafe
    -private recruitment agencies
  2. -skills of staff
    -forecast future staff skills and requirements

most important requirements deal with skill lvl of employees –> more productive –> create wealth for bus

112
Q

skills (HUMAN resources for SME)

A

recruit qualified applicants with msot suitable skills
-more productive, wealth

  1. provide TRAINING for existing employees
  2. recruit those with required skills

msot important include:
good teamwork, communication, problem solving, initiative, quick learner, plan and organise

113
Q

human resources for SME (cost: non/wage)

A

only employ if ROI higher than cost
-pay for wage/salary and employee expenses **(on-costs) **

on-costs: payments for non-wage benefits
-superannuation
-annual leave
-public holidays
-sick leave
-leave loading

114
Q

superannuation (on-costs)

A

requires employers to make financial contribution to fund employees can access when retire so money can be used:
-for retirement

-federal gvt

115
Q

annual leave loading (human resources, non- wage costs)

A

employees except casuals entitled to min 4 weeks annual leave for each year they work
-extra payment received on top of annual leave pay (17.5%)
-common feature of most modern awards

116
Q

taxation for SMEs

A
  1. **federal (ATO collects) and state
  2. local rates** and charges

taxation compulsory payment of prop of earnings to gvt

117
Q

5 major FEDERAL taxes that apply to businesses (levied by…)

A
  1. INCOME tax (PAYG)
    -takenfrom salary/wage directly
    -progressive rates
  2. **FRINGE BENEFITS TAX
  3. GST**
    -10% on most g&s
  4. COMPANY tax
    -earnings of company, calculated using company’s net profits
    -full rate 30%, lower 27.5%
  5. CAPITAL GAINS tax
    -calculated on profit made on selling assets including sale of bus/prop bought & resold within 1 yr
118
Q

3 taxes levied by NSW GVT

A
  1. STAMP DUTY
    -levied on transer or property
    -individual/business
  2. LAND tax
    -tax land owned by indi/bus over certain value
    -land used for primary production/ind’s primary residence exempt (free)
  3. PAYROLL tax
    -payable on wages paid by employer to employees on payrolls >$1.2mill at certain rate
119
Q

how should SMEs manage tax

A

structure records and finances so they have necessary info and money to efficiently manage taxation obligations
-must become familiar with appropriate tax requirements to fed and state gvt on basis of what they earn, own and sometimes purchase
-diff taxes apply to diff bus

120
Q

GST

A

10% on most g&s in AUS
-more diff for bus & find operating in ‘cash eco’ to avoid tax
-bus become responsible for collecting tax on behalf of gvt

121
Q

input tax credit

A

tax deduction bus can claim for GST included in price of bus inputs (raw materials, electricity - gst on inputs)

122
Q

BUSSINESS ACTIVITY STATEMENT BAS

A

document records bus’ claim for input tax credits and accounts for GST payable

Economics (14 decks)

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