Chapter 1: Starting a Business

Question 1

Business

Answer 1

an activity that requires the organisation of resources to achieve a reward, whilst running a risk

Question 2

Entrepreneur

Answer 2

an individual with an idea or business

Question 3

Gap in the market

Answer 3

a business opportunity that is either a completely new idea or adds something different to an existing product or service.

Question 4

Franchise

Answer 4

The legal right to use the name and logo of an existing firm and sell the same products.

Question 5

Business Aim

Answer 5

A stated target for the future. For example, a new business may have the aim to survive its first year of trading.

Question 6

Business Objective

Answer 6

A clearly defined target for a business to achieve over a cetain period of time.

Question 7

Growth

Answer 7

An increase in turnover(sales), market share or profit.

Question 8

Profit

Answer 8

What is left after costs have been deducted from revenue.

Question 9

Profit Margin

Answer 9

Profit made as a proportion of sales revenue.

Question 10

Sales

Answer 10

The amount sold or the value sold.

Question 11

Market Share

Answer 11

The proportion of total market sales sold by one business.

Question 12

Customer Satisfaction

Answer 12

How happy the customer is with the product or service.

Question 13

Ethics

Answer 13

The moral questions on which decisions are made and the impact the business has on its internal and external environment.

Question 14

Turnover

Answer 14

The value of sales made during the trading period, also called revenue.

Question 15

Stakeholder

Answer 15

An individual or group with an interest in a business, such as employees, customers, managers, shareholders, suppliers, competitors and the local community.

Question 16

Business Plan

Answer 16

A statement showing how a business sets out to achieve its aims and objectives.

Question 17

Funding

Answer 17

The capital provided for the various stages of business growth by different sources of finance, either on a short- or long-term basis.

Question 18

Forecast

Answer 18

A technique where the business attempts to estimate future sales, or other financial variables.

Question 19

Risk

Answer 19

The potential for loss but rewards in business make it a calculated gamble.

Question 20

Uncertainty

Answer 20

Not knowing the future, or what is going to happen.

Question 21

Sole Trader

Answer 21

The most common form of business organisation, often just one person

Question 22

Partnership

Answer 22

The simplest way two or more people can be in business together where partners are jointly and personally responsible for debts.

Question 23

Unlimited liability

Answer 23

Unincorporated businesses, such as sole traders and partnerships, have unlimited liability, which means that the owners are responsible for all the business’s debts.

Question 24

Incorporation

Answer 24

The process of forming limited liability company such as a private limited company or PLC.

Question 25

Limited Liability

Answer 25

Investors (shareholders) in a limited company can only lose their investment in the business if it fails; they cannot be forced to sell assests to pay off the firm’s debts.

Question 26

Technology

Answer 26

In relation to business location, this refers to the use of e-technology, such as the Internet and email, to create a virtual market between the business and the consumer.

Question 27

Logistics

Answer 27

The process of buying, managing and delivering goods, from the point of manufacture to the end customer.