Chapter 2: Small Business Decision Making

Question 1

What is Market Research?

Answer 1

Market research is a process of systematically collecting, recording and analysing information concerning a specific market.

Question 2

What is Market Conditions?

Answer 2

Market conditions are the features of a market into which a new product or service is to be introduced, and include factors such as the number of potential customers, level of competition and potential for growth.

Question 3

What is Innovation?

Answer 3

Innovation is either creating a
new product, service or process, or significantly improving an existing one.

Question 4

What is Research and Development?

Answer 4

Research and development (R&D) is a set of activities undertaken to: improve existing products, create new products and improve production.

Question 5

What is Entrepreneurship?

Answer 5

Entrepreneurship is the ability and willingness to start, operate and assume the risk of a business venture in the hope of making a profit.

Question 6

What is Business entity?

Answer 6

A business entity is any organisation engaged in the production of goods and services.

Question 7

What is incorporated business?

Answer 7

A business that is incorporated has a separate legal entity from the owner(s).

Question 8

What is sole trader?

Answer 8

A sole trader (proprietor) business is a business owned and operated by one person.

Question 9

What is unlimited liability?

Answer 9

Unlimited liability means the business owner is personally responsible for all the debts of his or her business.

Question 10

What is a partnership?

Answer 10

A partnership is an unincorporated legal business structure with a minimum of two and a maximum of 20 owners.

Question 11

What is a silent partner?

Answer 11

A silent or sleeping partner contributes financially to the business but takes no part in the running of the partnership.

Question 12

What in a incorporation?

Answer 12

Incorporation is the process that businesses go through to become a registered company and a separate legal entity.

Question 13

What is shareholders?

Answer 13

Shareholders (or members) are the owners of a company.

Question 14

What is limited liability?

Answer 14

Limited liability means that the shareholders in a company cannot
be held personally responsible for the debts of that business

Question 15

What is proprietary company?

Answer 15

A proprietary (private) company is an incorporated business with a minimum of two, and a maximum of 50 private shareholders.

Question 16

What is a public company?

Answer 16

…

Question 17

What is cooperative?

Answer 17

A cooperative is a democratic organisation owned and controlled by the people it serves, who join together for a common benefit.

Question 18

What is trust?

Answer 18

A trust is a business structure where a trustee (usually a company) holds property or carries out business on behalf of the members of the trust, known as beneficiaries.

Question 19

What is goodwill?

Answer 19

Goodwill is the monetary value attached to the reputation of a particular business.

Question 20

What is a Franchise?

Answer 20

A franchise means buying the rights from another business to distribute its products under its name..

Question 21

What is a Franchisor?

Answer 21

A franchisor is an individual or organisation that grants a franchise.

Question 22

What is Franchisee?

Answer 22

A franchisee is an individual or organisation that purchases a franchise

Question 23

What is zoning?

Answer 23

Zoning is a means by which local councils allocate land for different uses, such as residential, commercial, recreational and industrial.

Question 24

What is complementary businesses?

Answer 24

Complementary businesses offer products or services that are related to a different business and that may be of use to the customers of that business.

Question 25

What is a solicitor?

Answer 25

Solicitors provide information concerning business formation and structures, registration, contracts, leases, partnership agreements, patents and legislation. Solicitors are up to date with any changes to company law and can advise the small business owner on how best to deal with such changes

Question 26

What is an accountant?

Answer 26

Accountants provide valuable advice on all finan- cial management issues and taxation obligations. They have access to the latest changes to taxation and financial reporting requirements

Question 27

What is a bank manager?

Answer 27

Bank managers are another valuable contact who can provide information and advice on financial services, sources of finance, and basic business management.

Question 28

Business enterprise centres Australia

Answer 28

BEC Australia is a not-for-profit network of business enterprise centres which provide support to small business owners. These centres provide information, mentoring, training programs, workshops and seminars, referrals to accountants, solicitors and government programs, and access to networks of other businesspeople

Question 29

Chambers of commerce.

Answer 29

These are local associations of businesspeople, usually centred around a suburb or region. They provide legal and financial help, taxation advice, an explanation of legislation, and industrial relations information. They also organise training seminars, arrange industry conferences and liaise with government departments

Question 30

Victorian employers chamber of commerce and industry ( VECCI)

Answer 30

VECCI is the state’s main employer group and Australia’s largest multi-industry employer organisation. It is concerned primarily with human resources and industrial relations issues, and provides support for members who may be in dispute with their employees

Question 31

Small business association of Australia and New Zealand

Answer 31

This lobby group provides a forum for exchanging news and views relating to small business matters. It also organises training days and promotes the role of small business and its importance in the total economy

Question 32

What are trade associations?

Answer 32

Trade associations offer specific industry information and assistance. Examples include the Plastics and Chemicals Industries Association, the Australian Retailers Association and the Australian Medical Association. Each association is made up of organisations in the same line of business, so it can provide specific details about product development and industry trends

Question 33

Federal government

Answer 33

The federal government operates a website, www.business.gov.au, as a service to businesses of all sizes, offering access to all government departments with advice on everything from fair trading to taxation. Government departments such as the Department of Foreign Affairs and Trade, and the Department of Innovation, Industry, Science and Research provide specific advice and support to businesses on issues such as exporting overseas and research and development of new products

Question 34

State government

Answer 34

In Victoria, the Department of Innovation, Industry and Regional Development offers a number of programs designed to assist businesses, including:
• the Business Victoria website (www.business.vic.gov.au), which provides entry and
links to information and support on all aspects of starting and managing a business
• Victorian Business Centres, which offer a centralised range of business services
from all levels of government and the private sector

Question 35

Local government

Answer 35

Local councils offer advice on land zoning, assist with subsidised land and consider development applications

Question 36

Informal network

Answer 36

Businesspeople can use their network of friends and colleagues, as well as other local business owners to gain information and advice. Active membership of local chambers of commerce, trade associations and service clubs can lead to friendships and contacts that go beyond the formal activities of theses bodies

Question 37

What is Demand?

Answer 37

In business terms, demand is the quantity of a product that consumers are prepared to purchase.