Chapter 3: Small Business - Planning

Question 1

What is planning?

Answer 1

Planning is the process of formulating objectives and determining how to achieve them.

Question 2

What is a resource?

Answer 2

A resource is any person or product that will help in the production of a good or service.

Question 3

What is human resources?

Answer 3

Human resources are the employees who provide their time, energy, skills and effort.

Question 4

What is physical resources?

Answer 4

Physical resources refer to equipment such as a computer, cash register, machinery, motor vehicle, office equipment and stock.

Question 5

What is an asset?

Answer 5

An asset is any item of value owned by the business.

Question 6

What are establishment costs?

Answer 6

Establishment costs include those costs involved in setting up the business.

Question 7

What are operating costs?

Answer 7

Operating costs include those costs involved in the ordinary day-to-day running of the business.

Question 8

What is equity?

Answer 8

Equity is the funds contributed by the owner(s) of a business to commence and build the business.

Question 9

What is debt?

Answer 9

Debt is the funds provided by sources outside the business, which must be paid back over time, with interest.

Question 10

What is working capital?

Answer 10

Working capital is the funds available for the short-term financial commitments of a business.

Question 11

What is a bank overdraft?

Answer 11

With a bank overdraft, the bank allows a business or individual to overdraw their account up to an agreed limit for a specified time, to help overcome a temporary cash shortfall.

Question 12

What is bank bills?

Answer 12

Short-term securities issued by a business and bought by a bank.

Question 13

What is trade credit?

Answer 13

Trade credit exists when a supplier provides products to a business with an agreement to charge for the goods or services later.

Question 14

What is a mortgage?

Answer 14

A mortgage is a loan secured by the property of the borrower (the business).

Question 15

What is leasing?

Answer 15

Leasing is a way of financing the purchase of assets without a large initial capital outlay.

Question 16

What is the lessee?

Answer 16

The lessee is the person or business to whom a lease is granted.

Question 17

What is the lessor?

Answer 17

The lessor owns and leases the equipment for an agreed period of time.

Question 18

What are grants?

Answer 18

Grants are administered through departments of business development or small business development centres, which advise individuals on setting up and administering a business.

Question 19

What is marketing?

Answer 19

Marketing is ‘the process of planning and executing the conception, pricing, promotion and distribution
of ideas, goods and services to create exchanges that satisfy individual and organisational objectives’

Question 20

What are marketing objectives?

Answer 20

A marketing objective is a statement of what is to be achieved through the marketing activities.

Question 21

What is the target market?

Answer 21

The target market is the group of customers to which the business intends to sell its product.

Question 22

What are marketing strategies?

Answer 22

Marketing strategies are actions undertaken to achieve the business’s marketing objectives.

Question 23

What is marketing mix?

Answer 23

Marketing mix refers to the combination of the four elements of marketing, the four Ps — product, price, promotion and place — that make up the marketing strategy.

Question 24

What is marketing management?

Answer 24

Marketing management is the process of monitoring and modifying the marketing plan.

Question 25

What is enlightened self-interest?

Answer 25

Enlightened self-interest is the belief that a business ultimately helps itself when it helps to solve society’s problems.

Question 26

What is triple bottom line?

Answer 26

Triple bottom line refers to the economic, environmental and social performance of a business.

Question 27

What is a business plan?

Answer 27

A business plan is a written statement of the business’s goals and objectives, and the steps to be taken to achieve them.