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 are human resources

Answer 3

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

Question 4

What are 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 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 are bank bills

Answer 12

They are a type of bill of exchange and are given for larger amounts, usually over $100000, for a period of 90–180 days. The borrower receives the money immediately and promises to pay the sum of money and interest at a future time.

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 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 a lessee

Answer 16

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

Question 17

What is a lessor

Answer 17

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

Question 18

What is a grant

Answer 18

Governments are also providers of finance in the form of grants for business development, and especially to promote exports.

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’ (American Marketing Association).

Question 20

What is a marketing objective

Answer 20

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

Question 21

What is a marketing target

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 a 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 a 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.