Chapter Three-Small Business Planning

Question 1

Business plan

Answer 1

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

Question 2

Planning

Answer 2

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

Question 3

Resouce

Answer 3

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

Question 4

Human resources

Answer 4

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

Question 5

Physical resources

Answer 5

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

Question 6

Asset

Answer 6

An asset is any item of value owned by the business

Question 7

Establishment costs

Answer 7

Establishment costs include those costs involved in setting up the business

Question 8

Operating costs

Answer 8

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

Question 9

Equity

Answer 9

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

Question 10

Debt

Answer 10

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

Question 11

Working capital

Answer 11

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

Question 12

Bank overdraft

Answer 12

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 13

Bank bills

Answer 13

Short-term securities to be repaid at a later date

Question 14

Trade credit

Answer 14

When a supplier provides products to businesses with an agreement to charge for the goods/services later

Question 15

Mortgage

Answer 15

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

Question 16

Leasing

Answer 16

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

Question 17

Lessee

Answer 17

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

Question 18

Lessor

Answer 18

A lessor is the owner of an asset that is leased under an agreement to the lessee

Question 19

Grant

Answer 19

Funds obtained from the government

Question 20

Marketing

Answer 20

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 21

Marketing objectives

Answer 21

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

Question 22

Target market

Answer 22

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

Question 23

Marketing strategies

Answer 23

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

Question 24

Marketing mix

Answer 24

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 25

Marketing management

Answer 25

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

Question 26

Enlightened self-interest

Answer 26

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

Question 27

Triple bottom line

Answer 27

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