enterprise and business planning Flashcards
what happens in the primary sector?
extraction- provides natural resources such as the food we need, farming and supplying the power we use.
what happens in the secondary sector?
manufacturing- private enterprises provide us with consumer goods; manufacturing cars, processing food ect..
what happens in the tertiary sector?
service- private companies: provide gyms, offering financial advice ect.
what are the 3 advantages of operating in more than one sector?
- the risk is spread- if one sector collapses the business can rely on the other
- the business can have everything at cost price without having to pay silly prices or additional fees
- more control of how many, where and when
what is a sole proprietor
someone who owns and operates a business alone
what is a partnership?
a business ran by 2-20 people
what is a limited company?
a business that is owned by shareholders who have limited liability
what does SME’s stand for?
small and medium sized enterprises
how big is a small enterprise?
how big is a medium enterprise?
-0-49 employees
-up to 250 employees
how many people do SME’s have employed?
what is the combined turnover of SME’s?
-14.4 M
-£1600 B
what are the 5 motives of an entrepreneur?
- to turn a hobby or pastime into a business- satisficing
- to gain a profit - make more money than current job
- to use redundancy money- setting up business is only outcome
4.To be their own boss- in control of their own destiny
- carry on family tradition- already have skills and expertise
what are the key characteristics of an entrepreneur? (6)
- being a risk taker (risk capital and own time to create profits)
- taking initiative and being proactive (don’t panic or get overwhelmed)
-effective organiser (undertake a wide range of activities)
-having creativity and being innovative
(come up with innovative concepts and ideas)
-being hard working (entrepreneurs work 52 hours a week estimated)
-being determined and having perseverance
how should entrepreneurs identify business opportunities (4)
- find a product or service that is not available in the area
-change a product or service they are unhappy with
-see if they can support other businesses
-developing a brand new product or service
what are the roles of an entrepreneur?
(9)
- set up and leading a business
-organisation, management , planning of the business
-risk taking
-decision making (finance, employment)
-acting as an innovator(bringing new products to the table)
-create employment
-securing finance (raising money internally and externally)
-formulate business plan
undertake market research
what are the skills of an entrepreneur?
-communication
-numeracy
-confidence
-organisation skills
what do entrepreneurs bring to the economy?
-wealth to an area
-provide jobs
-innovation
-attract other entrepreneurs
why are SME’s important?
(6)
-create jobs
-creates demand for product which in turn creates more jobs and other businesses
-generates wealth in the economy (SMEs buy G&S from other businesses
-pay taxes to government
- introduced new tech and innovation to the market
-stimulates economy by instilling confidence in people. (consumer confidence means more investments)
what are the disadvantages of SMEs?
(4)
-small scale businesses are more likely to fall in recession and hardship
-funds don’t compete with larger organisations because they have smaller budgets (can’t invest as much money so affects ability to offer high quality services)
-less recognition so harder to compete with others
-don’t obtain economies of a similar scale to larger businesses
what is a need? give examples
-essentials for survival
-food, water, shelter, clothing,
what is a want? give examples
-desires that aren’t essential
-designer clothes, latest iphone
what is a service? give examples
-something that is intangible
-hairdressers, plumbing
what is a good? give examples
-physical items that are tangible
-crisps, ball
where can entrepreneurs find help when wanting to start up a new business?
-surveys
- data
-books
-articles
what is a business plan?
-a business plan makes clear the objectives of the business and how the business intends to achieve these objectives
- business plans are ongoing
what are the 5 main components of a business plan?
- overview/ executive summary
- marketing plan
- operations plan
- human resources plan
- financial plan
outline the purpose of the overview/ executive summary portion of a business plan.
(6)
- clearly describes business idea
- briefly describes the business opportunity that is going to be exploited
- outlines strategies and how finance is going to be obtained
- sets out overall aims and objectives
- should be flexible and adaptable
outline the purpose of the marketing plan within a business plan
(3)
- establishes the possible size of the market, needs of customers and the level of competition based off field and desk research
- after marketing plan the strategy can be prepared.
- identifies weaknesses so businesses can better meet customers needs and differentiate from competition
outline the function of the operations plan within a business plan
(5)
contains details of
• where the business is operated
•production methods
• equipment needed
•information on the costs of production
• where the business supplies
outline the function of the human resources plan within a business plan
identifies:
•the number of employees
• experience and qualifications they require
•management team
identify the purpose of a financial plan within a business plan
(4)
identifies:
• a sales forecast indication potential revenues
• a cash flow forecast for the first 12 months
• a profit and loss and balance forecast for the end of the first year
• a break even analysis
what are the benefits of a business plan?
• businesses are more likely to survive with one
•gives the owner a clear set of instructions on how to run their business
• allows the owner to check progress against objectives, monitor cash flow and take action when objectives aren’t being met
• needed for potential investors when seeking finance from banks, without one it is highly unlikely that capital will be attracted
what are the drawbacks of a business plan?
(4)
• market research costs time money and resources that could be better spent elsewhere in the business
• it’s difficult to predict what your income will be for a new business
• market research data maybe unreliable, most new business will be using guesswork which is a weakness
• and inaccurate business plan with unachievable objectives can give entrepreneurs false hope leading to failed investments
