Running a Business (Yr 10 Mid-year) Flashcards
Name some reasons for being self-employed.
- Independence
- More control over your life
- Choose when and where you work
- Choose whom you work with
- To work at home
Advantages of being self-employed.
- Independence
- Possibility of making a profit
- Challenges, reward and satisfaction
- Increase personal wealth
- Contribute to society
- Develop own creative ideas
- Overcome unemployment
- Achieve a better lifestyle
- Possible tax advantages
- Employ family members
Required skills and characteristics needed to be an entrepreneur.
- Resilience
- Focus
- Self-reliance
- Open mind
- Competetive
- Confidence
- Determination
- Passion
- Self-motivated
- Good communicator
- Sets goals
- Takes advice
- Willing to learn
- Deals with failure
- Leadership qualities
- Desire to succeed
Disavdantages of being self-employed.
- Hard work and long hours
- Other ‘bosses’ — customers, suppliers, financiers.
- Income may fluctuate and be uncertain
- Risks of failiure
- Stress and worry
- High levels of responsibility
- Difficulty selling the business
- Constantly facing problems
What is a business opportunity?
Something an entrepreneur can see as an avenue to success.
Business opportunities: Market research
Market research is required to investigate certain aspects of the business, such as location, competition and demographics.
- Who are the customers?
- Do they need our product?
- Who are the competitors?
- What are they like?
Business opportunities: Location
- A good location can make the difference between success and failiure.
- It is an asset and will lead to high levels of sales and profits.
- Where is the business located?
- Is the product reliable?
- Is the product easy to access?
- Where is the market located?
- Rural
- Urban
Business opportunities: Demographics
Demographics provides details of the size of a particular population and its characteristics.
- What is the majority of ethnic groups?
- What is the largest age group?
- Family size and income?
- Majority of occupations?
Business opportunities: Competition
Businesses need to know who they are competing against in the market place and whether there will be enough room for them.
- Is the product unique?
- What is the price range/quality?
- What is the setup and appearance?
- Who are the competitors?
Business opportunities: Target markets
- Target market refers to the group of customers to which the business intends to sell its products.
- Once the target market has been identified, the business concentrates its marketing activities on that group.
- Is the product in demand?
- How much are consumers willing to pay?
- Who is the target market?
- Where will you find your target market?
What is a sole trader?
- A business owned and operated by one person.
- The most common type of business in Australia.
- The cheapest and simplest structure to set up.
- Unlimited liability
What is a partnership?
- A business owned and operated by 2–20 people
- Unlimited liability
What is a private company?
- Pty. Ltd (Proprietary Limited)
- Often family owned
- Shares are only offered to the people who the business wants as part-owners. (not given out freely)
What is an incorporated association?
- Can have an unlimited amount of shareholders.
- The general public may but and sell shares.
- Limited liability
What is equity finance?
- money received from the sale of shares of ownership in the business.
- you use your own money.
What is debt finance?
- money obtained through loans from:
- banks
- finance companies
- trade suppliers
- you use other people’s money.
Name the advantages of starting a new business.
- shape reputation
- don’t have to pay for goodwill
- invest small amounts
- determine the pace of growth and change.
- the owner has more flexibility to select the
- location
- target market
- range of products
- level of customer service
Name the disadvantages of starting a new business.
- There is a high risk and a measure of uncertainty.
- Difficult to attract customers.
- It may prove difficult to secure finance.
- Time is needed to:
- develop a customer base
- employ staff
- develop lines of credit from suppliers.
- If the start-up period is slow, then profits may not be generated for some time.
Name the advantages of purchasing an existing business.
- Sales to existing customers will generate instant income.
- A good business history increases the likelihood of business success.
- Stock has already been acquired and is ready for sale.
- Equipment is available for immediate use.
- Existing employees can provide valuable assistance.
Name the disadvantages of purchasing an existing business:
- The existing image of the business may be difficult to change,
- especially if the business had a poor reputation.
- The success of the business may have been due to the previous owner’s personality and contacts and this may be lost when the business is sold.
- Some employees may not agree to any change to the business operation.
What are some regulations enforced by the local government that impact businesses?
- determining land zoning (use) and approving new development applications
- fire regulations, especially fire prevention facilities parking regulations governing the number of spaces that need to be provided
- health regulations, especially the safe handling of food
- the size, shape and location of business signs.
What are some regulations enforced by the state government that impact businesses?
- registration of the business name unless the business carries the name of the owner
- provision of employee entitlements such as:
- workers’ compensation
- occupational health and safety
- award rates of pay and conditions
- not engaging in misleading or deceptive advertising
- abiding by any pollution controls
- observing regulations relating to the sale of food, cigarettes and alcohol
- adequate and non-deceptive labelling of all foods and clothing.
What are some regulations enforced by the federal government that impact businesses?
- payment of Pay As You Go (PAYG) income tax and fringe benefit tax
- deduction of income tax from employees who earn above the minimum taxable wage level
- possible collection of Goods and Services tax (GST) on behalf of the Australian Taxation
- Office provisions for employee superannuation
- abiding by unfair dismissal laws when dismissing employees
- not engaging in anti-competitive practices.
Name marketing strategies for businesses.
Networking: Tell people about your business and what you do for a living.
Creating a website: The website can be used for product displays, e-tailing and blogging.
Advertising: Use print or electronic media to communicate messages about your products.
Social media: Create a business page on different social media platforms.
Testimonials: Existing customers tell others about their positive experiences with your business.
Publicity: Write articles and give seminars on topics related to your business.
What is a competetive advantage?
The ability of a business to develop strategies that ensure it has an ‘edge’ over its competitors.
What are demographic factors?
Population characteristics that affect customer spending, which include:
- age
- ethnicity
- gender marital status
- family size
- income
What is an entrepreneur?
Someone who starts, operates and assumes the risk of a business venture in the hope of making a profit.
What are expenses?
The costs incurred in running a business.
What is a franchise?
The rights from a manufacturer to distribute its products under its name.
Define assets:
items of value owned by a business
Define goodwill:
The monetary value of a business’s reputation.
What is a gross profit/loss?
The amount remaining when the cost of goods sold is deducted from revenue.
What is an incorporation?
When the company has become a separate legal entity from its owners (shareholders).
What are liabilities?
The debts owned by a business to others.
What is meant by unlimited liability?
- A business owner is personally responsible for all the debts of their business.
- Can be forced to sell personal assets such as a house or car to pay for business debts.
What is limited liability?
If the business cannot pay its debts, a shareholder generally loses only the money they invested in the business.
Define liquidity:
The ability of a business to pay its debts in time.
What is management?
The coordination of the human, physical, financial and information resources to achieve the goals of the business.
What is net profit/loss?
The amount remaining when operating expenses are deducted from gross profit.
What is a niche market?
A very small segment of the total market.
What is owner’s equity?
The value of the business to the owner.
What is promotion?
Methods used by a business to inform, persuade and remind customers about its products.
What is revenue?
The income earned by a business.
What is risk management?
The process of identifying and minimising the risks faced by a business.
What is a target market?
A group of customers whom the business intends to sell its products.
