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Business > Section 1 - Starting a Business > Flashcards

Section 1 - Starting a Business Flashcards

1
Q

Why might one start a business?

A
  • Employment
  • Earn more money
  • Own boss; control
  • Salary
  • Workload
  • Passion, pursue dream
  • Unhappy with other similar businesses
  • Meet demand
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2
Q

What are goods?

A

Products to sell to people

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3
Q

What are services?

A

What you do to provide for the public

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4
Q

What is a customer?

A

Someone who purchases the product

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5
Q

What is a consumer?

A

Someone who sues the product

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6
Q

What is a need?

A

Satisfy our basic requirement for living

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7
Q

What is a want?

A

Things we desire beyond our needs

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8
Q

What is an entrepreneur?

A

Anyone who takes a risk and starts their own business

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9
Q

What characteristics must an entrepreneur have?

A
  • Business minded
  • Innovative
  • Good leader
  • Forward thinking
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10
Q

What is a primary industry?

A

Extracting raw materials from the land or sea

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11
Q

What is a secondary industry?

A

Manufacture, processing raw materials into finished goods

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12
Q

What is a tertiary industry?

A

Selling finished goods to the customer

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13
Q

What is the chain of production?

A

Primary–>secondary–>tertiary (industries)

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14
Q

What is a franchise?

A

Where a business sells their rights to another business to use their name, product or process

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15
Q

What is a franchisor?

A

The actual business, the businesses under control of the owner

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16
Q

What is a franchisee?

A

The people who asks to become the franchisee

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17
Q

What is the role of the franchisor when franchising?

A
  • Train franchisee workers
  • Take a % of profit from franchisee
  • Provide advertisement for franchisee
  • Provide idea/product
  • Give support
  • Give you equipment
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18
Q

What is the role of the franchisee when franchising?

A
  • Ask to open their own business as part of a company
  • Pay franchisor starter fee
  • Provide staff
  • Promote the brand
  • Stick to price/product
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19
Q

What are the advantages of franchising for the franchisor?

A
  • Keep control
  • Regular royalty payment
  • Business grows
  • Less organisation
  • Franchisee motivated so more success of brand
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20
Q

What are the disadvantages of franchising for the franchisor?

A

-Reputation reliant on others

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21
Q

What are the advantages of franchising for the franchisee?

A
  • Sell established product using successful brand image
  • Easy to obtain bank loan (less risk)
  • Easy to start up
  • National marketing
  • Help + training available
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22
Q

What are the disadvantages of franchising for the franchisee?

A
  • No flexibility; must follow franchise model
  • Must pay % of profit to franchisor (royalty)
  • Could receive all profits if set up alone
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23
Q

What is a niche product?

A

Products for specific people, a special target market

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24
Q

What is a mass product?

A

Products for a wide audience

25
Q

What is a niche market?

A

Where businesses target a small, specific segment of the market + tailor their product to meet customer needs

26
Q

What is a mass market?

A

Where businesses target their product at the entire market + appeal to all customers

27
Q

What happens if a business uses a niche strategy?

A
  • Attractive to small businesses
  • Specialised
  • Less competition
  • Unique
  • Quality
28
Q

What happens if a business uses a mass strategy?

A
  • Standardised product
  • High competition
  • Global businesses
  • Economies of scale
  • Generally lower prices
29
Q

What is a shareholder?

A

Someone who owns part of a business

30
Q

What is a stakeholder?

A

Someone who is interested in, or affected by a business

31
Q

What is an aim?

A

A goal to achieve at the end, a final goal, long term goal

32
Q

What is an objective?

A

Individual stages to get to an aim, targets set to achieve your aim

33
Q

What is a mission statement?

A

Summary of aims/values of a business

34
Q

What aims might a start up business have?

A
  • Survive as a business
  • Break even + then start making profit
  • Conduct market research
  • Provide good product/service
  • Gain loyal customers
  • Raise awareness of the business
35
Q

What ways can a business measure their success?

A
  • Profit
  • Sales figures
  • Number of stores
  • Number of loyal customers
  • Customer feedback
  • Market share
  • Meeting aims/objectives
  • Number of staff
  • Number of countries operated in
36
Q

What examples of stakeholders are there and how are they affected by the business?

A
  • Customers: need product, want choice
  • Employees: paid more if company is doing well, employment, job security
  • Competitors: same customers, better prices, other business tactics as similar business
  • Suppliers: more a business sells, more they need
  • Shareholders: get more money if company does well
  • Bank: make sure they can back loans
  • Government: tax, provide jobs to tackle unemployment
  • Owners: profit
37
Q

What is a business plan?

A

A written report showing what the business plans to do + what it needs to do in order to achieve its aims/objectives. Will include business’ financial documents

38
Q

What do businesses write a business plan?

A
  • Gives business direction/structure
  • Know when they are on track
  • Organisation
  • Attract investors
  • Know how to achieve aims/objectives; measure success
  • Secure finance; more chance of loan
39
Q

What are the contents of a business plan?

A

1) Mission/Aims: overall targets
2) Objectives: how to achieve aims
3) Market Environment: place/trends
4) Competition: who?
5) Product/Service: idea
6) Marketing: how you intend to advertise
7) Distribution: how to get product to customers
8) Funding: how much money you need
9) Forecast: predict sales/profit
10) Time: how long to achieve everything

40
Q

What is a sole trader?

A

A business run + owned by a single individual

41
Q

What are the characteristics of a sole trader?

A
  • Risk taker
  • Organised
  • Passionate
  • Self motivated
  • Independent
  • Hard working
  • Persevering
42
Q

What is unlimited liability?

A
  • When you go into debt and have to get out
  • Business owner responsible for all debts of business
  • May have to sell personal possessions to pay creditors
43
Q

What are the advantages of setting up as a sole trader?

A
  • Get all profit
  • Complete control
  • No unexpected loss of job
  • Own boss
  • More rewarding; greater satisfaction
  • Lower costs at start up
  • Keep business flexible
44
Q

What are the disadvantages of setting up asa sole trader?

A
  • Unlimited liability
  • Lots of work on your own; pressure, responsibility
  • Low money in which to start business
  • Reliant on one person
45
Q

What is a partnership?

A

Partners are the joint owners of a business. The law says a partnership can have between 2 + 20 people

46
Q

What is a sleeping partner?

A

Someone who doesn’t work but get some of the profit (invested initially)

47
Q

What are the advantages of setting up as a partnership?

A
  • Less pressure/responsibility
  • Less work each
  • Someone else to rely on
  • Share debts
  • More money at start
  • More support
  • More ideas/skills
  • Easier to secure a loan
  • Easier to set up
48
Q

What are the disadvantages of setting up as a partnership?

A
  • Unlimited liability
  • Less profit as split
  • Less rewarding; less satisfaction
  • Higher start up costs
  • Not always equal share
  • Cause arguments/disagreements
  • Problems if partner leaves
  • All partners responsible for debt
49
Q

What is a limited company?

A

Whose owners are legally responsible for its debts only to the extent of the amount of capital they invested

50
Q

What are the two types of limited company?

A
  • Private limited company (Ltd)

- Public limited company (Plc)

51
Q

What is limited liability?

A

Responsible for all debts. Can only have up to a fixed sum taken from them (amount invested)

52
Q

What are the features of a limited company?

A
  • Ownership divided into shares
  • Owners aren’t necessarily involved in running the business
  • Separate legal identity to owners
  • Have limited liability
  • Owners called shareholders
  • Profits shared among shareholders
  • Memorandum of Association/Articles of Association
53
Q

What is the role of shareholders in a limited company?

A

Own part of the business, they’re investors

54
Q

What are the three documents involved in becoming a limited company?

A
  • Memorandum of Assoiation (external)
  • Articles of Association (internal)
  • Certificate of incorporation
55
Q

What is the Memorandum of Association?

A

Details of the company: address, capital invested, activities involved

56
Q

What is the Articles of Association?

A

Details voting rights of shareholders, how profits distributed, duties of directors

57
Q

What is the Certificate of Incorporation?

A

Issued by companies house to say limited company has been formed

58
Q

What is a social enterprise?

A

A type of business set up for the benefit of society

59
Q

What are the main factors affecting location?

A
  • Cost of site: not too expensive, afford rent/site
  • Availability of labour: where staff, enough to work
  • Skills of locals: need skills beneficial to business
  • Labour costs: somewhere with low labour costs to maximise profits
  • Competition: not too much competition
  • Proximity of raw materials: where suppliers can easily reach you
  • Proximity to market (transport links): maximise number of customers
  • Infrastructure: near roads for access/distribution
  • Government incentives: where government may help (e.g. high unemployment areas)

Business (13 decks)

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