Starting Up A Business Flashcards
Financial reasons
Making a fortune from the firms profits or just a steady income
Personal reasons
The independence of being their own boss, difficulties finding a job elsewhere, or a desire to see their ideas for a product put into practice.
Help others
Charities
Main aim
To make a profit in order to survive. If not it will go bust
Other aims
Biggest in the market
Provide the highest quality products
Satisfying customer needs
Sole traders
Most small business. Don’t need anything to start trading. (E.g plumbers, hairdressers e.t.c)
Advantages - easy to set up, be your own boss, decide what happens with the profit
Disadvantages - long hours, unlimited liability, do everything on your own e.g pay debts.
Partnerships
Not that common. Have equal say in decisions and equal share in profits.
Advantages - more ideas and people to share the work, more capital (money)
Disadvantages - legally responsible for what other partners do, may have disagreements
Private limited companies (ltd)
Have limited liability. Owned by shareholders. The more shares you own, the more control you get. They’re firms whose shares can only be sold if all the shareholders agree.
Franchising
Companies give other firms the right to see their products in return for a fee.
Franchisors
Product manufacturers
Franchisees
Firms selling their products
Pros of franchising
Less risk of the business failing
Wider marketing
Provides training
Cons of franchising
Have to run the business according to the Franchisors’s rules (not own rules)
Survival
Most important short-term aim to a new business
Profit
Profitable firmware are an important source of wreath creation for the economy
Growth
Aim by increasing number of employees, increasing the number of products sold or increasing income from sales
Market share
When a business starts up it has no market share. One of its first aims is to capture a part of the market and establish itself.
Market share = (sales of the firms products / total sales of the market) X 100
Environmental sustainability
Minimising the impact of the firm’s activities on the environment
Ethical consideration
Thinking about whether the company acts in a way that society believes is morally right (e.g testing on animals)
Customer satisfaction
Measures how happy consumers are with the products being sold through the use of surveys
Objectives
Short term aims (stepping stones)
Stakeholder
Anyone who is affected by a business. Can be external (customers and suppliers)or internal (owners)
What do they do
Provide good or a service to customers who pay
Business plan
Outline of what a new business will do and how it aims to do it
