Starting Up A Business

Question 1

Financial reasons

Answer 1

Making a fortune from the firms profits or just a steady income

Question 2

Personal reasons

Answer 2

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.

Question 3

Help others

Answer 3

Charities

Question 4

Main aim

Answer 4

To make a profit in order to survive. If not it will go bust

Question 5

Other aims

Answer 5

Biggest in the market
Provide the highest quality products
Satisfying customer needs

Question 6

Sole traders

Answer 6

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.

Question 7

Partnerships

Answer 7

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

Question 8

Private limited companies (ltd)

Answer 8

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.

Question 9

Franchising

Answer 9

Companies give other firms the right to see their products in return for a fee.

Question 10

Franchisors

Answer 10

Product manufacturers

Question 11

Franchisees

Answer 11

Firms selling their products

Question 12

Pros of franchising

Answer 12

Less risk of the business failing
Wider marketing
Provides training

Question 13

Cons of franchising

Answer 13

Have to run the business according to the Franchisors’s rules (not own rules)

Question 14

Survival

Answer 14

Most important short-term aim to a new business

Question 15

Profit

Answer 15

Profitable firmware are an important source of wreath creation for the economy

Question 16

Growth

Answer 16

Aim by increasing number of employees, increasing the number of products sold or increasing income from sales

Question 17

Market share

Answer 17

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

Question 18

Environmental sustainability

Answer 18

Minimising the impact of the firm’s activities on the environment

Question 19

Ethical consideration

Answer 19

Thinking about whether the company acts in a way that society believes is morally right (e.g testing on animals)

Question 20

Customer satisfaction

Answer 20

Measures how happy consumers are with the products being sold through the use of surveys

Question 21

Objectives

Answer 21

Short term aims (stepping stones)

Question 22

Stakeholder

Answer 22

Anyone who is affected by a business. Can be external (customers and suppliers)or internal (owners)

Question 23

What do they do

Answer 23

Provide good or a service to customers who pay

Question 24

Business plan

Answer 24

Outline of what a new business will do and how it aims to do it