Topic 1 Business Activity

Question 1

What is enterprise?

Answer 1

-A business or company

Question 2

Define an entrepreneur.

Answer 2

• A person who takes the risk of starting and running a business

Question 3

Define a business.

Answer 3

-An individual or organization whose aim is to satisfy the needs or wants of consumers by providing good and/or services that they will buy.

Question 4

State the risks of starting a business

Answer 4

-(Financial) - possibility of losing money
-(health) - can affect mental health e.g. stress

Question 5

State the rewards of starting a business.

Answer 5

-(Financial) - some successful entrepreneurs make money
-(Independence) - some people like to be their own boss

Question 6

List three characteristics of an entrepreneur .

Answer 6

-Risk-taking
-Determination
-Creativity/innovative
-Confidence
-Hard Working
-Organised

Question 7

Why do people start their own business?

Answer 7

-To make a profit
-To invest money
-To create a work-life balance
-To make use out of their skills and interets
-To be their own boss

Question 8

Define a business plan.

Answer 8

-how a business aims to achieve its objectives

Question 9

What is the purpose of a business plan?

Answer 9

-To reduce the risk of starting a business
-To help a business succeed

Question 10

What is the role of a business plan

Answer 10

-To identify markets
-To assist with finance
-To identify the resources that are needed
-To achieve a business aim or objective

Question 11

List the contents of a business plan

Answer 11

-Aims and Objectives
-Target market
-Competition
-Business idea
-People running it
-Market research
-Finance

Question 12

Define finance.

Answer 12

-The money needed to start a business

Question 13

Define unlimited liability.

Answer 13

-Responsibility for the debts of the business rests with the owners (business and owner are one)

Question 14

Define capital

Answer 14

-Money raised to start or develop a business

Question 15

Define a deed of partnership.

Answer 15

-A document setting out the operations of the partnerships.

Question 16

What is a sleeping partner?

Answer 16

-Someone who invests in a business but does not

Question 17

Define limited liability.

Answer 17

-When a business is not responsible for its debts (the business and owner are separate)

Question 18

Define a shareholder.

Answer 18

-Owner of a limited company
-Someone who has shares in a business

Question 19

Define a dividend

Answer 19

-Money paid to shareholders from the business

Question 20

List the advantages of running as a sole trader.

Answer 20

-Easy to set up
-Little finance is required
-Full control
-Keep all then profits
-Financial information is private

Question 21

List the disadvantages of operating as a soul trader.

Answer 21

-Unlimited liability
-Business cannot run if ill or on holiday
-Long working hours
-Shortage of capital
-Skills shortage

Question 22

List the advantages of operating as a partnership.

Answer 22

-More capital available
-Easy to set up
-More skills available (shared)
-Shared workload
-Financial info is private

Question 23

List the disadvantage of operating as partnership.

Answer 23

-Shared profit
-Unlimited liability
-Shortage of capital
-Slower decision making
-No continuity

Question 24

List the advantages of operating as a private limited company.

Answer 24

-Limited liability
-Continuity
-Can raise capital more easily
-Control over share sale (invited to buy)

Question 25

List the disadvantages of operating as a private limited company.

Answer 25

-Financial information is available to the public
-Complex and expensive to set up
-Sale of shares is restricted to 50
-Dividends to be paid

Question 26

List the advantages of operating as a public limited company

Answer 26

-Can raise capital by selling shares on stock exchange
-Easier to borrow money
-Limited liability for shareholders

Question 27

List the disadvantages of operating as a public limited company

Answer 27

-Possibility of a takeover
-£50,000 required
-Financial information available to the public

Question 28

Define business objectives.

Answer 28

-What the business wants to achieve

Question 29

Define business survival.

Answer 29

-The business can afford to pay for its costs but nothing else

Question 30

Define profit.

Answer 30

-The difference between revenue and costs

Question 31

Define market share.

Answer 31

-The share of the total market for a product