Topic 1- Entrepreneurship

Question 1

an entrepreneur

Answer 1

• comes up with an idea
• recognises a need in a given market
• transforms it into a successful and profitable business

Question 2

a profitable business

Answer 2

makes enough profit to:

a) serve as an income for entrepreneur
b) put money back into business for expansion

Question 3

market research

Answer 3

an attempt to obtain new info and if business:

a) still meets needs of target market
b) produces/provides enough to satisfy target market
c) sells products/services at competitive prices to show profit

Question 4

target market

Answer 4

specific group of people who would buy a product or service

Question 5

break-even point

Answer 5

the minimum number of sales necessary to cover all expenses

income = expenditure, therefore no profit or loss

Question 6

7 components of a business plan

Answer 6

1. info about the business
2. production plan
3. marketing plan (5Ps)
4. financial plan
5. management plan
6. SWOT analysis
7. protect your idea from others copying, imitating or using it

Question 7

production plan

Answer 7

a detailed description of the product including:

a) product specification
b) exact method/recipe of production
c) equipment and suppliers used
d) quality standards that will apply

Question 8

the 5Ps

Answer 8

1. Product- describe and explain your product and its advantages
2. Promotion- how you will convince consumers to buy your product, how you will ensure a competitive advantage
3. Price- what you intend to charge and how you calculated it
4. People- target market
5. Place- where you will sell your product or how you will distribute it

Question 9

product specification

Answer 9

• a detailed statement describing the product
• ensures that a certain standard is maintained
• complete products always have the same appearance and quality

Question 10

product specification includes (5)

Answer 10

• description of appearance eg. size
• raw materials used in production
• info about packaging
• equipment used
• method of production

Question 11

factors to consider when choosing a product for production

Answer 11

1. availability of human skills
2. financial resources
3. available work space
4. available raw materials
5. consumer attraction

Question 12

start up costs

Answer 12

costs to start a business, including:

• registration fees
• business licence
• rent
• purchasing equipment

Question 13

operating costs

Answer 13

all costs required to run the business, including:

• rent
• water and electricity
• repayment of bank loan
• stationery

Question 14

7 factors influencing efficient production

Answer 14

1. planning
2. keeping to specifications
3. quality control
4. tidy workplace
5. hygiene of workers
6. control of finances
7. stock control

Question 15

production planning

Answer 15

-date product must be delivered
-work schedule
-efficient use and maintenance of equipment to prevent breaks
breaks = decrease in sales and profit

Question 16

keeping to specifications

Answer 16

ensures that clients always get good quality products

Question 17

quality control

Answer 17

• ensures that product conforms to specific standard and requirements
• ensures that clients will continue to buy
• must be built into every phase of production

Question 18

a tidy workplace

Answer 18

• maximises production as work can be performed quickly and efficiently
• must be kept safe to prevent injury, illness, accidents, fire

Question 19

why hygiene of workers is important

Answer 19

• hygienic workplace ensures safety and health of workers
• poor hygiene poses health risks to clients
• raw materials could become contaminated if workers are unhygienic

Question 20

control of finances

Answer 20

keeping records of money coming in and going out of the business

Question 21

budget

Answer 21

indicates how much money a business expects to receive and how it plans to spend it

Question 22

stock control (5)

Answer 22

1. ensures the purchase of correct. high quality raw materials and makes them available for production
2. avoids running low on raw materials
3. prevents wasting
4. prevents spending too much money
5. prevents theft

Question 23

sustainable profitability

Answer 23

a business’s ability to manufacture products over a long period of time, to cover all expenses and then show a profit

Question 24

feasibility study

Answer 24

an analysis and evaluation of a proposed idea or project to determine the chances of making a success of it

Question 25

purpose of a financial feasibility study (3)

Answer 25

1. identify strong and weak points of a business
2. to get a clear idea of the viability of a business
3. to make forecasts and to adapt a business plan to enable the business to continue successfully

Question 26

5 steps to follow in a financial feasibility study

Answer 26

1. list total costs and expenditures of the business
2. predict the possible income from sales
3. calculate the possible profit mark up per month
4. calculate how long it will take to cover the start up costs
5. decide if sales for this period can be maintained to make the project viable

Question 27

how to work out selling price

Answer 27

selling price = cost price + profit markup

Question 28

how to work out profit

Answer 28

profit = selling price - production costs

Question 29

how to work out production costs

Answer 29

production costs = selling price - profit

Question 30

how to work out profit markup

Answer 30

profit/ selling price x 100

Question 31

best sales scenario

Answer 31

forecast of a business if the product sells so well that the sales target is met and a profit is made

Question 32

worst sales scenario

Answer 32

forecast of a business if the product sells so poorly that the sales are less than the break-even point (ie. a loss)