Unit 1 Flashcards
Define sole trader
A business that is run by a single individual
Define secondary industry
Manufacture, processing raw materials into finished good e.g. Builders, bakers, carpenters, chefs
Define partnership
Joint ownership of a business. The law says partnerships can have between 2 and 20 people
Define entrepreneur
Anyone who takes a risk and sets up their own business
Define consumer
Someone who uses that’s product
Define unlimited liability
You have no-one to help you get out of debt, solely your responsibility. If you go into debt they can take your personal possessions (by creditors)
Define wants
Things that are beyond our needs e.g. Phone, iPod, faster car
Define needs
Satisfy our basic requirements for living e.g. Food, water, warmth, security
Define primary industry
Extracting raw materials from the land or sea e.g. Fishermen, farmers, miners, forestry, oil rigs
Define customer
Someone who purchases the product
Define franchisor
The actual business, the business under control of the owner e.g. subway
Define tertiary industry
Selling finished goods to the customer e.g. Online shops (Amazon, eBay), supermarkets/shops
Define franchise
Where a business sells the rights to another business to use their name, products or process
Define franchisee
The people who ask the franchisor for the rights to use their name, products or process
Define niche products
Products for specific people/target audience
Define sleeping partner
Someone who doesn’t work for a business but gets some of the profits. Puts some money to start up in
Define affluent area
An area that is very rich
Define shareholder
Someone who ‘owns’ part of a business
Define stakeholder
Someone who is interested in/affected by a business
Define aim
A goal to achieve at the end, a final long term goal
Define objective
Individual stage/targets to achieve an aim
Define mass products
Products for a wide target audience
Define business plan
A written report showing what the business plans to do and what it needs to do in order to achieve its aims and objectives. It will include financial predictions for the company
Define mission statement
Summary of aims/values of a business
Advantages of setting up as a franchisee
- easy to start up
- help and training available from the franchisor
- easier to obtain bank loans(less risk)
- selling a product that is already established through an established company image
Disadvantages of a franchisee
- must pay a %of profits to franchisor
- no flexibility, must follow franchisor model
Advantages to a franchisor of a franchisee
- less organisation
- keep control
- regular royalty payments
Benefits of setting up a franchisee compared to starting up as a sole trader
- less risk, already established
- easier to obtain a bank loan
- people are already aware of your product so are more likely to trust the company
- get help and training from the franchisor
Disadvantages to a franchisor of a franchisee
- could receive all profits if set up alone
- reputation reliant on others
Benefits of setting up as a sole trader
- receive all profits
- you have complete control
- you’re own boss
- more rewarding
- lower start up costs
- keep business flexible
Disadvantages of setting up as a sole trader
- unlimited liability-could lose personal possessions
- lots of work to deal with on your own, pressure and responsibility
- reliant on one person
Benefits of setting up as a partnerships
- more ideas and skills
- more support, less pressure and responsibility
- bank is more likely to give you a loan
- easier to set up
- share debts
- have someone else to rely on
- less work
Drawbacks of setting up as a partnership
- still have unlimited liability
- get less of the profit and is less rewarding
- higher start up costs
- not always an equal share, can cause arguments and disagreements
- problems if partner leaves
- All partners are responsible for debt
What are the 10 part to a business plan?
- Mission/aims
- Objectives
- Market Environment
- Competition
- Product/service (idea)
- Marketing
- Distribution
- Funding
- Forecast
- Time
What is meant by the term social enterprise?
A business that is set up for the benefit of society e.g. Charity
What are the three pieces of documentation that must be completed before becoming a limited company?
- memorandum of association (external) details of the company, it’s address, capital invested and activities involved
- articles of association (internal) details of the voting rights of shareholder show profits are to be distributed duties of directors
- certificate of incorporation, issued by companies house to say that a limited company had been formed
Why might someone decide to start a business?
- employment; will not be fired etc.
- can earn more money
- be your own boss
- have more control; salary, workload
- identified a gap in the market; meet demand
- pursue you dreams
(Characteristics of an entrepreneur)
- innovative
- forward thinking
- business minded
- determined/persevering
- risk-taker/courageous
- good leader
What is the order of the chain of production order?
primary–>secondary–>tertiary
List some factors of a business and their product for mass marketing.
- standardized product
- high competition
- global business
- economies of scale
- generally lower prices
List some aims for a business start up
- gain loyal customers
- raise awareness of the business
- survive
- break even then profit
List some aims for a larger business
- more employees
- expand into other countries
- increase profit
- increase market share
How can a business measure their success?
- profit
- sales figures
- number of stores
- number of loyal customers
- meeting aims and objectives
- market share
- customer feedback
- number of staff
How does a business having lots of loyal customers show a business is successful?
Shows that customers are satisfied with the good/service that the business is supplying them
How does a business having a high number of staff show a business is successful?
Shows that the business needs them, and that the business has a need for large quantities shows that they have a lot of jobs that need doing by these staff.
How does a business meeting their aims and objectives show that a business is successful?
Means that they are working at the level set, and are where they want to be at certain points, and that they are doing well to meet them.
