Unit 1 - Business Activity Flashcards
State three characteristics of an entrepreneur.
- Showing initiative
- Undertakes new ventures
- Risk taker
Explain two rewards of entrepreneurship.
One potential reward is financial. This means that the entrepreneur will be able to successfully support their family if the business is successful.
Another reward of entrepreneurship is the independence. This means that he/she will be their own boss and will be able to make their own decisions.
Identify three risks of entrepreneurship.
- Financial
- Mental / Physical health
- Strain on relationships
Outline one purpose of business planning.
The business is more likely to achieve because they are able to meet their aims and objectives on the plan.
Identify four elements of a business plan.
- Business idea
- Objectives of the business
- Competitors
- Finance
Explain why business planning is especially important for new business.
Will help secure finance, for example getting a bank loan as lenders will see a business is organised.
Identify two other reasons that business planning is important.
- Can be used to measure actual performance
- Provides a focus on the business idea
Outline one problem if a business did not complete a business plan.
Could lead to a slow progression. This is because the business would not be able to review if their objectives have not been completed.
State the purpose of identifying resources needed on a business plan.
Provides a logical structure to thinking about the business.
Outline how a business plan helps a business to stand out in comparison to competitors.
Can help reduce the risk of failure.
State when a new business would normally complete a business plan.
Before the business is started.
What is meant by a sole trader?
Describes any business that is owned and controlled by one person.
‘Some sole trader businesses can be setup with very little capital’. Explain what this means.
This means that sole trader businesses can be setup with those with very little savings. This is good because it will give them a chance to get a job and make profit. Therefore the sole trader would be able to financially be able to support their family.
Why is unlimited liability a problem for soletraders and some partners?
The owner(s) will be responsible for all the business debts. This is a problem because it could result in them having to sell personal possessions if the business debt is still owed.
Identify two advantages of a partnership as a form of ownership.
- Workload and ideas can be shared
- Partners may have different skills to offer
