Unit 1 - Starting a Business

Question 1

Name 3 reasons why a business is set up.

Answer 1

• Financial reasons (Entrepreneurship).
• Personal reasons (The independence of being your own boss, difficulties finding a job elsewhere or to see ideas put into practise).
• To help others (e.g: Charity).

Question 2

What is an Aim?

Answer 2

An aim is a long-term target.

e.g: Make £10,000 in sales and profits of £1000 after one year.

Question 3

What is an Objective?

Answer 3

An objective is a way to help a business achieve its aims.

Question 4

What does Enterprise mean?

Answer 4

Taking advantage of business opportunities and risks.

Someone who takes enterprise is called an entrepreneur.

Question 5

What are the Advantages and Disadvantages of being a Sole Trader.

Answer 5

Advantages

• Easy to set up.
• Be your own boss.
• Decide what happens to any profit.

Disadvantages

• Unlimited liability.
• Work long hours.

Question 6

What are the Advantages and Disadvantages of being in a Partnership.

Answer 6

Advantages

• More owners means more ideas, and more people to share the work.
• More owners means more capital that can be put into the business.

Disadvantages

• Most partnerships have unlimited liability.
• Each partner is legally responsible for what the other partners do.
• More owners means more disagreements, and you’re not the only boss.

Question 7

What are the Advantages and Disadvantages of LTD’s (Private Limited Companies).

Answer 7

Advantages

• Limited liability.

Disadvantages

• More expensive to set up and more legal paperwork.
• Company is legally obliged to publish its accounts every year.

Question 8

Why is a Business Plan beneficial?

Answer 8

It provides a clear idea of what the business needs to do to be successful - what the business will do and how it aims to do it.

The plan is to convince financial backers (e.g: Banks) that the business is worth investment.

Question 9

Give two reasons why a good business plan is no guarantee of success.

Answer 9

1. The health of the economy.
2. The actions of competitors.

Question 10

What 7 factors influence location?

Answer 10

1. Proximity to raw materials.
2. Proximity to target audience.
3. Availability of skilled labour.
4. Infrastructure.
5. Competition.
6. Communication links.
7. Government policy.