paper 1

Created by

alexandra burnell

Cards (69)

why new business ideas come out
changes i’m technology
changes in what consumers want
Products and services becoming obsolete
risk and reward 
Risk- Business failure, Financial loss, lack of security
Reward- Business reward, Profit, Independence
The roles of entrepreneurship
.Organise business resources
.Make business decision decisions
.Take risks
The role of business enterprise
To produce goods and services
To meet customer needs
To add value (convenient, branding, quality, design, unique selling point)
Customer needs 
price
Quality
Choice
Convenience
Efficient and reliable
Providing great design
market research 
Purpose:
To identify and understand customer needs
To identify gaps in the market
To reduce risk
To inform business decisions
methods of market research
Secondary research – research that already exists
research conducted by the company
primary research 
Advantages –
up to date information
focused on specific requirements
Disadvantages –
Takes time to collect/analyse
Can be expensive to collect
secondary research
Advantages –
Free/low cost
Usually large enough scale to be reliable
Disadvantages –
Out of date
Not specific enough to meet businesses needs
quantitive data 
When factual research takes place among a large enough group to provide statistically reliable results
qualitative data 
Gathered by in depth research into opinions and views of small groups of potential/active customers
market segmentation 
Location
Income
Lifestyle
Age
Gender
Race
Religion
strenghts and weaknesses of competitors
What to look for –
Price
Quality
Location
Product range
Customer service
Financial aims and objectives
Survival
Profit
Sales
Market share
Financial security
non-financial aims and objectives
Social objectives
Personal satisfaction
Challenge
Independence
Control
what is revenue? 
Total amount of sales made within a certain period of time
what is variable costs?
Costs that vary as output varies such as raw materials
what are fixed cost?
Cost that don’t vary just because output varies such as rent
what is interest? 
Charges made by banks
what is profit and loss?
Difference between revenue and total cost
what is break even output?
Level of sales at which total cost are equal to total revenue
what is margin of safety?
The amount by which demand can fall before businesses start making losses
what does a break even chart look like? 
graph=
Why does cash matter?
Only thing that could be used to pay bills
what is the importance of cash?
Payment to suppliers
pay for employee/overheads
bills to pay
how should cash be managed?
Negotiate an overdraft
Keep cost under control
Keep the cash coming in
what to do if you have a negative cash flow
Cut stock levels
Increase credit taken from suppliers
Reduce credit to customers
what is a cash flow forecast?
coming in
what is an opening balance?
Money at the start of the month in a bank account
what is net cash flow?
A figure showing ‘ cash in’ minus ‘ cash out’ at the start of the month
What is a closing balance?
Money left at the end of the month a bank account
Long time sources of business finance
Personal savings
Share capital
Loans
Venture capital
short term sources of business finance
Bank overdraft
Trade credit
What is limited liability
Restricting the losses suffered by owners/shareholders to the sum they invested in the business
what is unlimited liability?
Treating the business and the owner as inseparable, they’re making the individual responsible for all debts of a failed business
types of business ownership
Soul trader
Partnership
Private limited company
Franchising
what is a soul trader?
A business run by one person, that person has unlimited liability for any business debts
what is a partnership?
A form of unlimited liability business with more than one owner
what is a private limited company?
A small family business in which shareholders enjoy limited liability
what is franchising? 
Paying a business owner for the right to use an established business name, branding and business methods