BUSINESS PAPER 1

• Trade Credit (Short-Term Financing): It's when suppliers let you get things now and pay them later.
• Customers seek products that fulfill their desires when making purchase decisions.
• Considerations of customers include price, quality, choice, convenience, and satisfaction.
• Meeting these needs is essential for repeat purchases, attracting new customers, and business growth.
• Market research is the process of understanding precisely what customers want.
• This involves various methods such as surveys, questionnaires, focus groups, observations, and finding a gap in the market.
• Identifying an unmet customer need can be a significant growth opportunity for a business.
• Primary research involves collecting original data directly from sources, such as customers, using methods like surveys, questionnaires, interviews, and observations.
• Secondary research involves using existing data sources like market reports, industry studies, and government statistics to gather insights without conducting new research.
• Data comes in two main types: qualitative data, which provides insights into feelings, opinions, and experiences, and quantitative data, which is numerical and can be easily organised into charts and graphs.
• Combining both types of data provides a more complete picture.
• Market segmentation involves dividing customers into groups based on various factors, including location, lifestyle, income, and demographics.
• Pros of market segmentation include enabling businesses to target specific customer groups better, resulting in more effective marketing.
• Cons of market segmentation include over-focusing on segmentation which can limit the overall customer base and increase marketing costs.
• Businesses must strike a balance between meeting customer needs and maintaining a diverse customer base.
• A market map is a visual representation that helps businesses understand where their products stand relative to competitors' products based on factors like quality and price.
• In a competitive market, businesses must excel in various areas, including quality, customer service, and innovation.
• Positive cash flow means you have more money coming in than going out.
• Crowdfunding is when lots of people give small amounts of money online for your project, you get funds if you reach your goal; otherwise, they keep their money.
• Fixed costs are expenses that don't change with production levels, like rent or salaries.
• Overdraft (Short-Term Borrowing) is like a short-term loan from your bank.
• Venture Capital is money from investors who want a piece of your business, they help, but they get a share of your business and its profits.
• After the break-even point, the business starts making a profit.
• Personal Savings are your own money that you put into your business, you don't owe it to anyone, but it means you can't use it for personal expenses.
• A cash flow forecast is like a financial roadmap for your business, predicting cash shortages or surpluses and planning accordingly.
• Retained Profit is money your business earned and saved, you can use it for new things, but it's your own money, so no interest.
• Short-term financing options are used for immediate needs and quick repayment, examples include bank overdrafts, trade credit from suppliers, and short-term loans.
• Cash flow is the lifeblood of a business, predicting when you'll receive money (income) and when you'll spend it (expenses).
• Share Capital (For Corporations) is like selling parts of your business to people, you get money, but they become owners too, and you have to share decisions.
• There are several ways to enhance cash flow, including encouraging customers to pay faster or offering discounts for early payment, negotiating better terms with suppliers to delay payments, considering short-term financing options like bank overdrafts, managing inventory efficiently to avoid tying up excess cash, and obtaining financing from different sources based on your needs and financial situation.
• Long-term financing options are suitable for larger amounts over an extended period, they include personal savings, venture capital, share capital (for corporations), traditional bank loans, retained profits, and crowdfunding.
• The break-even point is a critical milestone for businesses, where total revenue equals total costs.
• Negative cash flow indicates you're spending more than you're earning, which can lead to financial trouble.
• Variable costs are expenses that change with production, like materials or labour.
• Before the break-even point, the business is operating at a loss.
• The margin of safety is a safety net for your business, telling you how much sales can drop before you start losing money.
• Loans are when you borrow money and pay it back with interest, useful for big expenses, but you have to repay it.
• Break-even analysis is a vital tool for businesses to understand their financial health.
• Financial Aims and Objectives:
• Financial Security: Achieving a level of financial stability and personal wealth.