1.4

• What does unlimited liability mean?


  Your personal property is at stake when it comes to investing in your business
• What is limited liability?


  Your loss only goes as far as your business
• What is a sole trader and what are its pros and cons?

  Sole trader is a 1 person company Pros: Full control, easy setup Cons: Unlimited liability, limited resources
• What is a partnership and what are its pros and cons?


  Partnership is a group of joint owners Pros: Shared decision-making, shared resources Cons: Shared profits, unlimited liability
• What is a private limited company and what are its pros and cons?

  Private Limited Company a business that has grown over time Pros: Limited liability, separate legal entity, easier to raise capital, perpetual succession. Cons: More regulations, restrictions on transfer of shares, higher compliance costs.
• What is a franchise and what are its pros and cons?

  Franchise is a way of expanding businesses. Pros: Established brand, support system Cons: High initial costs, lack of control
• What is the marketing mix and the 4 ps?

  a marketing startegy that uses

  product

  price

  place

  promotion
• How does the marketing mix work together?

  balancing - providing different products and services

  Differentiated - higher price depending on the market

  Impact - needs and wants met

  technology - commerce and 4 PS
• What is a business plan?


  documents which set the future plan for a business
• what are the parts of a business plan?

  identify the business idea

  identify the aims and objectives

  identify the target market

  forecast the revenue, cost, profit

  identify the sources of finance

  identify the location
• What does it mean to help in success?

  clear plans so it becomes easier to achieve them

  making official goals
• What is help in risk reduction?

  risk of failure later

  write down and spot problems

  prepare cash flow forecast

  carefully planned can reduce risk later
• What is help in resource allocation?

  input and output process

  flag critical resources that are needs

  human staff

  equitment

  raw materical
• What is the focus of Edexcel GCSE Business 1.4?

  Making the Business Effective
• What are the main options for start-up and small businesses?

  • Limited & Unlimited Liability
  • Business Location
  • The Marketing Mix
  • Business Plans
• What must an entrepreneur consider when starting a business?

  The legal structure of the business
• What type of liability do sole traders and partnerships have?

  Unlimited liability
• What does unlimited liability mean for business owners?

  Owners are fully responsible for all debts
• What is a consequence of unlimited liability for business owners?

  They may use personal assets to pay debts
• What is the key feature of limited liability?

  Owners can only lose their investment
• How does limited liability protect shareholders?

  They are not responsible for business debts
• What happens to shareholders if a company fails under limited liability?

  They lose their investment only
• What are the three common forms of business ownership for start-ups?

  • Sole traders
  • Partnerships
  • Private limited (Ltd) companies

  
• What is a sole trader?

  A business with a single owner
• What is an advantage of being a sole trader?

  Complete control over the business
• What is a disadvantage of being a sole trader?

  Unlimited liability for business debts
• What is a partnership?

  A business formed by two or more people
• What is an advantage of partnerships?

  Shared responsibilities and decision-making
• What is a disadvantage of partnerships?

  Potential for disputes between partners
• What defines a private limited company (Ltd)?

  Ownership is divided into shares
• What is an advantage of a private limited company?

  Limited liability for owners
• What is a disadvantage of a private limited company?

  More complex legal requirements
• What is franchising?

  • A business model where a franchisee buys rights
  • Operates under a franchisor's established system
  • Receives support and branding from the franchisor
• What is a key advantage of owning a franchise?

  Centralized advertising and brand recognition
• What is a disadvantage of owning a franchise?

  Royalty costs based on sales turnover
• What can happen if a franchisee does not meet quality standards?

  The franchise rights can be removed
• What factors influence business location decisions?

  • Proximity to market
  • Proximity to labor
  • Proximity to materials
  • Proximity to competitors
  • Nature of business activity

  
• Why is proximity to the market important?

  Reduces transportation costs and increases accessibility
• What does proximity to labor refer to?

  Availability of qualified and skilled workers
• Why is proximity to materials significant for a business?

  Minimizes transportation costs for supplies