Business unit 1

• Entrepreneur

  is a person who takes the risk of starting and running a business enterprise.
• Spotting an opportunity


  is the ability to see the need for a particular product or service that customers need.
• Enterprising characteristics

  are the features of an entrepreneur, which include being determined, creative and having ability to take risks.
• Business plan

  is a simple plan which sets out details on the product or service being sold, where the finance is to come from to start the business, how the product or service is to be marketed, and the market research to show there is a need for what is being sold.
• Finance


  is a business word used instead of money. The finance needed to start a business is the money that is needed to do so.
• Success

  for a business can take many forms, including making a profit, surviving and providing a good service to customers.
• Markets


  are where a business sells its goods and services.
• Resources

  are the things a business needs to make it work, including finance (money), staff and materials.
• Operate


  is a term used to explain how a business works.
• Aims and objectives

  are the things that a business is trying to achieve, such as grow larger, or make more profit.
• Limited liability

  the responsibility for the debt of a business is limited to the amount invested by a shareholder. A feature of private and public limited companies.
• Unlimited liability

  the responsibility for all the debts of a business rests with the owners of the business. A feature of sole traders and partnerships.
• Sole trader


  a business owned by one person.
• Partnership

  a business owned by between two and 20 partners.
• Private limited company


  often (but not always) a smaller business. Owned by at least two shareholders. Shares cannot be sold to the general public. Has Ltd after its name.
• Public limited company


  a large business, where shares can be sold to the general public enabling vast sums of money to be raised to develop the company. Has plc after its name.
• Deed of partnership

  a document setting out the operations of the partnership, including amount of capital to be invested and how profits will be shared.
• Capital


  money raised to start or develop a business.
• Sleeping partner

  a partner who invests in a partnership but has no part in the running of the business.
• Limited liability partnerships

  part partnership part limited company. Owners are members, not partners. They have limited liability and have to make their finances available to the public.
• Shareholders

  the owners of a private or public limited company.
• Dividend

  the money paid to a shareholder from the profits of a limited company. This is the reward for the shareholder taking a risk by investing money in the company.
• Satisficing

  making just enough profit to provide the business owner with a decent living. More common in smaller businesses.
• Market share

  the share of the total market for a product or service and is shown as a percentage.
• Business objectives

  what the business aims to achieve, and include survival, profit, growth and providing a service.
• Profit

  the difference between revenue and costs.
• Survival

  when a business just manages to keep going.
• Growth

  where a business becomes larger, for example by making more products or opening more places where goods and services are sold.
• Providing a service


  where a business makes sure that the needs of the customer are being met.
• Stakeholders


  groups or individuals who have an interest in business.
• Internal stakeholders

  the business owners and people who work in the business.
• External stakeholders


  the local community, suppliers, customers and governments.
• Stakeholder group


  owners, employees, customers, suppliers, government, local community.
• Organic growth

  growth of a business internally by increasing sales. Sales can be increased in a number of different ways.
• Merger

  two or more businesses agree to join together.
• External growth


  growth of a business by takeover or merger.
• Takeover


  a business takes a controlling interest in another business.
• Horizontal growth

  a merger or takeover where two businesses are involved in a similar operation, e.g two electrical producers or two shops selling fashion clothing.
• Backwards vertical growth

  a business merges with, or takes over a business that supplies it with goods or services.
• Forwards vertical growth

  a business merges with or takes over a business that it supplies goods or services to.