3.1

• Entrepreneur


  Individual who starts a new business
• The role of an entrepreneur


  - Spots business opportunities

  - Takes calculated risks in order to gain possible future returns

  - Acts as catalyst for creation and growth of new business enterprises
• Primary sector


  - Extraction of natural resources

  - Eg. farming/mining
• Secondary sector


  - Production of finished goods and components

  - Eg. manufacturing/food processing
• Quaternary sector


  - Jobs that deal with the handling and processing of knowledge and information.

  - Eg. software development
• Shareholder


  Individual who owns 'shares' that is part of the business
• Stakeholder


  Any group with an interest in a business
• Unlimited liability


  Business owner is personally responsible for debs and losses of the business
• Unincorporated


  - The owner is the business - no legal difference

  - Owner has unlimited liability for business actions (including debts)

  - Most unincorporated businesses operate as sole traders
• Incorporated


  - Legal difference between the business and the owners

  - Owners (shareholders) have limited liability

  - Most incorporated businesses operate as Ltds
• Sole trader


  A self employed individual who runs and operates their own business
• Advantages of a sole trader

  - The owner keeps all the profit to themselves

  - The owner makes all the business decisions (complete control)

  - It is relatively quick and easy to set up

  - Minimal paperwork

  - Easy to shut down
• Disadvantages of a sole trader

  - Unlimited liability - owner is personally responsible for all the debt and losses of the business

  - Long hours

  - Less tax efficient - you will be liable for all the tax owed by the business

  - The business is the owner

  - Harder to raise finance
• PLC


  - The company can sell its shares to the general public

  - Tends to be much larger than Ltds

  - Owned by shareholders

  - Minimum share capital is 50,000
• Disadvantages of a plc

  - High costs (flotation can be expensive)

  - Loss of control (decisions)

  - They can get too large
• LTD


  - Shareholders are the owners of the company

  - Protected by limited liability

  - If the company fails, shareholders only loose what they invested into the company

  - Cannot issue shares to the general public only to private investors

  - Must have at least one shareholder
• Advantages of a ltd

  - Limited liability - company finances are very much separate from personal assets

  - Control of company not lost to outsiders

  - Confidentiality and Privacy - Protecting Business Information.
• Disadvantages of a ltd

  - Profits have to be split between all shareholders, which reduces the amount per person

  - Cannot offer shares to the general public - restricts the amount of capital they can raise

  - Higher set up costs
• Public sector organisation


  - Organisation owned and controlled by the government

  - Eg. public services: NHS, schools, police, BBC
• Private sector organisation


  - A business owned by individuals or shareholders

  - Aim is to make a profit
• SMART


  - Specific

  - Measurable

  - Achievable

  - Realistic

  - Time-specific

  *It is used to plan and achieve goals
• Dividends


  A portion of a company's earnings that is paid to a shareholder
• Market capitalisation


  The total market value of the issued share capital of the company
• Disposable income


  Income remaining for a person to spend or save after all taxes have been paid
• Real income


  How much money an individual or entity makes after adjusting for inflation
• Fixed costs examples


  - Costs that do not vary with output

  - Eg. rent/insurance/electricity
• Variable costs


  - Costs that vary with output

  - Eg. raw materials/extra staff during busy season
• Business objectives


  - Profit

  - Growth

  - Survival

  - Cash flow
• Real life examples to use

  - Inflation

  - Recession - significant decline in economic activity that lasts longer than a few months.
• Factors that impact an organisation (ESCELP)

  - Economic

  - Society

  - Competition

  - Environmental/ethical

  - Legal

  - Politically
• Entrepreneur


  Individual who starts a new business
• The role of an entrepreneur

  - Spots business opportunities

  - Takes calculated risks in order to gain possible future returns

  - Acts as catalyst for creation and growth of new business enterprises
• Primary sector


  - Extraction of natural resources

  - Eg. farming/mining
• Secondary sector


  - Production of finished goods and components

  - Eg. manufacturing/food processing
• Tertiary sector


  - Providing services to consumers and businesses

  - Eg. retailer/personal services
• Quaternary sector


  - Jobs that deal with the handling and processing of knowledge and information.

  - Eg. software development
• Shareholder


  Individual who owns 'shares' that is part of the business
• Stakeholder


  Any group with an interest in a business
• Unlimited liability


  Business owner is personally responsible for debs and losses of the business
• Limited liability


  Business owners are only financially responsible for what they invested in a business