business in the real world

• why do people start business?

  • make profit
  • forming a stable lifestyle
  • flexible bounds
  • help out local community
  • challenge other companies
  • promote your own product ideas
• what is a franchise?


  owning a branch off another company/carbon copy of a restaurant or company. earning money from it would go back to the original roots and they have to abide by their rules
• what's is an entrepreneur?

  someone who is willing to take risks involved in starting a business
• what is interest?


  the money paid by banks as a reward to attract people to save with them
• what is GDP?


  It measure all the income earned in a countries economy in a year.
• what are motives of an entrepreneur?

  • be their own boss
  • keep all profits
  • satisfaction from being a success
  • flexibility
  • help society
• what are the factors of production?

  • land
  • labour
  • capital
  • enterprise
• what are the sectors of businesses?

  Primary, secondary, tertiary
• what is a sole trader?

  is an individual owning a business on his/her own
• sole trader advantages

  • respond to customers needs quickly
  • accounts remain private
  • individualised service can be provided
• sole trader disadvantages

  • costs are usually higher - means higher prices
  • difficult to take holidays
  • owner may have to work long hours
  • illness can cause problems
  • unlimited liability
  • extra capital may be hard to raise
• what is one drawback of sole traders have unlimited liability?


  they are responsible for the business costs & debts - if ur business goes bust you still have to pay the money back. can result in loosing personal assets etc
• what is a partnership?

  two or more people co owning a business
• advantages of a partnership:

  • minimal paperwork
  • provide specialist knowledge and skills
  • more potential to raise finance
  • jobs can be shared
• disadvantages of a partnership:

  • unlimited liability
  • partners have to live with the decisions of others
  • decision making can take longer
  • short life - one may die or leave - it ends
  • profits have to be shared
• private limited company advantages:

  • capital can be raised through shares
  • shareholder have limited liability
  • shares are sold privately - only if all shareholders agree
• private limited company disadvantages:

  • can be expensive to set up
  • company must public its accounts every year - doesn't need to be made public
  • shareholders have to vote so decisions can take longer
• what is a dividend?


  payment to a business will give to its shareholders. all depending on how much shares you have eg 1 % shares = low dividend
• public limited company advantages:

  • shareholders have limited liability
  • can raise capital by selling shares on the stock market
• public limited company disadvantages:

  • plcs must make their accounts public so everyone including competitors can see how its performing
• advantages of a franchise:

  • marketing done for you
  • direct supplies
  • feeling from an established business
  • training and support are provided
  • franchise already has a reputation
• disadvantages of a franchise:

  • royalty payments
  • has very little say in business decisions
  • must follow business rules
• what are smart objectives?

  • specific - clearly state what is to be achieved
  • measurable - desired outcome must be number value that can be measured eg increase profits by 10%
  • agreed - all staff agreeing on aim
  • realistic
• what is market share?

  the proportion of sales within a market that are accounted for by a particular company or product
• what is financial security?


  the owners of a business will therefore expect it to provide enough money to finance their lifestyle.
• financial aims

  • survival
  • profit
  • sales
  • marker share
  • financial security
• non financial aims

  • social
  • person satisfaction
  • challenge
  • independence & control
• what is a stakeholder?


  an individual or group or other institution with a direct interest in the activities and performance of an organisation
• egs of stakeholders

  • suppliers
  • shareholders
  • employess