Business

• Enterprising


  • 1) Make a successful business idea
  • 2) Be able to take risk
  • 3) Have the ability to solve problems
  • 4) Be wise at decision making
• Business resources


  • Capital
  • Enterprise
  • Land
  • Labour
• Landlords


  Provide land
• Capitalists


  Provide capital
• Entrepreneurs


  Provide enterprise
• Employees


  Provide labour
• Why the government encourages enterprise

  • Creates employment
  • More taxes which can be spent on schools and hospitals
  • Less money to be spent on unemployment benefits
• What people risk when starting a business


  • Time
  • Reputation
  • Health
  • Money
• Rewards of business


  • Success
  • Job satisfaction
  • Freedom
  • Independence
• Why businesses start

  An entrepreneur thinks he has a successful business idea and thinks he will succeed in the market
• Capital


  • Used to purchase non-current assets such as land, machinery
  • Used to invest in the business
  • "Wealth employed in creation of further wealth"
• Labour


  Workers who manufacture products
• Land


  A plot of land used to build business premises
• Micro business


  Turnover of 1.7m, 9 members of staff
• Small business


  Less than Turnover of 5.6m, less than 10-49 members of staff
• Medium sized business


  Less than Turnover of 22.9m, Less than 50-249 members of staff
• Large business


  Turnover of 22.9m+, 249 members of staff+
• Private sector business


  • Aim is to make profit
  • Capital provided by capitalists
  • Profit is divided amongst shareholders or is reinvested back into the business
  • Owned by private individuals
• Public sector businesses


  • 1) Owned by the government
  • 2) Controlled by the council
  • 3) Capital is raised by taxes and rates
  • 4) Profits is handed to back to the governments or used to schools/hospitals/roads
  • 5) Aim is to provide a service
• Sole trader


  A business completely owned and controlled by a single person
• Advantages of sole trader


  • All profits are kept
  • Better control
• Disadvantages of sole trader


  • Unlimited liability
  • Lack of continuity
• Partnership


  When 2-20 combine to form a business
• Deed of partnership


  Agreement to set up a partnership
• Advantages of partnership


  • Partners have less workload
  • Easy to raise capital as they can share the investment
• Disadvantages of partnership


  • Conflict between partners
  • Unlimited liability
• Private limited company


  • 1) Owned by shareholders
  • 2) Shares cannot be sold to the public or transferred without the permissions of all shareholders
• Advantages of private limited companies


  • Shareholders have limited liability
• Disadvantages of private limited companies


  • Shares cannot be sold to the public, this means that it is hard to raise capital for the business
  • Have to share dividend
• Public limited company


  Ends with PLC
• Advantages of PLCs


  • Members of public can buy shares, this means that it is easy to raise capital
  • Banks are willing to give loans to PLC
• International trade


  The selling and buying of goods to and from foreign countries
• Dividend


  What it is called when shareholders have to divide their profit
• Disadvantages of PLCs


  • Anyone can buy shares
  • Decision making is often slow as several meetings have to be held
• Franchise


  A franchisor gives permission to a franchisee to open up a business under the franchisor's name
• Franchisee


  Someone who buys a franchise from a franchisor
• Franchisor


  Someone who sells a franchise to a franchisee
• Advantages of a franchisee


  • Will create revenue as the brand is well established and customers are already interested in the business
  • Banks are willing to give loans to franchises
• Disadvantages of a franchisee


  • Doesn't have much freedom to manage his store as he little control of the business and has to follow the franchisor's guidelines
  • Has to pay the franchisor a down payment and has to pay royalties every month
• Advantages of a franchisor


  • Franchising the brand allows the business to expand more quickly
  • Doesn't need as much day-to-day involvement in the business