business

• cash is used of

  • suppliers for raw materials
  • rent
  • staff salaries and wages
  • overheads including gas and electricity
  • insurance and business rates
• without cash a business would not be able to cover its running costs and would become bankrupt
• to avoid bankruptcy, businesses need to manage heir cash by completing a cash flow forecast
• Cash inflows

  • Cash from owners
  • loans
  • revenue
  • share capital
• cash outflows

  • rent
  • wages and salaries
  • advertising
  • loan repayments
  • overhead bills
  • buying raw materials
• benefits to a business of using cash-flow forecast

  • helps with planning
  • supports attempts to raise finance
  • assists in determining the viability or feasibility of a new business venture
• variable costs - wages, materials, packaging and delivery costs. Costs which change with output
• Fixed cost - Rent, insurance, advertising salaries. Costs which DONT change with output
• Break even - finding the number of units that need to be sold for a business to cover all their costs. At this point they are not making a loss or profit
• purpose of break even

  • focus on how long it will take before a startup is profitable
  • understand the feasibility of a business opportunity
  • Understand the importance of a start-up keeping fixed costs down
• a profit and loss account is a financial statement that sets out a businesses revenue and costs and whether it made a profit or a loss over a trading period
• Market segmentation involves dividing a market into a smaller set of customers or segments who have similar needs and interests
• the marketing mix is the combination of product, price, place and promotion for any business venture which influences where a customer buys a product