Business

• Need


  A good or service which is essential to living
• Want


  A good or a service which people would like
• Good


  An object or something that is teachable
• Service


  Something that is provided to the customer
• Ways to add value

  • Collaborate
  • Branding
  • Convenience
  • Quality service
• Understanding customer needs


  • Price (fair price)
  • Quality
  • Choice
  • Convenience
• Primary research


  Data that has been collected by the own company and is only accessible to them
• Secondary research


  Information that has already been collected and is accessible to everyone
• Market segmentation


  A part of the whole market in which consumers have similar characteristics or preferences
• Market segmentation


  Dividing the whole market into segments
• Benefits of segmentation


  • Possible to charge higher prices of similar products in one segment (price discrimination)
  • Design goods and services for specific segments
• Adding value


  • Making your product/service special
  • Reduce the cost of material
  • Increasing selling price
• Options in starting up a business

  • Private sector (owned and controlled by individuals)
  • Public sector (owned and controlled by the government)
• Unlimited liability


  Business and owner have the same
• Limited liability


  Business and owner do not have the same
• Public limited company (LTD)

  Everybody can buy shares in the stock market
• Private limited company (PLC)


  Shares can only be shared with friends and family
• Sole trader


  • Easy to set up
  • Owner keeps all profit
  • Owner has absolute control
• Partnership


  • 2-20 people
  • More ideas for goods and services
• Franchise


  A business system where entrepreneurs buy the right the name/product of an existing business
• Enterprise


  Setting up of the business by the entrepreneur
• Invention


  Making new items
• Innovation


  Bringing new ideas to the market
• Literal thinking


  Thinking outside the box
• Deliberate creativity


  Generating new ideas
• Blue-sky thinking


  Selecting ideas
• Calculated Risk


  Market research, business plan, competitor analysis
• Business objectives - Financial

  • Survival
  • Increased profit
  • Growth
  • Increase market share
  • Financial security
• Business objectives - Non-financial


  • Social objectives
  • Personal satisfaction
  • Challenge
  • Independence
  • Control
• Market share


  The revenue of a business expressed as a percentage of total market share
• Revenue


  Selling price x quantity sold
• Total Costs


  Fixed costs + variable costs
• Profit


  Revenue - total costs
• Cash flow forecast


  Predicting the future cash inflows and outflows of a business (12 month)
• Interest rates


  Costs of borrowing money from or for saving money in the bank
• Cash inflows


  Sales, loans, capital
• Cash outflows


  Supplier cost, rent, employee costs
• Net cash flow


  Cash inflows - cash outflows
• Opening balance


  Same amount as last month's closing balance
• Closing balance


  Net cash flow + opening balance