Business activity

• Rewards of entrepreneurship


  Profit, being your own boss, personal satisfaction and making a difference to society
• Risks of entrepreneurship


  Financial loss, Health issues from stress, Nobody interested in the business and additional competitors
• Higher risk higher 


  reward
• Lower risk 


  Lower reward
• Business planning name 5 main components of a plan

  The Business idea, people involved, finance, competitors
• 3 purposes of business planning

  reducing risk of failure, Helps managers identify resources needed, Helps managers identify the costs so they don't go into debt
• usefulness of a business plan

  can be used to obtain finance, helps the business in achieving its aims and objectives, reduce level of risk as the business can identify resources
• limitations of a business plan


  its only a plan doesn't guarantee anything, needs updated often time comsuming and takes time of other important jobs, lacks detail investors will not invest, a poor business plan could mean the business lacks finance
• Main characteristics of an entrepreneur

  Risk taker, creativity, determination, confidence
• What information would a business plan include?

  Aims and objectives, Business needs, costs of products/service, changes to a market, HR
• Advantages of a sole trader:

  Self employed, 100% profit, lower starter costs, faster decision making,
• Disadvantages of being a sole trader:

  Responsible for all the businesses' debt, Limited capital available, nobody to share ideas with, have to work longer hours
• Advantages of a partnership

  Share workload, raise more finance, less financial risk, debts can be shared
• Disadvantages of a partnership

  Slower decision making, profits have to be shared,
• LTD (Private limited company) advantages:

  Businesses that want to grow can be offered with quite a lot of finance, They can raise funds from private investors by selling shares, Shareholders can restrict who can buy shares so the owners still have controll
• Disadvantages of LTD 


  Shares restricted, more paper work, Divedends need to be paid to shareholders.
• What is Dividends 


  When a company's profits are given to shareholders
• PLC Advantages 


  Large amounts of finance can be raised, Large finance can result in expanding the business
• PLC Disadvantages 


  Complex paperwork, shares open to the public meaning the business can be bought and owner has no control
• Liability - Unlimited liability benefits and drawbacks


  Owner is responsible for repaying debts, They are sole traders and partnership companies, Owners can loose money, and personal assets , Higher financial risk
• Unlimited liability benefits and drawbacks

  Owners can only loose money not personal assets, Owners have legal protection, they are LTD and PLC companies and less financial risk
• name all the Internal Stakeholders

  Business owner, employers inside the business
• name all of the External stakeholders


  Customers, Supplier, Government, local community
• Why would a business set objectives?

  Give specific targets to hit, motivate workers, clarifies business direction,
• What does PIGS stand for?

  Profits, Increase customer service, growth and survival
• What is a stakeholder?


  A person who has an interest in the business
• Formula for market share is...

  Sales of business/total shares in the market x 100
• If Asda had £14,000 sales this year and all the other competitors including asda had a total sale of £780,000 what is Asda's total market share?

  1.8% (rounded)
• Define organic growth 


  Its the growth of a company by increasing output and enhancing sales internally
• True or false in organic growth takeovers happen

  False
• Merges advantages...


  More customers, more product range, less competition (more power)
• Merges disadvantages...


  Negative brand reputation if customers dont like the other merger, less profits (have to be shared), unhappy customers and redundancies
• What is meant by the term redundancies?


  Duplicate roles in a business after a take over
• define Takeover 


  A business that takes over another business by buying over 50% worth of shares