Theme 1

• Why do businesses exist?

  Businesses exist to satisfy the needs of customers.
• What do businesses provide in return for satisfying customer needs?

  Businesses are rewarded with profit.
• What can an entrepreneur do once an idea for a business exists?

  An entrepreneur can develop the idea into a business.
• How might an entrepreneur spot an opportunity in an existing product?

  An entrepreneur may see a chance to develop and improve it.
• What is enterprise?

  Enterprise is seeing an opportunity to provide a product or service that people are willing to buy.
• What are some reasons why people choose to start their own business?

  • To be your own boss
  • To pursue your own personal interests
  • To earn an income
  • To do something positive for society

  
• What does it mean to be your own boss?

  It means making decisions on your own hours, pay, duties, and working conditions.
• How could someone combine their passion with their job?

  By starting a business related to their hobby, such as a guitar shop or teaching guitar.
• Why might someone start their own business after losing a job?

  To generate income needed for rent, food, and bills.
• What is an example of starting a business to do something positive for society?

  Starting a charity shop to raise funds for homeless people.
• What are some examples of needs and wants provided by businesses?

  Needs:

  • Food
  • Water
  • Shelter
  • Clothing
  • Medicine

  
  

  Wants:

  • A car
  • An iPhone
  • A TV
  • A chocolate bar
  • A fake tan
• What are the characteristics of a successful entrepreneur?

  • Creative
  • Risk taking (calculated risks)
  • Determined
  • Confident
  • Able to learn from past failures
• What are the risks and rewards involved in starting your own business?

  Risks:

  • Might have invested your own savings
  • Might have given up a job with a steady income
  • Might be very stressful
  • Long hours and strain on personal relationships
  • Changing consumer tastes

  
  

  Rewards:

  • Possibly a higher wage/salary
  • Ability to sell the business for a profit
  • Being your own boss
  • Personal satisfaction of being successful
  • Independence

  
• Why is it important to create a business plan for a new business venture?

  • More likely to get investors
  • Reduces the risk of failure
  • Identifies necessary resources for accurate budgeting

  
• What are the components included in a business plan?

  • Aims & objectives
  • Marketing plan
  • Human Resource plan
  • Production plan
  • Finance plan
• What does a marketing plan include?

  A marketing plan includes market research, target audience, and the 4Ps (product, price, promotion, place).
• What is the purpose of a finance plan in a business plan?


  A finance plan outlines how to raise money and includes a cash-flow forecast.
• How does a business plan help in identifying markets?

  It helps a business think clearly about who it is targeting products/services at.
• Why is a business plan important for obtaining finance?

  A bank is more likely to lend money if it sees a well-thought-out business plan.
• What does a business plan help identify regarding resources?

  It identifies resources such as equipment, finance, and skilled personnel needed to operate.
• What is the role of aims and objectives in a business plan?

  They give a business the best chance of achieving its aims through careful thought and research.
• What is a sole trader?

  A sole trader is a business owned and run by one person.
• What are the advantages and disadvantages of being a sole trader?

  Advantages:

  • Low start-up costs
  • Owner keeps 100% of the profit
  • Owner makes all decisions
  • Finances can be kept private

  
  

  Disadvantages:

  • Unlimited liability
  • Lack of continuity
  • Responsibility on one person
  • Skill shortage
  • Shortage of capital

  
• What is a partnership?

  A partnership is a business owned and run by 2-20 people.
• What are the advantages and disadvantages of a partnership?

  Advantages:

  • Low start-up costs
  • Different specialities among partners
  • Workload and debts shared
  • Easier to raise finance

  
  

  Disadvantages:

  • Unlimited liability
  • Potential disagreements
  • Profit sharing
  • Less control than a sole trader
  • Limited capital raising

  
• What is a deed of partnership?

  A deed of partnership is a document setting out the operations of the partnership.
• What happens if there is no deed of partnership?

  If there is no deed of partnership, profits will be split equally among partners.
• What are sleeping partners?

  Sleeping partners provide capital but take no part in running the business.
• What is a limited liability partnership?

  A limited liability partnership means liability for debts is limited to the amount invested.
• What is a Private Limited Company (Ltd)?

  A Private Limited Company is owned by shareholders, with shares sold privately.
• What are the advantages and disadvantages of a Private Limited Company (Ltd)?

  Advantages:

  • Limited liability
  • Ability to raise finance by selling shares
  • Continuity of existence
  • Control over share sale

  
  

  Disadvantages:

  • Profits must be shared as dividends
  • Accounts must be published annually
  • Higher set-up costs
  • Limited capital raising compared to a plc

  
• What is a Public Limited Company (plc)?

  A Public Limited Company is owned by shareholders, with shares sold to the public on the Stock Exchange.
• What are the advantages and disadvantages of a Public Limited Company (plc)?

  Advantages:

  • Limited liability
  • Ability to raise finance by selling shares publicly
  • Continuity of existence
  • Run by experienced board of directors

  
  

  Disadvantages:

  • Profits must be shared as dividends
  • Accounts must be published annually
  • Higher set-up costs
  • Threat of takeover if 51% of shares are bought

  
• What are the main objectives of most businesses?

  • To survive
  • To make a profit
  • To expand/grow
  • To increase market share
  • To provide a service
• Why should businesses set objectives?

  • To align employees towards a common goal
  • To measure success at the end of the year
  • To provide clear targets for employees
• What might be the objective of a brand new shop in a home town?

  To survive, as many new businesses fail in the first year.
• What might be the objective of a medium-sized business with 10 stores across the UK?

  To make a profit and expand.
• What might be the objective of a multinational business with stores around the world?

  To maximize profits and achieve global domination.
• What are stakeholders in business?

  Stakeholders are groups of individuals who have an interest in a business.
• Who are internal stakeholders?

  Internal stakeholders are the business owners and employees.