Utilisateur
A business with fewer than 250 employees and an annual turnover of less than £50 million
The action taken by individuals to start a business
An individual who starts a new business and takes financial risks in hope of profit
Financial: to increase revenue and profit, to provide for the family
Non-financial: to be your own boss, to create something to be proud of, to help others (social enterprise)
Being a risk taker, taking the initiative, being an effective organiser, having creativity/innovation, being hard working, being determined/persevering
Based on existing skills and experiences, to fill a gap in the market, based on market research, to adapt an existing product
They employ people (improve the economy), they pay taxes (which the government reinvests), introduce new products and services into the market, fill market gaps, provide for local needs
they're small scale so more likely to fail in times of recession, in Wales public sector organisations have a greater impact on the economy, larger businesses have a greater impact and influence
Involves acquiring raw materials (e.g. coal, oil). It's very important to Wales.
the manufacturing and assembly process (e.g. assembling cars)
The services which support the production and distribution process (e.g. insurance, transport). It's the UK's biggest sector.
People or groups who have an interest in the activities of a business.
A document which gives information about different aspects of the business idea.
The executive statement (strategic overview), the financial forecast (cash flow, budgets etc), the marketing plan (including market research), the personnel statement (HR - how many employees will be needed?), the operational plan (how the product will be produced and distributed)
A good plan brings focus to all issues/aspects (reduces risk), helps small businesses obtain start-up finance (from banks), gives a sense of direction (allows the entrepreneur to monitor their progress)
External influences can throw even best-prepared plans into disarray, the plan will be of limited value if it has not been properly researched, the plan can encourage businesses to become too rigid in their thinking (may miss opportunities or threats)
The part of a country's economy which is made up of organisations that are owned and run by the government.
It provides goods and services available and important to all community members, even those who cannot afford them.
It often involves funding through taxation.
Public sector organisations are often bureaucratic (have lots of rules and regulations that cause delay) - inefficient.
Consumers have a great choice of products.
Private sector businesses tend to be more efficient (helped by competition).
Many attempt to cut costs to make profit so they don't always do what's good for society (e.g. poor working conditions)
Produce goods which are often overconsumed/problems to society (e.g. alcohol, porn).
Survival
To break even
Growth
Customer satisfaction
Profit maximisation
To achieve a certain market share
Benefit the environment
Ethical/local community
A person who owns and runs their own business
You keep all profits
Low start-up costs
Control
Easy to set up (no legal documents)
More personal service
You are responsible for all business decisions
Hard to raise finance
Limited capacity to raise capital
Long working hours alone
Unlimited liability
An agreement between two or more people to take joint responsibility for the running of a business.
Shared responsibility + workload
More skills between partners
Easy access to capital (invest)
Shared profits
Slower decision making
Potential conflict
Unlimited liability
A process of settling disputes (e.g. vote)
Clarity of duties
Profit distribution
A business which has a seperate legal identity from the entrepreneur and has limited liability.
The owners have limited liability
Additional funds can easily be raised by selling shares
The company can keep trading if a shareholder dies.
Complex to set up and greater administration costs.
Must publish accounts every year.
Decision making will be slower.
Profits are usually shared amongst shareholders.
Shares cannot be sold to the public, reducing the potential for growth.
A company that is able to offer its shares to the public.
When a business offers its shares for sale to the general public for the first time on the stock exchange.
A payment from the profits of a company which is paid to shareholders.
Can sell shares to the general public.
Are well-known organisations with a good reputation so it is easier to raise finance.
Can take advantage of economies of scale.
Limited liability for owners
It may not be an attractive investment on the stock market for investors
The owners lose some control and risk a rival takeover
Take a long time to prepare and are costly/complicated to set up
All accounts are in the public domain.
A business owned and controlled by its members.
Profits are shared fairly amongst members
Power and control are shared equally
Motivates people
Disagreements and difficult decision making (e.g. when cutting jobs)
Decision making can be slow as everyone has a say in running the business which can be frustrating when they need to be made fast.
A business that has specific social objectives as its primary purpose
An organisation that aims to promote and raise funds for a specific cause.
companies focus on maximising profits for shareholders but any money charities receive must be used to help meet the specified charitable aims.
companies pay increased taxes, charities pay reduced taxes.
company employees are paid a wage or salary, but in charities, many staff work as volunteers so costs are minimised.
Owner's capital (finance put into the business by the owner)
Retained profit (profit kept and reinvested by the business)
Selling assets (selling off things owned by the business)
The bank allows the business to draw more money than it actually has
It can be quick to arrange and is a good short term solution to a cash flow problem
Interest repaid can be very high and very expensive if the overdraft limit is exceeded
An amount of money that is borrowed and repaid with interest over a set period of time
Large amounts of money can be borrowed
The goods become business property immediately
Interest rates are often fixed for the loan duration and can be paid in regular instalments
The business has to pay back the original money AND interest, increasing overall fixed costs
Banks may want collateral/security for the loan so if repayments are not kept up with the entrepreneur could lose their possessions
An arrangement where a business can pay for its goods at a later date
It gives the business more cash to use in the immediate future with no interest paid
It is very short term but bills usually have to be settled within 30 days.
A sum of money provided (by the governement) to a business that does not have to be repaid
It's not repayable and often comes with helpful advice on developing the business
Grants are not available for all businesses and sometimes only in regions where unemployment is high
The government will expect lots of completed forms (and probably a business plan)
Finance that comes from wealthy people or organisations who invest in small, risky business who are often fast growing
They can provide ongoing expert advice
Venture capitalists can be a good option if banks have refused to allow loans
The finance comes with no interest payments
The business owner may lose control to the venture capitalist
The finance raised from selling new shares in the business
A method of buying goods - a business pays in regular instalments while having use of it
No need to pay interest on the finance
Some businesses can raise large sums of finance (such as PLCs)
Some shareholders can offer help and support in running the business
It can take a long time to prepare and there are often many legal costs.
It is a source of finance only available to companies.
It is costly as it gives away some of the company and its profits to investors
For PLCs it could mean a rival takeover
The cost is split into small, manageable amounts that are usually paid every month (no large upfront payment)
The business owns the asset at the end of the HP term
Often very expensive (high interest)
You will only own the item at the end, after it is fully paid for (can be repossessed if the business falls behind in repayments)
When a business pays for the use of an asset but will never own the asset.
The business can lease new equipment after the leasing period ends without worrying about the disposal of old equipment
The cost is split into small, manageable amounts so improves short-term cash flow
The maintenance and repair bills are sometimes covered by the leasing company
The business does not own the asset
Can be very expensive over a long period and well in excess of the purchase price.
Where businesses sell their invoices to an organisation such as a bank
It is a good way of improving cash flow in the short term
It removes the hassle of chasing payments
Not so good for profits as there is a fee charged for the service.
Customers may prefer to deal with the business directly and may be upset by an aggressive factoring company
The amount of money a business receives
Costs that do not change with output
Costs that change with output
Costs with components that are both fixed and variable, e.g. a fixed worker salary, + overtime
Costs that can be identified with a particular product or process, e.g., pizza base
Expenses that are not directly involved with making a particular product, e.g. rent/insurance
Revenue - total variable costs
Selling price per unit - variable costs per unit
Revenue - variable costs = contribution
Contribution - fixed costs = profit
The point at which total costs equal total revenue
The quantity sold above the break-even point
fixed costs / (selling price per unit - variable costs per unit)
expected sales - break even point
You can physically touch the product
multiple use (last a time)
single-use products e.g. food
goods ready to be sold and instantly used
goods that need to be used with others e.g. IKEA furniture
Improved communication (internet), Improved/cheaper transport (flights), Trade liberalisation (countries becoming more welcoming to foreign businesses e.g. China)
Products only sold during a particular season or time, e.g. umbrellas, Christmas decorations
When a business offers almost the same products to all consumers and promotes them in almost the same way.
Maximises income, allows a reduction in costs through economies of scale
Competition is often fierce, extensive distribution channels are required
A specialised market segment catering to the demand for products/services not supplied by main suppliers
Less competition, more loyal customers
Lack of economies of scale, vulnerable to market changes
When costs per unit fall as output increases (bulk buying)
(new market size - old market size) / old market size x100
sales of the business / total sales in the market x100