Resources
What are resources?
Resources are the people and objects that are needed for the business to function properly.
Identify two benefit of buying an existing business
Sales to existing customers generate instant income.
A good business history increases the likelihood of business success.
A proven track record makes it easier to obtain finance.
Stock has already been acquired and is ready for sale.
The seller may offer advice and training.
Equipment is available for immediate use.
Existing employees can provide valuable assistance.
Define equity
Equity refers to the funds contributed by the business owners to start and then expand the business
Identify any 3 stakeholder.
Government, owner, customer, employee
What does 'S.W.O.T' stand for?
Strengths, Weaknesses, Opportunities and Threats
What are the natural, labour and capital resources that a fast-food restaurant would likely have?
Potatoes, workers/manager & fryer
In what circumstances might someone choose to start a business from scratch?
Recognition of a gap in the market, where it is clear that existing providers are not catering for the demand for particular goods or services.
The development of new goods or services, when the person who has created something unique chooses to go into business to market their innovation or invention.
Either:
Regular repayments on the borrowings must be made, so the business must generate sufficient earnings to make these payments.
There is higher risk for businesses using debt as the interest, and government charges, have to be paid on top of the principal amount borrowed
Identify TWO Factors that influence where a business should located.
The proximity to the market
Competitors
Availability of raw materials
Technology
Define the term 'business plan'
A business plan is a written statement of the goals and objectives for the business, and the steps to be taken to achieve them.
What is unique about labour when compared with natural and capital resources?
As labour resources refer to the people that provide their skills, effort and knowledge to the business, we need to remember to treat them with compassion as any decision made by the business can have drastic effects on the lives of its workers.
Which of the following is not a benefit of starting a business from scratch:
The owner has the freedom to set up the business exactly as he or she wishes.
The owner can determine the pace of growth and change.
There is no goodwill for which the owner has to pay.
A proven track record makes it easier to obtain finance.
If funds are limited, it is possible to begin on a smaller scale.
A proven track record makes it easier to obtain finance.
What are two advantages of using equity to finance a business
Either:
Equity does not have to be repaid unless the owners leave the business.
Equity is cheaper than other sources of finance because there are no interest payments.
An owner who contributes equity to a business retains control over how that finance is used.
Under what circumstances will a sole trader not need to register a business name?
A sole trader will not need to register a business name if the business has the same name as the owner.
Explain two advantages of setting up a franchise business.
•The franchisee gets access to free training and marketing
•The franchisee is part of an established business
•It can be easier to make money
What is one factor relating to natural resource that a business would have to consider when planning?
Environmentally friendly/reducing wastage during production process/ are workplaces designed in a sustainable way that minimises energy usage.
How might operating as a franchise address some of the problems associated with starting a business from scratch?
Franchising has a success rate of almost three times that of independent businesses, largely due to its involving an established business name backed up by managerial expertise.
Explain three main sections or elements of a business plan.
•Personal details, Mission statement and Objectives
•Types of business and its activity
•Target market/ Marketing plan
•Resources required
•Staffing requirement
Finance forecast
List two factors that a prospective business owner should consider when evaluating a partnership as a possible legal structure?
Either:
Are the owners prepared to risk unlimited liability of operating their business?
Will the prospective partners have enough finances, skills and expertise to establish and grow the business?
Do the individuals believe that their prospective partners will act in the best interest of the business?
Is each individual certain that their prospective partners will not expose them to personal debts?
Can the prospective partners foresee disputes arising due to a clash of personalities or opinions?
State the difference between external growth and internal growth of a business. Give an example of each.
Internal growth (also known as organic growth) occurs when a business gets bigger by selling more of its products. e.g. e-commerce or outsourcing, franchising
External growth (also known as integration) occurs when a business gets bigger by joining or buying other businesses. eg takeover or Merger
What is one factor relating to both labour and capital resource that a business would have to consider when planning?
Labour
#of workers needed / skills needed from the employees / what training should be offered / legal responsibilities towards employees
Capital
What kind of tools and machinery is needed / how equipment will be repaired, maintained or replaced
State Two advantages of a business plan.
Increase chances of obtaining external finances such as loan
Help understand the finances:
Budget forecast
Expected costs/revenues
Differentiate between variable cost and Fixed cost ?
Fixed costs are costs that do not change with output. For example, the rent and variable cost are costs that do change with the output eg stocks
Which of the following businesses is not a sole trader nor a partnership
Jim's mowing
Cultural Commons
In2Performance
B.A Bakery
Discuss the use of a business plan.
A business plan is a written statement of the goals and objectives for the business, and the steps to be taken to achieve them. A benefit of a business plan is that it allows the prospective business owner to identify the business’s strengths and weaknesses. This can help to test the viability of the business. Further, the use of a business plan assists in maintaining the operations of a business — especially focusing attention on the goals and objectives.
A limitation of a business is that it is simply a plan — it does not guarantee the ultimate success of a business. For example, the profit of a business that has completed a business plan may be lower than anticipated, because a range of factors out of the owner’s control can affect it. Another limitation of a business plan is that it actually needs to be implemented; many business owners develop a business plan and then neglect to follow it.