Business - Topic 4 - Making the Business Effective

What’s limited liability?

• This means that the owners of the business are only responsible for the company's debts up to the amount they have invested. Their personal assets are protected.

What’s unlimited liability?

• Business owners have unlimited liability if they are personally responsible for all the business's debts.

• If the business goes into debt, their personal assets (like their house or savings) can be used to pay off the company's debts.

What are the implications of having a limited liability business?

• Offers more protection for the business owner's personal assets.

• Common for companies (private limited companies).

What are the implications of having an unlimited liability business?

• Business owners are at greater personal financial risk. Common for sole traders and partnerships.

What’s a sole trade?

A business owned and run by a single person.

What’s a partnership?

• A business owned by two or more people.

What’s a private limited company (Ltd)?

• A separate legal entity from its owners, meaning the company can own assets and take on debt.

What are the advantages owning a sole trader business?

• Complete control,

• all profits go to the owner,

• easy to set up.

What are the disadvantages owning a sole trader business?

• Unlimited liability,

• limited expertise,

• limited resources.

What are the disadvantages owning a partnership business?

• Unlimited liability (unless it's a limited partnership),

• potential for disagreements,

• shared profits.

What are the advantages owning a partnership business?

• Shared responsibility and expertise,

• easier to raise funds,

• greater resources.

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What are the advantages owning a private limited company business?

• Limited liability for owners,

• easier to raise capital,

• greater business continuity.

What are the disadvantages owning a private limited company business?

• More regulation and paperwork,

• shared control with shareholders,

• profits are shared.

What’s a franchise?

• A business model where a franchisee buys the right to use the trademark, business model, and products of an established brand.

What are some advantages of a franchise?

• Established brand recognition.

• Training and support from the franchisor.

• A proven business model reduces risk.

What are some disadvantages of a franchise?

• Ongoing franchise fees and royalties.

• Limited control over the business’s operations.

• Potential for disputes with the franchisor.

What are the factors that influence business location?

• Proximity to : market, labour, materials and competitors

• Nature of business activity

• The impact of the internet on location decisions

How does proximity to market influence business decisions?

• Being close to customers to reduce transportation costs and increase convenience

How does proximity to labour influence business decisions?

• Access to skilled workers for certain industries or sectors

How does proximity to materials influence business decisions?

• Location near supplies or raw materials to reduce costs

How does proximity to competitors influence business decisions?

• Some businesses may late near competitors to benefit

How does nature of business activity influence business location?

• The type of business affects its location needs.

• Each business type has specific location requirements based on resources, infrastructure, and regulations.

How does impact of the internet influence business location?

• E-commerce: Enables businesses to operate from any location with access to global markets, often prioritizing logistics over customer proximity.

• Fixed Premises: Required for face-to-face businesses, which still prioritize locations that are convenient and accessible for their target customers.

What’s the marketing mix?

• The marketing mix is a set of key elements that businesses use to promote and sell their products or services effectively.

• It includes four main components—Product, Price, Promotion, and Place

• Each element works together to meet customer needs, differentiate the brand, and drive sales.

  
  

What is the importance of price in the marketing mix?

• The amount customers pay, which influences their perception of value and impacts demand, revenue, and competitiveness.

What is the importance of product in the marketing mix?

• Refers to what the business offers to meet customer needs, including the design, quality, features, and benefits of the product or service

What is the importance of promotion in the marketing mix?

• Involves activities to raise awareness, generate interest, and persuade customers to purchase, like advertising, sales promotions, and social media campaigns.

What is the importance of place in the marketing mix?

• Refers to how and where the product is distributed, ensuring customers can access it conveniently, whether in physical stores, online, or both.

In what ways can to elements of marketing mix work together?

• Balancing the Marketing Mix Based on the Competitive Environment

• The Impact of Changing Consumer Needs on the Marketing Mix

• The Impact of Technology on the Marketing Mix

How does balancing the Marketing Mix Based on the Competitive Environment work?

• Businesses adjust each element of the mix to stay competitive, for example, by offering better pricing, improved products, or targeted promotions to attract customers in a changing market.

What is the Impact of Changing Consumer Needs on the Marketing Mix?

• As consumer preferences evolve, businesses modify their mix to meet new expectations, adapting product features, pricing strategies, or marketing channels to stay relevant.

What is the Impact of Technology on the Marketing Mix?

• E-commerce: Expands product availability online, allowing flexibility in price, place, and promotional strategies to reach a wider audience.

• Digital Communication: Enables targeted, cost-effective promotion through digital ads, social media, and email, making it easier to engage and retain customers.

What are the roles of a business plan?

To identify:

• the business idea

• business aims and objectives

• target market (market research)

• forecast revenue

• cost and profit

• cash flow forecast

• sources of finance

• marketing mix

What’s the importance of identifying the business idea?

Clarifies the purpose and concept of the business, helping to define the product or service being offered.

What’s the importance of identifying the business aims and objectives?

• Establishes clear goals for growth, profitability, and direction, guiding decision-making and measuring success.

What’s the importance of identifying the target market?

• Helps identify the customer base, allowing the business to tailor its offerings and marketing strategies effectively.

What’s the importance of identifying forecast revenue?

• Provides financial projections, allowing the business to estimate its earning potential and make informed budgeting decisions.

What’s the importance of identifying costs and profits?

• Projects total expenses and potential earnings, allowing the business to determine its profitability and manage resources effectively.

What’s the importance of identifying cash-flow forecasts?

• Predicts the inflows and outflows of cash, helping to ensure liquidity and avoid potential cash shortages.

What’s the importance of identifying sources of finance?

• Identifies potential funding options, like loans, investments, or grants, necessary for starting and expanding the business.

What’s the importance of identifying location?

• Determines the best location for the business based on market access, costs, and proximity to resources.

What’s the importance of identifying marketing mix?

• Details strategies for product, price, promotion, and place, ensuring a comprehensive approach to reaching and attracting customers.

What is the role of planning business activity?

• Minimising risk

• Obtaining finance

What is the purpose of minimising risk using a business plan?

• A business plan helps identify potential challenges and allows for proactive strategies to address them, reducing the risk of failure.

What is the purpose of obtaining finance using a business plan?

• Lenders and investors require a business plan to evaluate the viability of the business.

• A well-prepared plan demonstrates financial potential, increasing the chances of securing funding.