Studied by 1 personwhat’s fixed costs :)))
-the money u spend for the business which do not vary with output
remain the same usually but might change from year to year
don’t immediately change despite the amount you sell
eg. rent, salary, insurance
what’s variable costs??
-change with output
the less a company makes, the less variable costs (vice versa)
will be different day to day, month to month and year to year
eg. stock, packaging, hiring, wages
break-even meaning
when the revenue and total costs for the business are equal to 0
no profit :((((
equation: fixed costs / (selling price - variable costs)
what’s the margin of safety11!1!
number of sales above break even point (so profit is higher than 0!!111!)
what’s trade credit in business
-a supplier allows a customer to purchase goods or services at a later date
terms of agreement:
discount
credit period
credit limit
advantage: it helps manage cash flow and build relationships with suppliers.
what are overdrafts?
most common form of finance
—> should be used carefully & only in emergencies due to high interest rates charged by banks
Common features:
variable interest rates
bank can demand full payment
What’s venture capital?
-individuals buy large share of business, often providing expertise as well as finance
Advantages: no repayments
Disadvantages: lose part of profits & no complete control
What’s crowdfunding?
asking people for money online & those small amounts may lead up to big amounts
advantages: low risk
disadvantage: time consuming
What are focus groups?
a group interview where people are asked questions or asked for their opinions about a product/service
disadvantages: costly as you have to pay people to come
What’s share capital?
An LTD (private limited company) who can share their shares with friends & family
advantage: lower risk of insolvency
disadvantage: don’t have full control
Note
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