business chapter 1

What is a business plan

A document which sets out details on what is sold, marketing, finance and aims

What are aims and objectives?

Things that a business wants to achieve

Forms of business ownership?

• Sole traders

• Partnership 

• Ltd

• Plc

Advantages of sole trader?

• Easy to set up

• Low capital needed

• Control

• Keep profits

• Private financial info

Disadvantages of a sole trader ?

• Unlimited liability 

• Illness will mean no one to run it

• Shortage of capital leads to failure

• Long work hours

• Shortage of skills

• After death, business will die

Advantages of partnerships

• Easy capital

• Easy to set up

• More skills

• Shared workload

• Private financial info

Disadvantages of a partnership

• Shares profit

• Unlimited liability 

• Shortage of capital compared to ltd and plc

• Slow decisions

• After death, business may die

What is a deed of partnership

Document which sets out operations of partnership -e.g. capital+profit sharing

Purpose of a business

• To make a profit

• Independence

What is capital

Money raised to start a business

What’s a sleeping partner

Partner who invests in the business but does not take part in running it

Advantages of A PLC

• Easy to raise high capital

• Easy to borrow money

• Limited liability for shareholders

Disadvantages of a PLC

• Possibility of takeover

• High cost of operation

• Complex management structure

• Public financial info

Advantages of a private LTD

• Limited liability 

• Business continues after death

• Easy to raise money

• Control over share sale-Family

What is a dividend

The money paid to shareholder from profits of a limited company

Reward for the investment risk

Disadvantages of Private Ltd

• Public finance info

• Expensive admin

• Restricted sale of shares

• Dividends may cause conflict

What is a LLP

• Limited liability partnership

• Debts are limited to their money put into the business

What are some Suitable ownership types for start ups

Ltd

Sole trader

Partnership

examples of Aims and objectives of business 

• Profit

• Growth

• Market share

• Survival

• Providing a service

What does satisficing mean

Making just enough profit to provide business owner with decent living

What does it mean to make providing a service an aim

Business makes sure needs of the customer are being met

Start up aims

Competition survival

Establish name

Aims for evolving businesses

• Market share 

• Recession-survival

• Increase sales-growth

What is organic growth

Internal growth of business by increasing sales

What is external growth

Growth of a business where the business expands to another business

What is a merger

2 or more businesses agree to join together

What is a takeover

Where a business takes a controlling interest in another business

Horizontal growth

A merger or takeover where 2 businesses who are involved in similar operations

Backwards vertical growth

Business merges/takes over a business that supplies it

What is forwards vertical growth

Merger/takeover with a business it supplies to

What is diversification

Business merges/takes over another where there is no connection in operations

Suitable ownership types for established businesses 

• PLC

• LLP

• Partnerships