business

what is a way that a small business could use to segment the market

lifestyle

what is a definition of inflation

general increase in prices over time

explain one way a small business could be affected by an increase in interest rates

an increase in interest rates means the cost of borrowing goes up.

if a small business has a loan or overdraft, it’s interest repayments will rise.

this leads to the increase in businesses costs, therefore, reduces it’s profit and leaves less money available to invest in growth such as opening new outlets and buying new equipment.

explain one advantage to a small business from using venture capital

venture capitalists provide large amounts of finance to small businesses that are seen as risky which banks may refuse to lend to. they also often bring business expertise and useful contacts. this leads to the business growing faster and therefore, can can expand into new markets

discuss the impacts on a small business of conflicts between employees and shareholders

employees and shareholders often have different objectives

shareholders want the business to maximise profit so they receive higher dividends where as employees want higher wages and better working conditions and job security.

if shareholders refuse a pay rise to keep costs low employees may become demotivated

this could lead to lower productivity and poor customer service which reduces sales and could actually lower profits for the shareholders

therefore, employees may also leave so the business faces extra recruitment and training costs.

in a small business this impact is bigger because it relies on a few key staff and has limited cash to replace them.

however, the impact depends on how serious the conflict is and how well it is managed.

if the owners communicate with staff and compromise, for example by offering a bonus linked to profit, both groups could benefit. overall, conflict between employees and shareholders is likely to have a negative impact on a small business unless it is resolved quickly as it affects motivation, costs and profit

what is covered by consumer law

product quality

how to work out net cash flows

net cash flow= cash inflows - cash outflows

which two are the required to calculate revenue

quantity sold and selling price

which two are non- financial business aims

challenge and social objectives

calculating newspaper advertising

newspaper advertising = £12,000

posters= £2000

local radio= £16,000

total = £12,000+ £2000 + £16000 =£30,000

£12,000 divided by £30000 × 100 = 40%

explain one advantage to a business using quantitative market research

quantitative research is numerical such as percentages or statistics

so it is easy to analyse and compare

for example a business can see 80% of customers prefer a certain product

this leads to managers making clear informed decisions based on facts

therefore, reducing the risk of making and selling a product no one wants

explain one drawback to a small business of having negative cash flow

a negative cash flow means more cash is flowing out of the business than coming in

as a result, this leads to the business having no money or not enough to pay it’s suppliers staff or bills

therefore this means that suppliers may have to take out expensive loans and in the worst case the business could become bust or bankrupt

advantage of a plc

An advantage of a private limited company is limited liability. This means shareholders are only responsible for the amount of money they invested into the business. This leads to shareholders having less financial risk. Therefore, they may be more willing to invest in the business, allowing it to raise more finance for expansion.