buisness understanding nature and purpose

what is a business?

an organisation that produces goods or provides services to meet customer needs usually in order to make a profit

organisation

business brings people resources and processes

produces goods or services

creates something the customer wants or needs

meets customer needs

satisfy demand in market

makes profit

earn to make more money than they spend

profit

to achieve sales revenue that is higher than a total cost

growth

to increase in either value or volume of sales

survival

to continue to exist as a business making enough sales to cover once they reach a breaking point

cash flow

constant steady cash flow sufficient money for when needed

social

to behave in a way which benefits society

ethical

want to be right and legal behave morally correct

mission statement

overall reason for business to exist

cooperate aim

long term targets and plans to fulfill the mission statement

corporate objectives

medium to long term quatfible targets to fulfill mission statement

revenue

the money coming in from the sales of goods and services

selling prices x quantity sold

SMART

Specific

Measurable

Achievable

Realistic

Timed

Sole trader

one person owning the business

unlimited reliability

highly interested in cash flow

pros and cons of sole trader

pros

easy to set up

all profits go to sole trader

remain private

cons

unlimited liability

limited capital investment

difficult to cover when no employees

limited companies

exist in their own right

owner and company have sperate legal entities

only loose the money invested in business

private limited company

can only sell shares to others