Year 10 Business and Finance - Semester I Exam Revision

Sole trader

A business fully owned and operated by one person, not a legal entity.

Partnership

Relationship between multiple people to run a business for profit.

Company

Organisation established under the Corporations Act 2001 as a separate legal entity.

Pty Ltd Company

A proprietary limited company with 1-50 shareholders.

Ltd Company

A public company whose shares are listed on the stock market.

Trust

An obligation on a person or company, the trustee, to operate a business and hold assets on behalf of beneficiaries.

Franchise

A business model where a franchisor sells the right to own and operate using their brand to franchisees.

Primary industry

Industry in extracting natural resources (e.g. farming or mining)

Secondary industry

Industry in manufacturing and construction (e.g. factories or building companies)

Tertiary industry

Industry providing services (e.g. retail, hospitality, transport)

Business Continuum (what increases to the left and right side?)

Left side: autonomy, profits, workload, liability, risk, flexibility

Right side: support, structure, time lag, setup cost

Limited Liability

Owners’ personal assets are protected from creditors, who can only sell company assets to recover debt.

Capital

Money/resources invested in a business.

Shares

Units of ownership.

Shareholders

Owners of a company.

Establishment Phase Challenges

Stability, capital, cash flow management, hiring the right people.

Growth Phase Challenges

Acquisition and retention, organisation, competition, leadership, debts.

Maturity Phase Challenges

Restructuring, plateaus, complacency, efficiency, morale.

Post-Maturity Phase Challenges

Innovation, competition, succession planning, brand relevance.

Entrepreneurial Qualities for Success

Ambition, creativity, determination, discipline, prioritisation, work ethic.

Indicators of a Successful Business

Profitability, customer satisfaction, morale, achievement of organisational, financial, social, environmental objectives.

Planning Indicators of Success

Goals and objectives achieved.

Operations Indicators of Success

Quality goods, efficient production, high customer satisfaction.

Finance Indicators of Success

High profitability and cash flow, growth, financial obligations met.

Marketing Indicators of Success

High market share, good brand awareness, strong sales.

Human Resources Indicators of Success

Low labour turnover, accidents or absenteeism; high productivity and staff morale.

Reasons Businesses Fail

Lack of research or planning, financial mismanagement, poor marketing, not hiring the right people, growing unsustainably.

Entrepreneur

Person who organises and operates a business or businesses, taking on financial risks and providing leadership to get the business going.

Innovation

To make changes in something established, to introduce new methods, ideas or products.

Expense

Payments or costs incurred by the business.

Target Market

A particular section of the market, with customers at whom the product is aimed.

Business Plan

A detailed outline of goals and how future operations, financing, management will assist in achieving those aims.

Income

Money received by the business.

Business Ethics

The way business is conducted in order to operate in harmony with all stakeholders.

Market Research

Gathering information about the marketplace, consumers and competition in order to identify the target market and their needs and wants. 

4 classifications of business spread

Legal, geographical, industry, size

Taxes Businesses Pay (list 6)

GST, Capital Gains Tax, PAYG withholding, Company Tax, Payroll Tax, Fringe Benefit Tax

What are reasons someone would run a business? (list 3, bullet points)

• Higher income potential

• To provide a product

• To have flexible working hours

Why run a business as a trust

• Flexibility

• Asset protection

• Tax minimisation

Key characteristics of partnerships

Shared control, written partnership agreement, not a legal entity.

Advantages of Partnerships

Ease of setup, shared workload, tax advantages, more skills, capital.

Disadvantages of Partnership

Liability, conflicts, profit sharing, less autonomy.

Written Partnership Agreement

A legally binding contract outlining the terms and conditions of a partnership between two or more individuals or entities.

Role of a partnership agreement

Defines and regulates the ongoing business relationship between partners.