22.214.171.124 Dis: Little/No Expertise - prone to mistakes, Is it a real gap?
- Has it been done & failed?, Competition enters quickly.
126.96.36.199 Ad: Good knowledge of product, passion/interest of
product = motivation, contacts = established
market, entrepreneur have a reputation in market?
188.8.131.52 Dis: Competition?, Passion may cause
overestimation of market, need entrepreneurial
skills as well as product knowledge
2.2.2 Local maps
2.2.3 Small scale
2.2.4 Market mapping -
2.3 Protecting a Business Idea
184.108.40.206 Protection given to
books, plays, films
220.127.116.11 Exclusive right
to produce a
fixed period of
time - up to 20
18.104.22.168 Word, image, sound
and smell enabling a
differentiate itself from
3.1 Franchise: Form of business
contract which the franchisor
agrees to sell to the
franchisee the rights to use
their name, logo and trading
3.2 Franchisor: The business
selling the franchise
agreement to the
Entrepreneur who buys
the franchise agreement
from the franchisor
Limited risk -
certain - Turnover
not Profit, Risk is
shared - cost met
work and earning
for the franchisor
3.4.2 Disadvantage: Loss of
control on how the product
is presented to the
customer, Difficult to
control quality as franchise
increase as franchise
grows, Franchisees become
powerful as they acquire a
number of franchises
3.5.1 Advantages: Ability to
sell an already
take advantage of
central services for
FREE e.g. marketing,
not feel like it's
their own so
from the personal
MUST be followed
4 Resources in Goods & Services
4.1 Business Inputs & Outputs
4.1.1 Inputs: Contributing to the
production of a product/service
4.1.2 Outputs: Occurs as a result of the
transformation of business outputs
4.2 Primary Production:
1st stage of resources
extraction - land &
4.3 Secondary Production:
to produce finished goods
& components - car
4.4 Tertiary Production:
Transformation of resources
to provide a service - service
sector (inc. retailing)
4.5 Adding Value
4.5.1 Added Value:
Difference in value
between price of
final product and
cost of materials
4.5.4 Product Features
4.5.11 Higher Profit Margins
5 Business Plans
5.1 Business Plan: A
describing the nature
of the business, it's
projected cash flow
forecast and income
22.214.171.124 Start Date
how long it's been
126.96.36.199 Type of
sector of the
188.8.131.52 How is it
184.108.40.206 Benefits of
customers will gain
220.127.116.11 Plans for further
18.104.22.168 Info on business
5.2.4 Strategy & Implentation
22.214.171.124.1 Location of
capacity in relation to
126.96.36.199.3 Systems (stock
5.4 Limitations - They often
prove unrealistic for small
businesses for the
5.4.3 Expertise -
5.5 Sources of Help
5.5.1 Small Business
6.1 Market Research: Process
of gathering, analysing
and interpreting data
about a market
6.1.1 Quantitive and Qualitative Data
188.8.131.52 Quantitative: Numerical
Data. Collected in larger
scales - generate statistic
results. e.g. 8/10 People...
184.108.40.206 Qualitative: Data about
feelings, opinions &
attitudes. Why do people
behave/feel the way they do?
220.127.116.11.1 In-depth Interview
18.104.22.168.1.1 Group Discussions
e.g. Focus Groups
6.2 Primary: (Field) -
Collected directly for
purposes of the business
- doesn't already exist
22.214.171.124 Random Sample: One in which
each potential member of a
group has an equal chance of
being in the sample.
126.96.36.199 Quota Sample: The sample
of a certain number of
people is taken from one
specific group of the
population, for example
188.8.131.52 Stratified Sample: The population is divided
into groups with common characteristics, for
example, people earning over £100,000, and a
sample is randomly selected from this group.
184.108.40.206 Factors Affecting Choice
220.127.116.11.2 Nature of
18.104.22.168 Telephone &
22.214.171.124 Test Marketing
126.96.36.199.2 Difficult -
188.8.131.52.3 Inaccuracy =
184.108.40.206.4 Lack of
6.3 Secondary: (Desk) -
Already in existence
- Collected from
220.127.116.11 Telephone Book/
18.104.22.168 Trade Associations
22.214.171.124 Trade Press
126.96.36.199.1 Government Publications
7.1.1 Local: Customers are only
a short distance away
7.1.2 National: Geographically
dispersed market where
customers are spread
over a large area
7.1.3 Electronic: Doesn't
have a physical
presence - exists as a
virtual presence via
the internet. Many
from 'brick to click'
7.2.1 Size: Measurement of the size of
total sales for a whole market -
expressed in terms of the value of
sales (currency) or volume (units).
7.2.2 Segment: Group of consumers within a larger market
who have similar characteristics such as age/income level.
Segmentation: Technique where the market is broken
down into smaller sections with similar characteristics.
188.8.131.52 Demographic - Breaks market into customers
characteristics. e.g. age, income levels,
gender, ethnicity & socio-economic groups.
184.108.40.206 Geographic: Lifestyle, Personality,
Regional, National etc.
7.2.3 Growth: Measurement of the change in market size.
Usually expressed as a percentage of it's original size.
7.2.4 Share: Proportion of a
accounted for by one
product or company.
7.3 Demand: Quantity of a
product that customers are
willing & able to buy at a give
price over a curtain time.
220.127.116.11 Marketing: Often a positive relationship
between advertising expenditure &
other forms of marketing & demand
18.104.22.168 Seasonal Demand: Important for
products such as clothing & energy.
Less important for food & customer
8 Legal Structure
8.1 Sole Traders
8.1.1 Owned, controlled
& financed by 1
8.2.1 Owned, controlled
& financed by 2
8.3 Private Limited
8.3.1 Owned, controlled &
financed by at least 1
8.4 Public Limited (PLC)
8.4.1 Minimum of 2 but no
maximum shareholders *LL
8.5.1 *Main objective
22.214.171.124 Benefits inc.
Society, Easier to
recruit & retain,
126.96.36.199.1 Drawbacks. Profitability &
social aims may conflict,
entrepreneur takes lower
return - proportion go to
8.6.1 Business which has
brought the right to trade
as an established brand
8.7 Limited Liability (*LL) - The owners liability is limited
to the amount they have invested to the business.
Unlimited Liability - Owners are personally liable for
all debts incurred by the business.
8.8 Seperation of ownership & control: Situation where
owners are not the same as those controlling day-day
(Managers). Therefore each have different objective
for the business.
9.1 Internal - Finances raised from
within the business. e,g,owner's
savings, retained earnings/profit
& income from sale of assets.
9.1.1 Personal - Ad. No ad. costs, confidence & no interference.
Dis. Opportunity cost, limited finance = limited purchases,
entrepreneur could loose everything, borrowing from
friend/family causes strains if not successful.
9.2 External - Those outside
the business. e.g. banks &
9.2.1 Bank Loan - Good
source of finance for
assets e.g. machinery
& equipment & other
188.8.131.52 Ad. Timescales used = Repayment Plan, interest Fixed
=Budgeting, Guaranteed, No lender agreement terms
(profit, percentage, control) Dis. Interest must be paid
regardless profitability, may have to be personally
secured, length of loan may be longer than life of asset
9.2.2 Overdraft - Temporary
arrangement allowing the business
to draw out more money than in
the account. *Up to an agreed limit.
184.108.40.206 Ad. Flexible, Quick & Easy
Dis. Expensive-Long Term,
Fees can be high, can be
removed at short notice
9.3 Venture Capitalist - Professional
investor - Invests into business in
return for shares - usually, large
9.4 Business Angel - Wealthy,
willing to invest in small,
high risk business. *Expects
high return...likely to have
high growth potential.
9.5 Crowdfunding - Funding a
new business by raising
small amounts from a
large no. of people-
9.6 Share Capital -
putting money in for a
share of the business
10.1 Fixed Costs (Quantitative) -
Land/buildings, Government Grants,
Utility Bills, Cost of Managerial Staff
10.2 Variable Costs (Quantitative) - Material Transport, Local
Material, Wage Levels, Bulk Increasing/Reducing
10.3 Qualitative - Environment, Ease of Access,
Quality of Infrastructure (Roads, Airports,
Rail,Bandwidth) Quality of Labour, Planning
10.4 Technology (Quan.) - (Teleworking = Entrepreneurs work from home,
Internet) Ads. Reduced Costs - Premises, Reduced Risk - No committing
to rent/lease, Reduced Travelling - More Work Hours, Plan around
Family Dis. Separation of Work & Home, Initial Start-ups - House rarely
suitable, loss of social aspects - lonely, Hidden Costs - house insurance,
council tax, tenancy agreement, Distractions - children, pets & TV
10.5 Costs (Quan.) - Location decisions are CRUCIAL - Break-even analysis &
investment appraisal helps to decide based on financial information.
10.6 Infrastructure (Quan.) - Transport Links, Raw Materials, Customers, Local Services
(Waste disposal, Entertainment, Health, Education, Public Services)
10.7 Market (Quan.) - Start Ups = Close to customer - ESSENTIAL & away from
Competition, Growth = Geographically Dispersed - Good Location may change -
Transporting product could become more expensive than raw materials.
10.8 Qualitative: Natue of Product - gain/loose weight during production? Service- Location influenced by
customer needs. Do costs differ in location? limitations in choice? What factor is most important?
11 People in Business
11.1.1 Full Time: Usually around 35 hours +. Ads. Higher Output,
Available to handle unexpected events, Build better
relationships - Customer/Supplier, Customer Service =
Differentiating Factor, Easier to take training opportunities.
Dis. High Costs, Limited Flexibility - Capacity & Skills
11.1.2 Part Time: Usually 35 hours or less, 2 types: Term-time Workers,
term time & school holiday staff, Zero-hour Contracts, no fixed
no. of hours, hours change dependent on demand & employee.
Ads. Flexibility, cover busy periods (peak trading), Part-time Job
Share = wider range of skills & talents, good for growing businesses
Dis. Difficult to access training, communication
difficulties, difficult to build customer relationships, may not be
much different in costs.
11.1.3 Temporary: One who is employed for a fixed period
of time. Often seasonal & may work full or part
time. Rarely have the same benefits as permanent
employees such as pensions & health insurance.
220.127.116.11 Ads. Volume which is uneven & uncertain,
small jobs e.g. IT system designed & installed,
may want to sell a product/service for a fixed
time only, helps short term shortage/loss e.g.
maternity, some become permanent over time.
Dis. May not know the workings & culture,
motivational concerns, constant changing
makes difficult communication, customers may
not like it - particularly services!
11.2 Consultants & Advisors
advice/services for a
fee. Often it's how to
make the business
more successful or to
deal with a problem.
11.2.2 Benefits: Specialist skills without full-time employment, adjust size of
workforce up & down quickly, avoids searching & recruiting staff - can
usually be risky, start-ups can get advice in early stages - sometimes free
or at a subsidised rate.
11.2.3 Drawbacks: Don't
know business as well
as employees, Not as
motivated, Can be
11.3 Flexible Working
11.3.1 Flexibility is a key benefit to
Part-time, A small business
wanting to operate longer, or
increase output will often use PT
staff to cover the additional work.
This can help small businesses
wanting to grow.