This document provides information about starting and running a business. It discusses key characteristics of successful entrepreneurs, reasons for starting a business, risks involved, and rewards. It also outlines sources of funding, choosing a business structure, employing people, calculating costs and revenues, and setting objectives. The overall content provides guidance to entrepreneurs on important business concepts to consider when launching a new venture.
This presentation will help you to:
• explain the concept of business organisation;
• state the meaning and characteristics of Sole Proprietorship and Joint Hindu Family Business
• identify the merits and limitations of these forms of business organisation;
• describe the suitability of these forms of business organisation; and
• explain the steps in the formation of these business organisation.
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This chapter business objectives and stakeholders objectives will explain.
Different business objectives
The main internal and external stakeholders groups
This revision presentation considers the variety of stakeholders impacted by business activity. How will a change in objectives, such as a move from profit maximisation to revenue maximisation have an effect on different stakeholders?
This presentation will help you to:
• explain the concept of business organisation;
• state the meaning and characteristics of Sole Proprietorship and Joint Hindu Family Business
• identify the merits and limitations of these forms of business organisation;
• describe the suitability of these forms of business organisation; and
• explain the steps in the formation of these business organisation.
CH05 Business objectives and stakeholder objectives.pptxAbdiFitaahMahamed
This chapter business objectives and stakeholders objectives will explain.
Different business objectives
The main internal and external stakeholders groups
This revision presentation considers the variety of stakeholders impacted by business activity. How will a change in objectives, such as a move from profit maximisation to revenue maximisation have an effect on different stakeholders?
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A simple and packed with some of important business knowledge that essentially required by students for exam or businessman in order to achieve success in their life.
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He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
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The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
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The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
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2. ENTERPRISE AND ENTREPRENEURS
Characteristics of successful entrepreneurs
-Passionate (about the product)
-Visionary (have faith)
-Energetic and driven(prepared to work hard)
-Calculated risk taker (take risk to maximise rewards)
-Multi-tasker (take on more than one role)
-Resilient (able to handle problems)
-Focused(set clear goals)
-Results orientated(take pleasure from achieving targets)
3. ENTERPRISE AND ENTREPRENEURS
Reasons for Starting a business
-More flexibility over working life
-Escape an uninteresting job
-Pursue an interest
-Want to be your own boss
-Feeling of satisfaction
-Wanting more of the rewards from your effort
-Fed up of working un a business hierarchy
-Financial necessity
4. ENTERPRISE AND ENTREPRENEURS
Risks of starting a business
-Potential loss of investments
-Loss of pay from previous job
-Potential unlimited liability
-Stress and pressure
-Earning little
-isolation
Rewards for the Entrepreneur
-Potential for income and profit
-Satisfaction
-Freedom
-Control
-Capital Gain
5. ENTERPRISE AND ENTREPRENEURS
Sources of Government Support
The government are encouraging start-ups for economic growth
-BIS (Dept for Business, Innovation and Skills)
-Business Link
-DirectGov (advice on tax, laws and regulations)
-UKTI (help with international sales)
-Tax incentives or breaks for investment
Other Support and Advice for Start-ups
-Many online sources
-Business Associations (the Princes Trust and Federation of small businesses)
-Local business networks
-Professional Firms (Accountants and Lawyers)
-Campaigning Organisations (start-up Britain)
6. OPPORTUNITY COST
Opportunity Cost- is the cost of missing out on the next best
alternative. The benefits that could have been gained by taking a
different decision.
How opportunity costs affect the startup:
- Resources are limited
- Decisions need to be made when resources are scarce
- Take calculated risks and weigh up potential implications before choosing what they
think is best for the business.
7. GENERATING AND PROTECTING IDEAS
Sources of ideas
- Brainstorming and creative thinking
- Business/ Personal Experience
- Frustrations with poor service
- Copying an existing idea (Franchising)
- Innovation or invention
What makes a good Idea?
- Solving a problem
- Cheaper or better product/service
- Easier to use
- Can be developed easily
- exploits gap in the market or an emerging growth trend
8. GENERATING AND PROTECTING IDEAS
Patents
- Difficult to obtain
- On a new invention or innovative product or production method
- The patent owner is given up to 20 years protection against competitors
- Ability to license right to use the invention in return for royalties
- Patents are expensive and time consuming to obtain
Trademarks
- Identifies a product
- Can be a name, logo or symbol etc.
- Trademark allows a business from using identical or confusingly similar marks
- Trademark protection lasts for 10 years
Copyright
- Important source of protection for any startup in creative or knowledge industries
- Protection is granted automatically
- Protects the way in which an idea is expressed as soon as it is published
- Lasts for 70 years after authors death
9. ADDING VALUE AND TARGETING A NICHE MARKET
Added value – is the difference between the price of the
finished product and the cost of the inputs used in making it.
How to add value:
- Delivering excellent and distinctive customer service
- Building a distinctive brand
- Product features and benefits
Why add value?
- Can charge higher price
- Differentiate from competition
- Build customer loyalty
- Focus on customer needs
10. ADDING VALUE AND TARGETING A NICHE MARKET
Niche Market- is a smaller, specialist part of a larger market
where customers have particular needs and wants.
Market Segments:
- Geographic (countries, regions and population)
- Demographic (customer age, gender, lifestyle etc)
Advantages of niche segments:
- Better able to add value
- Customer needs are more precisely defined
- Potential to charger higher prices
- Encounter less competition
- Target potential customers easier
Disadvantages of niche segments:
- Customers are more demanding
- Existing established competitors
- Less able to benefit economies of scale
- Competitors soon attracted when market becomes mainstream
11. FRANCHISING
Franchise- the business format which a franchisor allows a franchisee to
use, under license.
Franchisor- the ultimate owner of the franchise format
Franchisee- the business who is granted the right to operate a franchise on
behalf of the franchisor.
Costs of being a franchisee:
- Initial cost
- Service fee
- Advertising levy
- Mark ups
Franchisees can be seen as a lower risk:
- Easier to gain customers
- Tried and tested business model
- Easier to raise bank finance
12. FRANCHISING
ADVANTAGES DISADVANTAGES
F
R
A
N
C
H
I
S
E
E
- It is your own business
- Business format is well thought
- Ongoing advice and support from the
franchisor
- Should be running a business with a
reputation and brand name
- Don’t necessarily need experience
- Benefit from franchisors scale
- You don’t own the business format
- Expected to act in the best interests
of the franchisor
- Restrictions on trading (prices and
location)
- Large proportion of revenues go to
the franchisor
- Risk of the franchisor of going out of
business
F
R
A
N
C
H
I
S
O
R
- Relatively quick method of
expansion
- Lower investment needed
- Regular fees and levies provide a
strong flow of income.
- Franchisees profit from the
franchisors business model.
- Poor franchisee can damage
reputation of whole franchise
- Need robust franchisee recruitment
and management systems.
13. ANALYSING AND UNDERSTANDING THE MARKET
A market is any location where buyers and sellers come together to transact
with each other.
Local Markets:
+ Customers are a short distance from suppliers
+ Close to the customers and respond to market change
- Market is small and often competitive
National Markets:
+ Much larger target market
- Customers are spread throughout the country
- Needs to be operated efficiently and hard to maintain
Physical markets:
+ Buyers and sellers meet in the same location(eg car boot sale)
+ Easier for buyers and sellers to exchange information
- Needs to be open for trade to take place
Electronic Market
+ Any connection between buyer and seller using electronic means
+ Ability to reach global market
- Price is highly competitive
- Product then has to be delivered
14. ANALYSING AND UNDERSTANDING THE MARKET
Demand is how much customers are prepared and willing
to buy a product at a given price.
Factors that affect demand:
- Price
- Incomes (how much money the customer has to spend)
- Taste and fashions
- Competitor actions
Market size – the value and volume
Market share – proportion of market owned
Market growth – the percentage growth over a period of time
15. CHOOSING A LEGAL STRUCTURE
Sole Trader
A business owned by a single individual
+ Quick and easy to set up
+ Simple to run
+ Minimal paperwork and simple accounting
- Full personal liability
- Harder to raise finance
- The business is the owner
16. CHOOSING A LEGAL STRUCTURE
Partnership
Where a business is owned by two or more people
+ The simplest way for two people to form a business together
+ Benefit from the expertise from all the owners
+ Greater potential to raise finance
- Full personal liability
- A poor decision by one partner damages the interests of others
- Harder to raise finance than a company
- Partners are bound to hour decisions of others
17. CHOOSING A LEGAL STRUCTURE
Limited company
A separate corporation owned by the shareholders
+ Limited liability
+ Easier to raise finance
+ Stable form of structure
- Greater admin costs
- Public disclosure of company information
- Directors legal duties
18. CHOOSING A LEGAL STRUCTURE
Social Enterprise
A business with a primarily social objective whose surplus is re-invested
for that purpose in the business or community.
- Still running a proper business
- Giving something back
- Activities that benefit society
- Availability of government grants and other finance support
- Stakeholders gain from profits reinvested
- Example is the big issue
19. SOURCES OF FINANCE
Internal sources:
- Personal sources
- Retained profits
- Share capital from entrepreneur
- Sales of assets
External sources:
- Share capital from outside investors
- Friends and family
- Bank overdraft
- Bank loan
- Grants and other government incentives
Factors affecting choice:
- Control
- Cost
- Amount
- Timing and flexibility
20. SOURCES OF FINANCE
ADVANTAGES DISADVANTAGES
Personal
Sources
- Owner remains in control
- Flexible and the lowest cost
- Builds personal commitment to the
start up.
- Opportunity cost
- Entrepreneurs funds at risk
- May be limited
Retained
Profit
- Cheap and highly flexible
- No loss of business control
- Potentially large if profits are strong
- External shareholders may want a
dividend
- Start-ups struggle to reach profitability
Bank
Overdraft
- Flexible short term source of
finance
- Only used when needed
- Expensive (high rate of interest)
- Repayable to bank on demand
Bank
Loan
- longer-term finance and more
secure
- No effect on ownership
- Hard for a startup to obtain
- Interest payable on entire amount
- Bank may require security
Venture
Capitalist
- Potentially significant source
- Expertise and contacts can be
useful
- Loss of control
- Longer and complex
Friends
and
Family
- Flexible
- Doesn’t have to mean loss of
control
- Potential for personal disputes
- May want some control or influence
over decisions
21. BUSINESS LOCATION
Location is the physical place from which a business is operated and
controlled.
Quantitative factors- based on measureable information such as cost.
Qualitative factors- based on personal opinions and preferences such as
quality of life.
Home Based Startup-
+ Low cost
+ Little travelling
+ Can be combined with domestic tasks
+ Lowers business risk
+ Freedom over what to wear
- Requires greater self discipline
- Work often interrupted
- Work never goes away
- Potentially lonely
- Could give poor impression to customers
22. BUSINESS LOCATION
Factors that influence the choice of location:
- Cost
- fixed costs raises break even output
- it’s best to try to minimise costs to lower risk of failure
- Proximity to the market
- need to be close to potential customers
- Infrastructure
- transport, telecommunication
- Personal and other qualitative issues
- location may create a USP that could attract customers or staff
23. EMPLOYING PEOPLE
Full- Time- contracted employee working more than 30 hours a week
+ maximises output from each employee
+ available all the time
+ better returns from training
+ potentially better for customer service
- Higher costs
- is there enough work to justify a full timer
- Reduced flexibility
- Raises the breakeven output=higher risk
Part- Time- contracted employee working less than 30 hours a week
+ keeps costs down= lower breakeven output
+ may be easier to recruit
+ consistent with increasing demand for flexible working
- Not always able to handle the high workload
- Less opportunity for training
- Harder to communicate with them as they aren’t working long
Permanent- employed by the business for a non-specified amount of time.
Temporary- employment for a specific period after which employment is terminated or renewed.
+ Flexibility
+ ideal for certain tasks or projects
- Higher cost per hour
- Temps are less likely to know and understand
- Potentially negative customer service
Consultant- individuals and businesses external to the business that provide specific services and advice.
24. CALCULATING COSTS, REVENUES AND PROFITS
Costs- incurred in making and delivery of the products/services
Revenue- amounts earned by a business by selling products and
services (Revenue= price x quantity sold)
Profit- the difference between total revenues and total costs.
Variable costs – costs which change as a result of changes in output
Fixed costs- costs which do not change in relation to changes in output
25. BREAKEVEN ANALYSIS
Breakeven point- the output at which total revenues equal total costs
Contribution- the difference between revenues and variable costs
Margin of safety- the difference between actual output and the
breakeven output.
To reduce breakeven output:
- Maximise added value
- Reduce variable costs
- Reduce Fixed costs
Breakeven output =
Fixed costs (£)
Contribution per unit (£)
Contribution per unit= selling price- variable cost per unit
Total contribution= contribution per unit x number of units sold
26. BREAKEVEN ANALYSIS
+ A crucial milestone
+ Focuses entrepreneur on a target
+ Encourages forecasting's of cash flow
+ Provides a measureable target
+ A key part of any credible business plan
+ Involves making estimates that could be wrong
- Ignores price and cost changes
- Assumes all output is sold
- New entrepreneurs may lack experience to make realistic estimates
- Breakeven output changes
27. CASH FLOW FORECASTING
A cash flow forecast is a prediction of cash inflow and outflow over a
period of time.
Why a business should produce a cash flow forecast:
- Identifies potential shortfalls
- Ensure the business can afford to pay suppliers
- Spot problems with customer payments
- Important discipline of financial planning
- External stakeholders and banks may require a forecast
However a forecast may not be reliable as:
- Difficult to forecast the timings
- Linked to the quality of market research
- Need to be cautious
- Good to have different scenarios
- Will have to make assumptions
28. BUSINESS PLANNING AND BUDGETING
- Income sales budget
- Expenditure costs budget
- Profit budget
A business plan:
Contents include, executive summary, market profile, competition, protection of the
business idea, management team, marketing, operations, financials, funding and exit
strategy.
+ Provides a focus on the business idea
+ Clarifies thoughts and identifies gaps in information and market research
+ Encourages the entrepreneur to focus and plan the future
+ Measure against performance
+ Essential to raise finance
- Assumptions about a business are uncertain
- Entrepreneurs may be optimistic
- Market research may be limited/unreliable
- Startups may incur unanticipated costs
- Budgeting is generally easier when there has been experience in trading
29. OBJECTIVES OF STARTUPS
- Survival
- Growth
- Profit
- Or Intangible such as freedom
What can go wrong:
- Poor management
- Sales lower than expected
- Startup costs too high
- Poor quality
- Overtrading
- Competitor actions
- Lack of finance