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49 Cards in this Set
- Front
- Back
Types of business aims and objectives
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An aim or objective is a statement of what a business is trying to achieve over the next year.
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Business Targets: Survival
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Just surviving is the main and most important short term aim of all new businesses.
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Business Targets: Profit
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Most businesses will aim to make profit. This can take years for a new firm to achieve. Profitable firms are important for the economy because they create wealth creation.
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Business Targets: Growth
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Some firms aim to grow. could mean icreasing amount of employees, no. of products sold or income from sales.
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Business Targets: Market Share
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A business has not market share when it starts up. Needs to establish itself. This can be increased.
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Purpose of setting business objectives
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Helps staff to focus of shared aims. Different businesses have different objectives.
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SMART Targets
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All business objectives need to be SMART.
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SMART: S
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S=Specific. clearly state what is to be achieved e.g. increased profits.
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SMART: M
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M= Measurable. The desired outcome is a number value that can be measured. e.g. increase profits by 10%.
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SMART: A
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A=Agreed. All staff are involved in discussing and agreeing on an aim.
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SMART: R
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R=Realistic. The target is possible given the market conditions and the staff and financial resources available.
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SMART: T
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T=Timed. The target will be met within a period of time.
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Internal Stakeholder
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The people who work in the business. This means they are inside the business and involved daily (all kinds of employees).
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External Stakeholder
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These are people who don't work for the business and aren't involved in the day to day running. (Customers and local residents etc.)
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Examples of internal stakeholders
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-Employees
-Managers -Owners -Shareholders |
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Examples of external stakeholders
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-Customers
-Suppliers -Government -Local community |
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Purpose of business plans
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-Provides a sense of direction
-Helps to secure investment -Predicts outcomes -Measure performance -Outline actions -Define responsibilities |
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THE MAIN SECTIONS WITHIN A BUSINESS START UP PLAN
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Aims/mission
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The goal of the firm
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People
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Skills of the management and workforce
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Product or workforce
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What the firm sells
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The Market
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Size of market; growth
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Competition
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How many other firms
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Marketing
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Price, Product, Promotion, Place
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Finance
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Where sources of funding come from
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Operations
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Location and the resources required
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Forecasts
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Costs, Revenue and Profits
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Risk
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The potential for loss in a business however, some risks must be taken in order to yield a reward.
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Uncertainty
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Not knowing what's going to happen in the future.
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Risk-taker
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A person who isn't fearful of uncertainty and may even enjoy risky situations. He/she will take a chance or gamble in the hope of winning.
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Unlimited liability
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If the business goes bust owing a huge amount of money, you may have to sell everything you own to pay off your debts.
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Sole Trader
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A business that is owned and controlled by one person although they may employ workers e.g newsagents
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Advantages of a sole trader
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-Small and easy to set up
-Wage bill will be low because there are little or no employees |
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Disadvantages of a sole trader
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-Work long hours
-Nobody to share responsibility with. -Risk of unlimited liability. |
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Partnerships
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Partnerships are businesses owned by two or more people. A contract call a deed of partnership is normally drawn up.
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Advantages of Partnerships
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-Less pressure on individuals
-There's someone to consult over business decisions. |
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Disadvantages of Partnerships
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-Not as much power/may have to consult others before making decisions
-Disputes over decisions -Like a sole trader, has unlimited reliability. |
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Private Limited Company (LTD)
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A company that can't sell shares to the general public. It isn't listed in the stock exchange.
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Advantages of LTD
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-Protection of the name
-Ability to bring in partners by selling them shares. -Alot less paperwork and regulation. -Separate VAT status for the company. |
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Disadvantages of LTD
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-Can't sell shares to the general public
-All profits are taxed. -Contracts tend to be more formal. - You will be fined if you miss filing deadlines. |
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Location: Availability of raw materials
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Need to build a factory near materials they need to keep transport costs at a minimum.
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Location: Transport
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Build factory near transportation (lorry depot, train station) to keep transport costs to a minimum and also needs to be transport links to and from the factory for workers.
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Location: Labour
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Needs to be near a populated area and somewhere where the business has employee interest.
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Location: Competition/other businesses
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Only build near competitors if you have the power/skill/product/money to challenge them with.
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Location: Technology
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You need to have the availability for technology so work life can be easier.
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Government and Location
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The government offers grants and assistance to businesses that locate in areas with high unemployment.
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Grants
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To help with the cost of setting up a business. Grants don't have to be repaid.
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Loans
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Loans are repayable over many years at lower rates of interest than the bank.
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Tax Breaks
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Firms may be made exempt from paying business rates.
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