As Business Studies Unit 1 Revision Notes

Unit 1 trade- Revision * Enterprise- The ability to handle scruple and deal efficiently with change. * Entrepreneur- both(prenominal)one who has a flair for trading likings and has the confidence to take the risks mired in pass outting up a ancestry. * roaring entrepreneurs * Passion * Motivate peck around them * Determined to succeed * Self-belief * frequent characteristics of successful entrepreneurs * Self-confidence- believe in your ideas ingatherings and be able to motivate others. * Initiative- macrocosm prepa inflammation to set emerge slightlything. * Hard bleeding- not roaring to set up a task. * Creativity- inventing sore results, finding new-sprung(prenominal) ways to do things. Resilience- be prep ard to redesigned and rethink, dont let set patronises dictate you off. * Taking risks. * weeny short letteres * Less whencece 50 employees * Value of gross sales less thence ? 2. 8 million * Value of balance sheet is less then ? 1. 4million * wher efore do mint set up craftes? * Be your knowledge boss * Work from home * Help others * Gap in merchandise * Redundancy * Per enforce a hobby * form property * Risks * No job security * Loose silver * Others could copy idea * whitethorn not realise regular income * Debt * Competition * Demand for reaping travel * Rewards * Enjoy * Personal pride/satisfaction * MAKE MONEY * pleasant customers weed date * Benefit family * Government Support * Financial- grants, subsidies, tax cuts and loans. * provide info and support- websites e. g. run away link * Create enterprise zones * Reduce regulation- red tape * Revenue disbursal is e truly day expenditure gas, electricity, gainful suppliers for materials, petrol, wavers and salaries. * Capital expenditure is expenditure on assets- car, machinery and equipment. Sources of Finance * Retained lolly * Whatever breads the trade ramp ups is ploughed back into the exhibit product line sector concern sector to make it grow. * Advantages * Doesnt founder to be re nonrecreational No interest charges * more than the billet grows, frequently(prenominal) of a sugar you make * Disadvantages * whitethornbe limited- constrain pose of wrinkle expansion * whitethorn run show up speedyly * sleek over devour to pay coin back * the to a greater extent bring in you put back into the personal line of credit the less you get to slide by * Sale of Assets * Assets ar the things the credit line owns. * Where the business trade ins things of their own to sack coin. * Advantages * Get money and when loose an asset * Dispose of un apply assets * Get your money back straight away * Finance development without extra borrowing * Disadvantages comprise money to transfer assets * Taxed on capital letter gains * Grow in encourage quicker than what the funds raft yield elsewhere * Personal Sources ( possessors funds) * Its money put into the business by the owner * Advantages * Doesnt urinate to be repaid * Immediately available and accessible * Disadvantages * If the business fall ins youve lost your own money * Bank Overdraft * Balance of a assert account when funds in conkn exceed funds deposited * Arranging a flexible loan on which the business bear draw as necessary up to an concur limit * Advantages Flexible- in that location when you engage it, helps to maintain exchange melt and you only borrow what you impoverishment. * Quick Overdrafts argon easy and quick to arrange, providing a respectable cash flow backup with the minimum of fuss * Disadvantages * Cost Overdrafts leave interest and leans often at more(prenominal) higher pass judgment than loans. This makes them very expensive for long term borrowing. You also demo large charges if you go over the agreed overdraft limit. * Recall Unless specified in the terms and conditions, the aver kindle recall the entire overdraft at whatever season.This whitethorn put across if you fail to make o ther payments, or if you commence broken terms and conditions though m whatsoever ages the banking keep companys simply change their policies. * Security- Overdrafts may need to be secured against your business assets, which put them at risk if you kindlenot toy repayments. * Trade mention * Where they crumb purchase estimables and pay at a later ap peakee * Advantages * You stinker debauch the stock and pay later when you oblige sell the stock and do adequacy money to pay them back * Eases the cash flow as you can pay after 28-30 days * Disadvantages If you do not pay them back on prison term you can draw up a bad reference history * Only companies with good acknowledgement history can be accepted the trade credit grant * Hire Purchase * A business can buy an asset and pay over a point in judgment of conviction of time with interest. * Advantages * foundert have to pay it all at once- spreading be * much money to pay for your own business * Disadvantages * T he item youve bought could be out of date by the time youve finished paying. * Interest could be added. * Leasing * Renting assets * Advantages * Dont have to pay interest table service & maintenance included * Dont have to worry nearly money being withdrawn * Equipment upgraded every a couple of(prenominal) years * Friends and family more spontaneous to put up * non giving swan up * Disadvantages * notes youve used for leasing could go else where * The item never belongs to you * Bank Loans * Sum of money lent for a wintry period of time with interest * Advantages * continuance of loan can vary * Interest is fixed * Loan guarantees business has money * Bank has no control of business * Disadvantages * Interest rates * Loose possessions due to debt Pay it, even if youre not earning profit * Venture Capital * Capital invested in a project in which there is a substantial element of risk, typically a new or hold outing business. * Advantages * Provide a mentor * Dont need t o repay money back * Helps the business get money outwardly * Disadvantages * Loose some control of the business * Pay legal & news report fees * Lengthy issue * Sh atomic number 18 Capital * whatsoever investors that put some money into the business get a fate of the profits * Advantages * Helps you start up * Dont have to pay it back * Business ordain grow If your bringing extra shareholders in, it will bring in additional expertises * Disadvantages * Loose some control of business * bemuse to give out a share of your profits individually year * Business Angel * Is an individual who proposes capital for a business start-up usually for business equity * Advantages * have experience from the business holy man * good pecuniary start * experiment with ideas * Disadvantages * sustain up some of your business * Higher risks of being took * Factors that determine which source of pay to use * Length of time- short term or long term get a linetrol- how much are you instinct ive to give up? * Amount needed * What is the money needed for? * Affordability- can you afford to repay? * Level of risk you are willing to take * Type of business cost * Expenditures made by a business in tell apart to carry out trading. * Types of cost * FIXED- those that do not change with directs of getup or sales. Also know as indirect cost. * VARIABLE- these that change directly with level of output or sales. Also known as direct cost. * measure be = arrive cost Fixed be variable cost Total Costs Fixed Costs Variable Costs * Total Variable Costs OutputTotal Variable Costs Output Average variable cost per attaining block of measurement= * Total Revenue/Turnover * The apprise of sales over a period of time * interchange damage No of Units interchange Selling toll No of Units Sold * Total Revenue Total Costs Total Revenue Total Costs Profit- what is left after hail be have been deducted from taxation. * office * not the same as profit- fixed be are not subtr acted * Selling determine per unit Variable Costs per unit Selling Price per unit Variable Costs per unit Goes towards paying your fixed costs, and the left over is profit. * Total Contri saveion * you can emergence this by increasing selling price * get down variable costs per unit Contri howeverion Per unit No of Units Sold Contri moreoverion Per unit No of Units Sold * Break-even * Fixed costs of business Contribution per unit Fixed costs of business Contribution per unit The number of wares you need to sell or make to cover costs, and not dope off anything or make profit. * Break-even Graphs * Margin of safety * Difference mingled with cur engross sales and break-even point * It shows the amount by which invite can fall before the business starts making a passage * What can simulate the breakeven point? Action EffectIncrease fixed costs Break-even rises, need to make/sell more to break-even Prices increase Increase in tax, break-even point falls Increase in variable c osts Break-even point rises Fall in pick up Break-even point is not effected but margin of safety is reduced Price cut Break-even increases * Strengths of Break fifty-fifty * Simple to understand and useful for what if scenarios e. g. what happens if there is a price increase, increase in costs etc. * Helps to estimate future sales or level of output needed to meet objectives in terms of profit * Helps with business decision making e. . to catch out if a business start-up or new product is viable * Supports applications for finance e. g. loans from the bank * Weaknesses of Break scour * They are predictions for the future, therefore not constantly honest due to changes internally and externally in business environment * As hites all output is sold- not always the case * Only as good as the info on which it is based, therefore wide or poor quality entropy make it not very useful * Cash Flow Forecasts * What is it? * Its a prediction showing timings of cash inflows and cash outflows of a business * Its SHORT TERM It shows the tinct on a business bank balance * NOT THE SAME AS PROFIT * A business may have the strength for profit in the long-term but have short-term cash problems * Purposes * Forecast when outflows exceed inflows * Plan when and how to finance major items of expenditure * Ensure liquid assets are available to meet payments * Highlight when cash surpluses could be made better use of * discharge to lenders that borrowed funds can be repaid * Benefits * Indicate periods of time where there energy be cash flow problems e. g. egative cash flow * Put proposals in place to cover periods of negative cash flow e. g. arrange an overdraft or short term loan * If there is significant negative cash flow to identify outflows may be reduced * Review timings and amounts of recipes and payments (e. g. may need to reduce credit terms to customers or extend credit terms with suppliers) * Show to a potential lender or investor e. g. bank of venture ca pitalist or business angel. * Limitations * Inflows might be inaccurate due to poor food commercialise research or incorrect self-assertion e. g. hat there product will be of higher pack * External factors may affect your forecast e. g. rise in pomposity which increases costs, competitors, weather, major event e. g. the Olympic Games * Inexperience- a person new to business has no historical data to base a cash flow on. Their inexperience may also cause them to make inaccurate predictions * upset(prenominal) cost increases e. g. due to inflation or weather * Budgets * A calculate is a monetary butt end for the future covering revenue (income) and expenditure * Expenditure budget- allocates money to cost areas e. g. alaries, rent, advertising * Income budget- sets out sales revenue target for a department or unit of measurement business i. e. how much money they are expected to bring in * Profit budget- sets out target profit for a business or department or individual over a given time period * Why budget? * Help you to not overspend- dependent on good financial control and monitoring * Help with risks- contingencies * Help to motivate supply * liberal financial responsibility * Help with trying to secure financing * Gives you something to monitor against * Help to improve financial efficiency Stages in setting a budget * Benefits of Budgeting * Help motivate staff e. g. given sales targets * Gives people financial responsibility * Helps to control costs * Gives employees financial responsibility * For a new business helps it to assess whether it is viable or not * washbowl persuade lenders of the viability of the business * Provides clear goals gives the business something to roleplay towards * altogetherows monitoring of financial performance against targets * Disadvantages * Time go through * For a new business there is no historical data * Gathering information can be costly Level of inflation not easy to predict * shadower be demotivati ng for staff if imposed rather than agreed * whitethorn be unfore plann changes e. g. in tastes. Supplies, external environment * Inexperience if youre not experienced you might make mistakes * Variance Analysis * Measures the difference among forecast budget figures and demonstrable budget figures * A adverse negative, not good * F favourable variation good ++ * Favourable variance occurs +++ * Where actual profit higher than budgeted * Where actual sales inflict than budgeted * Where actual costs disgrace than budgeted * Adverse variance occurs Where actual profit lower than budgeted * Where actual sales lower than budgeted * Where actual costs higher than budgeted * protect Businesses Rights * Intellectual property * Is property that results from original creative thought, as patent of inventions, secure material and stigmatizes. * ALL businesses have IP * Your IP is bidly to be a rich asset, it could include * Name of business * Products/ go you provide * Written /artistic material you create * Your IP rights can * raise your business apart from competitors * Be sold or licensed, providing a revenue stream * Offer customers something new or different Form an penury part in your foodstuffing and branding * Be used as security for loans * Patents * A patent is an grievous bodily harm right to use a process or produce a product usually for a fixed period of time, up to 20 years * Needed to understand that competitors cannot copy inventors ideas * This ensures that the inventors can recoup the initial research and development cost * This lay offs companies to gain an advantage over their competitors and increase their revenue * Companies can process other companies that breach these terms and stop them selling the product e. g. Dyson and vacuum-clean * Benefits The patent holder has exclusive commercial rights to use and license the foundation * Legal action can be taken against anyone who tries to use this finesse without the patent ho lders consent e. g. competitors * The existence of the patent may be enough to deter would-be infringers * The patent can be sold * Drawbacks * A full description of the conception is published and can be viewed by anyone applying to the appropriate patent administration office. * After the exclusive patent period other people or businesses can freely use the invention without needing authorization from or making a payment to the inventor. The cost of the patent may out-weigh the financial advantages of the invention. * Patents take time to create as they need to be very peculiar(prenominal) * Trademarks * A word, image, sound or impression that enables a business to differentiate itself from competitors * Designated by symbols * TM unregistered assay-mark GOODS * SM unregistered service mark SERVICES * R registered trademark * Advantages * TM and SM can be used to claim ownership without registration * Help owner protect mark from being used by competitors * Once company ha s trademark ownership it will have exclusive rights worldwide * Disadvantages Owner has to show proof of use at regular intervals if documents arent filed could lose trademark * Weakest IP protection as it protects marketing concepts and not always product itself * Have to pay fee for registration and renewal * Copyright * The protection given to books, plays, films and music * This ensures that people cannot copy or use protected items without the owners permission (and usually at a cost) * CR can protect * Literacy industrial plant e. g. ovels, instruction manuals, song lyrics, newspaper articles * Dramatic works e. g. dance or mime * Musical works * Artistic works e. g. paintings, engravings, photos * Layouts or typographic arrangements used to publish a work e. g. a book * Recordings of a work e. g. sound and film * Broadcasts of work * Advantages * Right to produce and produce their work * Right to authorise others to produce or reproduce * Prevents your work from being stol en or misused * Allows copyright holder to sue infringers Disadvantages * Does not allow you to permit others to use your work or to distribute it * You must(prenominal) own the copyright to be able to exercise the rights it grants. Being manufacturing business does not always grant ownership * dispatchs time and costs money * Designs * An industrial design right is an IP right that protects visual designs of objects that are not purely utilitarian (useful) * A recognised design is a legal right which protects the overall visual appearance of a product in the country or countries your register it in. For a designs registration to be valid * Has to be new * Have individual character * Advantages * Allows owner to control who uses it and how. * Allows author of a creative work to profit from it by charging for its use or by selling or licensing the rights * Gives owner exclusive rights to the use of the property * Deters others from misusing it * Allows owner to take legal action mo re easily against anyone who uses the design without permission * Compensation for misuse * Disadvantages * Registration can to expensive Not all designs can be registered * Have to be renewed after 25 years * Franchising * A prerogative is a business structure in which the owner of a business idea (the franchisor) sells the right to use that idea to another person (the franchisee) usually in return for a fee and a share in any profit the franchisee makes. * A franchisee is a person or company who has paid to become part of an established franchise business e. g. subway or Specsavers * A franchisor is the owner of the holding company and franchise * FRANCHISOR Advantages Disadvantages Franchisor can expand business quickly * Potential loss of control over how the product/service is presented * Franchisor earns revenue from the franchisees turnover * hard-fought to control quality as franchise network expands * Risk is shared- much of the cost is met by the franchisee * Co-ordin ation and conference problems may increase as it grows * Franchisee may have good entrepreneurial skills which will earn the franchiser revenue * Some franchisees become powerful as they acquire a number of franchises * FRANCHISEE Advantages Disadvantages Franchisee able to sell an already recognised and successful product/service * Proportion of revenue is paid to franchisor * Take advantage of central services much(prenominal) as marketing, purchasing, training, stock control and accounting systems and admin provided by franchisor * Franchisee may not fell that business is his/her own. And may not benefit from the personal rewards of entrepreneurship * Franchisor may have experience in the market that the franchisee can benefit from * Right to operate franchise could be withdrawn * OVERALL FRANCHISE Advantages Disadvantages Existing business format * Business format already set out * Banks more likely to lend to a franchise then to a new business * lighten an element of risk involved in buying a franchise, no guarantee of success * Less risk then new business * Other franchisees may give the brand a bad report card * Already established business * Maybe difficult to sell the franchise * Theres thing you need to research before buying a franchise * Is there any upfront costs? * Any fees need to plan? May need to lease property or equipment from franchisor * How is franchisor making money? Regional protection guarantees franchisor isnt going to sell other franchises or open up outlets nearby * How many franchises fail in a year? * Value of a re-sold franchise, is it a lucrative investment? * Legal Factors * Public bound caller-out (PLC) * Is owned by shareholders and shares can be bought and sold publicly. Advantages Disadvantages * Access of funds * F luckation can be expensive to process * Many investors * conjunction must have ? 50,000 in shares capital and have 25% in shareholders before trading. * Bankers and lenders see stable bu siness * Not possible to keep control * * goose egg topping competitors buying shares * * The owner is not in control. * Partnership * is more than one person in business together without having a company Advantages Disadvantages * few steps to follow to become a partnership * loss of control * additional skills * no liability, can lose possessions * more capital * got to be able to trust partner * share strain * lawfully bounded * different skills * * Processes * Formal documents have to be written * All partners have to agree to and sign the 1980 partnership act * Have to draw up a deed of partnership Private Limited Company (LTD) * Is that the owners are shareholders and their ownership of the business is determined by the proportion of the original shares each person holds. Advantages Disadvantages * Access to funds through shares * Bankers may see business as a risk * contributet lose control * More complicated setup * Stable structure * Lenders may see limited liability as a risk * Limited liability * * When shareholders die/resign the business doesnt stop * * Processes * Have to keep de give chase record once trading * Complicated process to setup Sole trader * Is the most common and simplest form of business organisation, it is one person operating a business alone. Advantages Disadvantages * Simple and quick to setup * Unlimited liability * Inexpensive to setup * Difficult to raise additional finance * Any profit made is the owners to keep or reinvest * All decisions rest with owner * Owner has complete control * consume comes from the owner * block birth between the business and customer can be built up * * Hours of work can be tailed to suit entrepreneur * * Processes Very little needed to setup * When up and running must keep basic records for tax, national insurance and bathtub purposes. * Not-for-profit businesses loving enterprise * A charitable company that doesnt keep profits. Advantages Disadvantages * Entrep reneurs can earn a living doing something valuable * Profits and social aims may conflict difficult choices * The more successful the more caller benefits * The entrepreneur will always have to accept a lower return than with a profit making business, because a proportion of the profit will go towards the social aim. * Customers may be more willing to buy from a social enterprise * * Easier to recruit, motivate and retain employees * * Grants or other forms of finance are available * * Unlimited Liability- the debts of the business are the owners responsibility * Unincorporated business- owner and business have no recess legal identity. * Added Value * the difference in value between the price of the finished product and the cost of materials used * it is the value of the process of transformation of INPUTS into OUTPUTS * Inputs- also known as the factors of production raw materials i. e. cotton and chaff * do work * domain e. g. building and rooms * capital * enterpr ise * Outputs- is the product or service or benefit to the customer * Business is a process where INPUTS are processed to produce OUTPUTS * At each stage of the process VALUE is ADDED so that the finished product is greater than the sum of value of all the inputs * Adding value you could * Branding * Quality * Design * unparalleled features unique selling point * size * Reputation * Range of products * incase * Celebrity endorsement * Good service * Offers * Location * Additional services Qualifications of staff * Transformation process * This refers to the process or processes that factors of production go through in order to produce goods and services. How business activity is categorize * Benefits of adding value * You can charge more * It differentiates you from the competition * Reduces the sensitivity of demand to changes in price * Higher profit margins * deal target product or service at a different sucker piece * Business Plan * Is a document setting out the busines s idea and showing how it is to be financed, marketed and put into practice.It is likely to be life-or-death part of an attempt to raise finance from outside sources such as a bank. * A detailed document that looks at the workings of a new business. * Structure of a Business Plan 1. Introduction/ analysis/overview 2. Details of product/service 3. The market- who your customers are 4. marting plan how are you going to clear customers? 5. Staffing plan- employ who? 6. Operational plan- logistics of business e. g. how customers will pay, where you will source things from 7. Financial plan 8. The future long term plans, growth and expansion * Benefits Essential planning tool makes the business think carefully rough all aspects of the business * Set objectives against which the business can then measure progress and performance * To support application for finance/funding * Identify any problems or pitfalls e. g. wish of expertise in the business * A written down plan enables con tinuity, for example, if the owner becomes ill or unable to work in the business for a period of time * Helps assess the viability of a business is it likely to succeed * Disadvantages Time consuming to research and draw up * Lack of expertise first time entrepreneur may not have knowledge needed * Forecasts may not happen e. g. sales might not be as predicted * Can be too rigid if owner tries to stick to the plan needs to be flexible * market Research * Gathers info astir(predicate) consumers, competitors and distributors within a quicks target market * Primary Research- data gathered by the entrepreneur, or paid to be collected, which does not already exist. Pros Cons Aim directly at your objectives * Expensive,? 10,000 per sketch * Latest info * Risk of it being bias e. g. interviews and questionnaires * Assess psychological science of customer * Research findings may only be useable if like back data exists. * Methods * Observation * Focus groups * Test marketing * Questionnaire telephone, face to face and email * Secondary Research data already in existence that has not been collected ad hocally for the purposes of the entrepreneur. Pros Cons Often obtained without cost * Not updated regularly * Good overview of a market * Not tailored to you * Based on actual sales figures, or research on large samples * Expensive to buy reports on many different market places * Sampling * the entrepreneur does not have the resources/time/skills to research everyone so a choice has to be made to select a proportion of those that could be researched * Random sample * Not haphazard * Computers used to generate random lists of people * Quota sample * Characteristics of marker Can be cheaper and accurate * Collected on street inlet * Stratified sample * Randomly chosen from a sub-group * Sample size of it * How many people you want to interview? * Consideration * Cost, time, target market * Quantative Data * Data in numerical form. An example is 8 out o f 10 owners who expressed a preference said their cats preferred supply. * Quantative data is usually collected from larger scale research in order to generate statistically reliable results. * Good for establishing key info about a business and its market * Numerical information * Focuses on what is happening. Techniques * Online survey * Telephone survey * Questionnaire * Qualitative Data * Data about opinions, attitudes and retrieveings. It is usually expressed in terms of why people feel or behave the way they do. * Difficult and expensive to collect * More revealing and useful * Information about attitudes, feelings and opinions * Focuses why it is happening * Techniques * In-depth interviews * pigeonholing discussions * Exam Tips * When asked to analyse market research carried out, consider the following * dependableness of the research e. g. was it up-to-date? How representative was the research e. g. was the sample representative of the target market. * Sample size was it large enough to be valid and reliable? * Response rate * Questions were the right questions asked? * Bias is the research likely to be bias? Who was asked? Was the method appropriate? E. g. questionnaires often produce bias results. * Market Share, Size and Growth * Market Share * This is the proportion of a centre market accounted for by one Product Company. * Market share can either be expressed as a % or as a value of the overall market * X 100X 100 Company Value Company Value Total value of the market Total value of the market * Market size- * The total sales for a whole market e. g. pet food expressed in the terms of value (? s) or units. ( dont know how to calculate it, no specific formula) * Market Growth- * Change in Size Change in Size Measures the percentage change in sales (volume or value) over a period of time. X 100 X 100 Previous Market Size Previous Market Size * To calculate the change is * refreshful Market Size Previous Market Size * Understating the Mar ket Market- anyone willing and with the financial ability to buy a product or service. * 2 types * Electronic market * Does not have a physical presence, but exists in terms of a virtual presence via the internet. * Many businesses have gone from brick to click * In fact there are business which exist to help other business create an online presence (e. g. shopcreator. com ) Advantages of realistic Presence Disadvantages of Virtual Presence * All customers are equally near from the business so distribution costs are reasonably constant. * Price transparency * The world is the market * Might get a plentifulness of hits doesnt mean people are buying * Less expensive marketing & distribution * No sales staff to encourage & can * 24/7 opening, no need to close * Website crashes * No necessity for an expensive location. * Security issues * Start-up costs lower * Some people like to go to a shop and browse * Business can answer quicker to customer requests * Lack of help and suppo rt. Factors Affecting Demand * Price- some products/services have a demand which is very radiosensitive to price changes. Competition- the actions of competition particularly in relation their prices, or the features of their products will affect demand. * Incomes- some products/services have a demand which is very sensitive to changes in peoples income. * Marketing there is a relationship between the amount of money spent on marketing and the demand for the product. * External Factors- such as seasonality will also affect demand and possibly price. Market Segmentation. A technique where a whole market is broken down into smaller sections to identify groups of consumers with similar characteristics. * Segmentation characteristics * get along * CULTURE * GENDER SOCIAL CLASS * LIFE CYCLES * INTERESTS/ LIFE movement * INCOME * Benefits * Help them to know customers and suit their needs * Increase sales * Make more profit * Retain more customers * Increase market share * Improve m arketing. * Limitations * Need a good knowledge of the market a small business start-up may not have this. * Can be difficult to predict customer behaviour they dont always behave like predicted. Location * Location is the place where a firm decides to site its operations. * Location decisions can have a big impact on costs and revenues. * E. G. * Skilled labour available * Low land cost * Low rent * Close to customers High unemployment * Low unemployment * Close to raw materials * Close to suppliers * Cheap labour * Government assistance e. g. grants * inhabit to expand * Within the EU trade area * Low potbelly stove tax * Access to ports * Excellent road networks * Low transport costs * Quantative factors those that have a numerical value attached to them e. g. low rent * Qualitative factors other factors associate with, for example, quality of the infrastructure or labour available. * Infrastructure the fundamental facilities and systems serving a county, city or area, suc h as transportation and communication systems, power plants and schools.Employing People * Staffing options * Full-time a instalment of staff who works in excess of 30 hours per week. Benefits Drawbacks * purchasable all the time to handle unexpected events. * High cost. * Able to build up better working relationships with each other- spending a lot of time together. * Might not give the business flexibility in terms of an ability to increase capacity. * Build up relationships with customers or suppliers. * * More loyal and committed. * * Take advantage of training opportunities. * Part-time a member of staff who generally works fewer than 30 hours per week or a fraction of a full-time contract. They have the same employment rights as full-time employees. Benefits Drawbacks * Flexibility * Difficult to access training * Can be used when there are busy periods of trade * Difficult to communicate between part-time staff * Extend trading & production periods * Less able to build close relationships with customers * Allows people to manage work alongside other commitments, such as family * Cost of employing and managing people on a part-time basis may not be much lower than full-time. * Job share wider range of skills and talents * Small business- starting point, allow small businesses to build slowly * If someone doesnt want to work full-time they can become part-time and the business still has valuable experienced staff. * Temporary- employees who are employed for fixed periods of time, often seasonal workers, can be part-time or full-time. Benefits Drawbacks * If the volume of business may be uneven or uncertain the entrepreneur can keep the level of staff very flexible. * May not know the working of the business or its culture. * Specific tasks or jobs may need doing which may have a finite time period. * Not as motivated as permanent. * Business could lack certain skills which are only needed for specific period of times * Make communic ation difficult. * Help a business through a period of short term staff shortage- e. g. gestation period cover. * Customers may not like a constantly changing work force e. g. service businesses. * May eventually become permanent. * Consultants & Advisors- * Businesses or individuals who provide sea captain person advice or services over a specific period of time for a fee. Small businesses often use consultants for advice on specific issues as it is more cost effective than employing a permanent member of staff e. g. for advice on marketing, human resources etc. Benefits Drawbacks * Bring in skills and expertise. * Can be expensive. * More cost effective. * Not know business as hygienic as employees. * Adjust size of work-force up or down quickly. * May not be motivated to work hard. * Assessing Business Start-ups In order to be able to assess the success of a business you have to look at the original objectives. Business objectives * Objectives are quantifiable targe ts set by an organisation against which they can measure their success. * Clearly defined targets for a business to accomplish over a certain time period. * contingent objectives * Profit maximisations- tying to earn as much profit as possible but this might conflict with other objectives. * Profit red-blooded making enough profit without risking too much stress or loss of control through employment of too many professional managers. * Survival- primary objective in the first few years of any new business. Sales growth- the owners try to make as many sales as possible. * Social objectives- the main objective would be to correct on of societys problems but there may be a financial requirement to at least break even too. * Benefits- * Give direction and focus to the owners and the people who work in the business. * Create a well-defined target so the owners can make appropriate plans to achieve these targets. * Inform lenders and investors of the aims of the business. * Give a gu ideline for assessing the performance of the business overtime. * mustiness be SMART Specific- clearly related to only that business * Measurable- put a value to an objective helps when assessing performance * Agreed- by all those involved in trying to achieve the objective. Increase motivational impact. * Realistic should be challenging but not impossible. * Time specific- should have a time limit so performance can be assessed effectively. * Why new business fail * Insufficient capital * Poor management skills/ lack of experience * Poor location * Lack of planning * Poor market research * Over-expansion * External factors e. g. price increases, competitors. Niche MarketsA small and clearly diagnosable segment of a market. E. g. specialist sports cars, gluten-free food, vinyl, bespoke furniture, tailor-made clothing. Characteristics * Relatively few customers, therefore small volume of sales. * Premium priced, therefore good potential for profitability. * Product is often high ly differentiated. * Usually too small to attract larger businesses, therefore attractive to smaller businesses. Advantages Disadvantages * Little competition easy to gain market share. * Tend to have higher fixed costs as they are spread across relatively small volumes of output/sales. * Can charge premium prices potential for higher profit. * Degree of speciality makes turning point markets vulnerable to changes in market conditions. * Can focus on needs of individual customers and respond quickly to changes in these needs. * Successful niche may attract interest of larger firms small firms may find it difficult to compete. * Allow small firms to compete effectively. * Gain first proposer advantage i. e. first in the market, can establish brand/image. * Can target market more effectively e. g. have a more personalised service.