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129 Cards in this Set
- Front
- Back
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Enterprise
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a business venture that aims to bring a product or service to market with a view to make a profit
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Entrepreneur
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a person who has spotted an opportunity in a market and who is willing to take risks to turn a business idea into a business venture
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Entrepreneurship
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means acting upon a business idea, spotting a gap in a market and developing a new product, service or process.
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Opportunity Cost
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the cost of the alternative foregone - the benefit sacrificed when making a decision
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Risk
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the events that could result in uncertainty in profits/danger of loss and cause the business to fail
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Uncertainty
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occurs when you do not know whether something will happen or not
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Government Support
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actions taken by the government to encourage entrepreneurs and support the creation of new businesses
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Government Grants
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financial support offered to entrepreneurs to pay for some of the start up costs
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Niche Market
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a small segment within a market
it is a gap in the market that has not yet been exploited |
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Innovation
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a new idea or invention which is launched onto the market with a view to financially gain
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Brainstorming
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the creative process of generating business ideas
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Patent
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is a form of intellectual property protection for a new invention
it grants the holder the right to be the only user of a specified product or process for a specific period of time after which the protection lapses |
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Copyright
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is a form of intellectual property protection for artistic or creative works
e.g. literature, images, photos, film, or music |
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Trademark
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is a form of intellectual property protection for a business' distinguishing feature such as a sign, symbol, or slogan
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Percentage Change Formula
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difference between original & new figure
______________________________________________ x 100 original figure |
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Franchise
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a process by which one business (franchisor) sells the rights to use its name and/or product or service to another business (franchisee)
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Franchisor
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an established businesses given permission to another business to use it's tried and tested name, and/or product or service, its trading methods and business logos
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Franchisee
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an entrepreneur/business who buys the right from a franchisor to use it's tried and tested name, and/or product or service under certain conditions
a franchisee usually pays an initial fee as well as royalities |
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Royalty
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a payment made to the franchisor by the franchisee for using its business model typically based on a share of the sakes turnover or profit made by the franchisee
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Business Plan
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a document that details how an entrepreneur proposes to set up a new business
it includes; the entrepreneur's objectives, nature of the product/service, information about the market, the marketing strategy, operational (production) decisions, staffing, and financial forecasts |
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Executive Summary
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a summary of a business plan
it is designed to capture the reader's attention - could be a bank manager or potential investor |
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Business Objctive
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a target that a business wants to achieve within a set period of time
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Market Research
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is the gathering and analysing of information about a specific market
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Business Advisor
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is a person with knowledge and/or experience in a specific are and who can offer advice and support to the entrepreneur
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Primary Market Research
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the collection of first hand original data that did not exists before and that is specific to the entrepreneur's market/business
e.g. surveys, questionnaires, focus groups, and observation |
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Secondary Market Research
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research that has already been undertaken by another organisation
the data is not specific to the entrepreneur's business and may be out of date e.g. internet, libraries, competitors, business advisors |
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Quantitative Research
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research the produces numerical data
e.g. sales figures or percentages |
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Qualitative Research
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research that produces non-numerical data in the form of words, such as - ideas, feelings emotions, and suggestions
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Sample
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is a subgroup of a target population
people selected for the sample must be representative of the entire target popualtion |
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Random Sample
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a small group of people representative of the entire target population
they're chosen by chance, all members of the target population have an equal change of being chosen |
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Quota Sample
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a small group of people representative of the entire target population
the proportions taken from each different market segments reflect the proportions of the target population e.g. if the market is 60% males then 60% of the sample should be male |
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Stratified Sample
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a small group of people representative of the entire target population
people are chosen at random from a specific subsection of the target population |
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Focus Group
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a small group of people representative of the entire target population selected to provide qualitative data
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Market Growth Formula
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change in size
______________________ x 100 original market size |
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Market Share Formula
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sales of a business
________________________ x 100 total market sales |
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Market
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any place, physical or non-physical, where buyers and sellers meet to exchange goods and services
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Electronic Markets
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a virtual location where buyers and sellers trade
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Demand
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is the amount of goods/services that consumers are willing and able to buy at a given price over a period of time
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Market Segementation
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the splitting of customers into subgroups according to their specific needs and wants
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Market Segment
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is a subgroup of the market where customers have similar needs and wants
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Demographic Segmentation
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the splitting of customers into subgroups according to their personal, social and economic characteristics
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Geographic Segmentation
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the splitting of customers into subgroups according to where they live
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Mass Market
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is a market containing a large number of customers purchasing similar products
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Market Size
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the total value (£) or volume (number of units) of sales in a market
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Market Growth
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the percentage increase in the size of a market over a given period of time
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Inputs
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the resources that are involved in generating goods/services
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Outputs
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the goods/services produced by the business
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Transformation
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the process of combining inputs to achieve outputs
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Added Value
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the difference between the value of the finished product and the costs incurred in making it
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Primary Sector
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businesses extracting or growing resources
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Secondary Sector
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businesses responsible for turning raw materials into goods
manufacturing |
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Tertiary Sector
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businesses providing a service
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Legal Structure
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defines the ownership of a business
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Unincorporated Business
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a business that has the same legal identity as its owner(s)
the owner is liable for all the debts of the business (unlimited liability) sole trader/partnership |
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Incorporated Business
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registered with companies house
separate legal identity from its owner(s) its called a company private limited company/public limited company |
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Company
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a business that is registered with Companies House and has its own legal identity
Ltd/plc |
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Sole Trader
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an individual who owns an unregistered business
unlimited liability |
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Partnership
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two or more individuals set up an unregistered business and share the profit
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Private Limited Company
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registered with companies house
owned by one or more shareholder who have limited liability shares can only be bought/sold privately Ltd |
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Shareholder
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person who invests money into a business in exchange for a share of the profit
they have a say in how the business is run |
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Dividend
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a share of the profit paid to the shareholder as a reward for their investment
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Public Limited Company
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registered businesses that is able to sell shares on the stock exchange - anyone can buy shares
minimum of £50,000 share capital Plc |
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Limited Liability
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a business owner is not responsible for the businesses debts
the owners potential loss is limited to the amount of money initially invested into the business |
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Unlimited Liability
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a business owner is responsible for any debts the business might have
the owner's potential loss is unlimited and s/he may need to sell his/her own property to pay the debts |
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Not-For-Profit Business
Social Enterprise |
a business whose motives are not financial gains for the owners but to provide a service/benefit to society
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Internal Sources of Finance
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entrepreneurs own money that may not need to be repaid
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External Sources of Finance
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money from outside the business
e.g. bank loan this money will need to be repaid, sometimes with interest |
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Overdraft
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temporary arrangement which allows a business to draw out more money than is in its account and up to a certain limit agreed with the bank - the bank will charge interest on money borrowed
the business will pay back the money as and when it can afford it the bank can change the level of interest and stop the overdraft at anytime |
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Bank Loan
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a set amount of money lent to a business to be repaid with interest over a period of time
the bank may ask for the loan to be secured by collateral (an asset of the same value as the loan) |
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Loan Capital
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money acquired by a business which must be repaid with interest
e.g. bank loan |
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Venture Capital
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investment from a venture capitalist or a group of venture capitalists in return for a share in the business
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Venture Capitalist
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wealthy individual investing money into a business in exchange for equity
they can also provide an entrepreneur with advice and contacts |
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Ordinary Share Capital
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funds provided by shareholders in return for a share of the profit (dividends)
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Infastructure
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the availability of services necessary to run a business
these will effect the businesses ability to run efficiently |
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Quantitative Factors of Location
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measurable factors
e.g. cost of renting |
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Qualitative Factors of Location
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factors that cannot be expressed as figures
e.g. availability of parking |
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Costs
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expenditure
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Technology
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the application of science to facilitate the running of a business
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Employee
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person working for a business in return for a wage or salary
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Employer
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business who pays employees a wage or salary to work for them
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Permanent Employee
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person who is contracted to work for a business for a non-specified period of time
can be full-time or part-time but their services will be required on an on-going basis |
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Temporary Employee
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person who is contracted to work for a business for a specified period of time
can be full-time or part-time to help meet the short term need of a business |
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Full-time Employee
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person who is contracted to work over 30 hours per week for a business
will provide continuity within the business but may be more costly during periods of lower level of activities |
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Part-time Employee
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person who is contracted to work less than 30 hours per week for a business
more affordable for a new business compared to full-time but might cost more in training |
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Consultant
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person with specific skills, experience or knowledge who is hired by a business for a specific task or project
not an employee but a supplier don't get paid a salary/wage, the businesses pays their invoice |
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Costs
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expenses a business needs to pay in order to operate
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Fixed Costs
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costs that stay the same regardless of the output/sales
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Variable Costs
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vary as output/sales vary
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Total Costs
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variable costs + fixed costs
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Revenue
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the total amount of money coming into the business from sales
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Total Revenue
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selling price x quantity sold
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Profit
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the money left after all the costs have been paid
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Contribution Per Unit
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the money left over from the price of 1 unit after variable costs have been paid
the money left is used to pay towards the fixed costs any surplus money represents profit |
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Contribution Per Unit Formula
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selling price per unit - variable costs per unit
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Total Contribution
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the contribution of all units
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Total Contribution Formula
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contribution per unit x number of units sold
OR revenue - variable costs |
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Breakeven Output
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the level of output at which total sales revenue is equal to total costs
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Breakeven Output Formula
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fixed Costs
________________________ contribution per unit (selling price - variable costs) |
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Breakeven Analysis
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the study of the relationship between fixed costs, revenue, and variable costs to identify the output at which a business breaks even
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Breakeven Chart
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a visual representation of a business' revenue and total costs
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Margin of Safety
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the difference between the actual output and the breakeven output
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Margin of Safety Formula
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actual output - breakeven output
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Cash Flow
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the movement of cash into and out of a business over a period of time
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Cash Flow Forecasting
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estimating the size and timing of the cash inflows and cash outflows over a period of time
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Cash Inflows
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the receipts of cash into a business
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Cash Outflows
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records of cash paid out to suppliers, tax office, in salaries, etc
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Net Cash Flow
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the difference between the cash coming in and the cash going out of the business in any one month
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Net Cash Flow Formula
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cash inflows - cash outflows
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Opening Balance
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the cash in the account at the beginning of the month
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Closing Balance
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the cash in the account at the end of the month
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Closing Balance Formula
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opening balance + net cash flow
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Liquidity
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the amount of cash a business and any asset that could be sold to bring in cash (without loss)
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Budgets
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financial plans/targets for the future looking at expected revenue from sales, expected costs and expected profit/loss over a time period
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Income Budget
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the agreed and planned income of a business
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Expenditure Budget
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the agreed and planned expenditure of a business
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Profit Budget
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the agreed and planned profit of a business over a period of time
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Variance Analysis
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the analysis of the difference between budgeted figures and real figures
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Favourable Variance
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the difference between the budgeted figure and the actual figure is beneficial to the business
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Adverse Variance
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the difference between the budgeted figure and the actual figure is NOT beneficial to the business
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Capital
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the amount of money the owners of a business have invested into the business
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Net Profit
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represents the overall profit made by the business at the end of a time period
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Net Profit Calculation
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gross profit - expenses
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Net Profit Margin
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represents how well as business is being run
shows what % of is left after all the day-to-day running costs or expenses have been deducted |
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Net Profit Margin Calculation
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profit
_________________ x 100 sales revenue |
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Return on Capital
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show the owner(s) what % return they are receiving on the money they have invested
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Return on Capital Calculation
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profit
__________________ x 100 capital invested |
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Business Objectives
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are goals and targets pursued by businesses that shape the decision of entrepreneurs
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Insolvency
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a business is insolvent if it doesn't have enough assets to pay its debts as they fall due
an individual is insolvent if he/she is unable to discharge his/her debts as they fall due |
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Capacity
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the maximum output a business can produce when using all its resources to the maximum extent
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