Bussiness Notes - Isaac Podmore PDF

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Preliminary Topic 3 Notes...

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NATURE OF BUSINESS:

98.45% are small business (Australia)

Definitions: Business: A group of organised individuals (in most cases) that provide a good or service to others to make a profit. Profit: What remains after all business expenses have been deducted from sales. Goods: Are items that can be seen or touched Services: Are things that are done for you by others. Production - The process of creating something from raw materials. Revenue: The money a business receives as payment for their products. Strategy: The formation and implementation of goals for a business to sell more products/services and laying out a plan on how to get to those goals Shareholders: People that are part owners of a business because they own shares. Innovation: Creating a new product or service that is improved over other products or services. Entrepreneurship: Willingness to start and venture into a business (taking a risk) in hopes of making a profit. Franchise - A business that licensed itself to another person in turn for a fee. Incorporation - Legal separation between the business and owner. The business is a distinct legal entity. Wealth - Have an abundance of possession of money, materials possessions, large diverse portfolio etc. Quality Of Life - The degree of someone being happy, comfortable and able to participate in life events.

List the reasons why someone might start up a business. They see a need for a new product or service They want to improve on something existing in the world They have passion and are motivated to make something new They are sick of an average “9 - 5” job and want to work for themselves

Identify the personal implications of a small business failing? Lack of funding Unsuccessful business plan or marketing initiatives Lack of demand of the products or services they provide

Using the above information summarise the paragraph into dot points. Business creates wealth by: Investing money into the economy by paying taxes to governments, buying machinery, raw materials etc Increases individuals wealth by providing wages and salaries through employment Producing goods and services to consumers in order to make a profit which goes back into the economy through the things listed above (business expenses) Using the digital text resource summarise in 4 points outlining role of business in improving the quality of life. Businesses employ individuals which may create a sense of “purpose” or fulfill for people Business provide people with wage or salaries from employment which increases individuals wealth Through wage/salary provides individuals to find life events e.g trips overseas, holidays, new products etc which may increase someone's happiness Provide comfort and stability to someone's life

Primary Sector The primary sector produces goods using natural resources - Extracted from the ground - Grown - Collected Fishing, hunting, oil drilling, stone quarry

Secondary Sector ● Capital goods used to make other goods or service - e.g making screws for other companies desk ● Consumer goods ● Utilities and construction

Tertiary Sector - BIGGEST SECTOR IN AUSTRALIA - 77% 8/10 JOBS - The tertiary sector provides services - to other businesses or directly to consumers - All shops and banks are tertiary sector E.G. Insurance, retail, hairdressing, banking

Quaternary Industry - Includes service - involves the transfer and processing of information and knowledge. E.G: Telecommunication , Education, Property, Financial advice, Tourism etc

Quinary Industry - Services that are traditionally done at home E.G: Bakers, Cleaners, Gardening, Child Minding

Example Table:

Primary From the Land

Secondary Manufacturing

Tertiary Service

Quentary Information

Quinary Domestic

Tailong Orchards

Bowral Bricks

Data Transfer computing

S & W Legan Center

Clancy’s Restaurant

Commonwealth Bank

Crookwell Real Estate Agent

Pollards Removals

Moo Moo Dairy Bald Hill Quarry

Finlays FIne Furniture Pioneer Water Tanks

Tanks Towing Central Town Motel

Creative Arts School

Tiggles Wiggles Daycare

PRIVATE COMPANIES -

Incorporation - Legal separation between the business and owner. The business is a distinct legal entity.

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Business are owner is legally separate - limited liability

PUBLIC COMPANIES Incorporation - Legal separation between the business and owner. The business is a distinct legal entity.

EXTERNAL INFLUENCES: A factor that the business has no control over such as: - Economic - Finical - Geographic - Social trends - Legal - Political - Institutional - Technological - Competitive situation - Markets

INTERNAL INFLUENCES: A factor that the business has control over such as: - Products they offer - Location of stores, headquarters etc - Resources - Management - Business culture - Stakeholders

INTERNAL STAKEHOLDERS: Internal stakeholders are entities within a business (e.g., employees, managers, the board of directors, investors). External stakeholders are entities not within a business itself but who care about or are affected by its performance (e.g., consumers, regulators, investors, suppliers).

⅓ business fail within the first year of establishment.

TEST 16/3/21

Classification of business, size, legal, geographical, industry Define corporation, A corporation is a legal entity that is separate and distinct from its owners Role of business in society

External business environment

LARGE BUSINESS: Understand Merges, takeovers, how they can grow: MERGES: Business A joins business B - business AB -

Like a joining (marriage) of business

TAKEOVER: Where business A buys out controlling interest in business B -

Now just bigger business A Buy all shares you have large control in business

BACKWARD INTEGRATION: Buy out things that suppliers buy them - They provide for themselves FORWARD INTEGRATION: They integrate the next step, they buying into processing or manufacturing - Milk farm buying milk processing plant -Integration is useful as you rely on your own business, not buying off others - Control all aspects, tighter schedules etc

BUSINESS CESSATION:

INVOLUNTARY CESSATION: Business closes involuntary, courts or creditors force you to closer -

Insolvency Bankruptcy (court declares) - someone that has money owed from you takes you to court Receivership or liquidation - (court declares) - person is put in charge of business and see if they can get you out of problems or sell all asset and pay debts

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VOLUNTARY CESSATION: Business closes voluntary -

Business closed by death Retirement Loss of interest/drive

1. Define Business decline, cessation, voluntary cessation, involuntary cessation, insolvency, bankruptcy, liquidation Business decline: Business decline is the decline of profit over a period of time. Business can fail at any time, due to internal factors such as failed products, poor management or external factors such as change of social trends, political issues etc. Cessation: Voluntary cessation: A decision to cease a business (either incorporated or unincorporated) at the initiation of the business owner when the business is solvent and can pay its debts as and then they fall due for payment. Involuntary cessation: termination of the business, either incorporated or unincorporated, by the actions on unpaid creditors of the business.

Insolvency: When a business that is unable to pay its debts as and when they fall due

Bankruptcy: When the court ordered process which occurs when an individuals cannot pay their debts. An individual can make voluntary application to the court to be declared bankrupt, or an individual owed money by the person may apply to the court to make them bankrupt. This is relevant in business studies in the context of debts owed by failed businesses which are unincorporated which includes sole traders and partnerships. Liquidation: The process of selling the assets and paying amounts owed by a company.

Receivership: The process where a secured creditor applies to the court to appoint a receiver in relation to property over which they have a security interest when the business does not pay the loan which is secured by the security interest.

2. Provide two reasons why voluntary cessation may occur -

3. Provide two reasons why involuntary cessation may occur 4. Describe the effects on creditors when a business goes into involuntary cessation 5. Outline the process of Liquidation in finalising the cessation of a business.

BUSINESS PLAN:

Business Plan: - Goals/Objectives and Strategies For what? - Success - Motivation - Direction - To obtain finance - Selling shares/partners Component: Executive Summary - Vision/Mission Statement - Situational analysis - SWOT / Market Analysis CREATE GOALS Strategies - Operational plan - Market Plan - Finance Plan - HR plan Implement - Monitor & Evaluate & Adjust plan

BUSINESS GOALS: Financial Goals - Profitability - Manage cash flow - Reduce debt levels on loans - Source Equity Finance with new shareholders

Operation Goals: - Reduce wastage - reduce cost - Input costs reduced - Improve premises - New technology / Machinery - Quality

Marketing: - Product goals e.g new products - innovation - Price -

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Promotion - Customers knowledge about business Placement - Where products/services are available

Human Resources: - Employer - Training - Retention

Specific Measurable Achievable Realistic Timed

Total Revenue - Price x Quanitity

Product Line:

Profit: Difference between total revenue and total costs

Evaluate external environment Management: Achievement of business goals through and with people

Classical Approach: - Mass production

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4 business parts Operations: - Provisions of G & S to consumers - To earn sales and revenue to make a profit - Inputs --- processes ---- outputs

Finance: - Collecting, organising, processing, interpreting, fincanbicla, informagton - Organisation of finance: - Debt / Equity Marketing: Marketing Mix (4 P’s) - Product - Price - Promotion - Placement Human Resources: - Ensuring have the best people for the job - mantiam those staff meber wellbeing, pay them, take care Acquisition - Acquiring human resources

Industrial Relations - Key Terms

IR - Relationship between employees & employees. How they solve issues before them. Employee shortages - eg high skill levl jobs...