Year 10 Business Monday 6th January 2014

Objectives To consider how we can put a business idea into practice whilst ensuring it is successful.

First off… Welcome back! Hopefully you all had a good Christmas and New Year – we’re now approaching the half way point of the year so need to make sure we are continuing to progress.

Today… Today we are going to be starting our next section – Putting A Business Idea Into Practice. As with our previous headings we will need to ensure that we cover ALL of the key points, and that we build up a good set of revision notes to help us prepare for our exam. Today’s heading – Getting It Right.

Idea through to Success… Simply put – a lot of new businesses fail. Why? Too little thought has gone into the setting up and planning process of the business. People think it would be nice to set up a little business but don’t actually have the acumen to make it succeed. Think about the number of businesses that come and go around Newquay – largely this is down to people thinking they know what customers want, but not actually fully considering their business idea regardless of whether it’s a good idea or not.

Process… REPEAT EVERY DAY OF EVERY WEEK OF EVERY YEAR. Think about setting up a Restaurant – someone would need to: Find a GOOD location. Negotiate an affordable rent. Design a restaurant and kitchen that is functional and that people want to visit. Get it built, equipped and decorated on time, and without too much cost. Appoint GOOD staff. Train staff and motivate them. Agree on menus that will appeal to chosen customer types. Set prices at a level people are willing to pay. Keep supplies at the correct quantity. Generate a nice atmosphere in the restaurant. Make sure customers are well looked after whilst in the restaurant. REPEAT EVERY DAY OF EVERY WEEK OF EVERY YEAR.

Therefore… In order to succeed there will need to be a clear plan put in place, enthusiastic leadership, effective organisation and a little bit of luck. To start with, there needs to be what we call a Sales Forecast. This will forecast how much the business is likely to make based on financial figures and customer numbers. So –if a clothes shop were to attract 400 customers on a Saturday, but only 50 were to purchase something spending an average of £20 a head, Saturday takings can be forecast as 50x£20 = £1,000. However – then you need to consider the Cost of Goods Sold, Wages, Overheads – all of which might total £900 leaving only £100 profit – not so good! Therefore – Sales Forecasts must be compared against Costs to ensure the business idea is going to work!

Financing the Start-Up In order to set up a business, it’s likely that the person setting up will need to raise some capital – this means approaching lenders of some sort. Most lenders will require the entrepreneur to put in 50% of the start up costs in order to prove they are serious about the business idea. Lenders also normally want security of some sort such as property or assets – these are then seized if the business fails to pay back its debt.

How? How can someone finance a business start up? Share Capital – selling % shares of the business to friends and family, or on the stock market if they get big enough. Overdraft – like a loan but on an account meaning you can spend beyond 0. Leasing – borrowing equipment or the like Medium Term Loans – as it says, a loan over a set period of time. Grants – these are given out to specific business types in specific areas and do not have to be paid back.

Therefore… There are lots of different areas to consider when setting up a business, and there is no set way to move forwards – each different business requires a different approach.

To finish… Lastly – to be finished for homework please – please turn to page 88 in your Text Books and read the section titled Practice Questions – Scoop Ice Cream – Start Up Success. Please answer questions 1, 2, 3 and 4 on page 89 – to be completed for homework and handed in at the end of the lesson on Wednesday.