NATURAL RESOURCES
Definition:
Items used by the business that come from the natural environment. These include land, water, raw materials etc.
NATURAL RESOURCES
Factors to consider when planning:
- Are their products environmentally friendly, and how can they minimise the negative effect of their
products on the environment? - How can they reduce wastage and environmental damage during the production process?
- Are the raw materials that they plan to use in production sustainable, accessible and reasonably priced?
- Are the shops, offices and/or factories of the business designed in a sustainable way that minimises
energy usage? - Where will they source their natural resources from?
LABOUR RESOURCES
Definition:
The people that provide their skills, effort and knowledge
to the business e.g. employees
LABOUR RESOURCES
Factors to consider when planning:
- How many workers will be needed and what kind of skills will they need?
- How will the business attract and retain these workers?
- What kind of training should the business offer to its workers to help them grow and benefit the business?
- How will the business provide fair pay and healthy working conditions for its employees?
- What are the legal responsibilities of the business towards its employees?
- How will the business resolve any disputes that arise with employees?
CAPITAL RESOURCES
Definition:
The tools and machinery that are used to produce goods or perform services.
CAPITAL RESOURCES
Factors to consider when planning:
- What kind of tools and machinery will be needed?
- How will the business repair, maintain and replace their capital equipment when needed?
- Do they have the right workers with the right skills to operate the machinery they need?
TYPE OF LOCATION - SHOPPING CENTRES
Definition:
Advantages:
Disadvantages:
D: Includes small suburban shopping centres or large regional shopping centres, such as Chadstone or Doncaster.
A: Proximity to customers, Weather does not impact business
D: Rent eats up profit of business, Visibility: may get lost amongst other businesses in the area
TYPE OF LOCATION - HOME-BASED
Definition:
Advantages:
Disadvantages:
D: Can include service providers, such as hairdresser with a salon in the garage of their home.
A: Cost, Have a choice in customers
D: No foot traffic, Parking depending on where you live
TYPE OF LOCATION - RETAIL SHOPPING STRIP
Definition:
Advantages:
Disadvantages:
D: Developed around major roads and transport links, generally including conveniences such as the local milk bar.
A: Unique businesses,Around major roads: foot traffic
D: Parking may be limited, Locals are the main customer: doesn’t really attract new people
TYPE OF LOCATION - ONLINE PRESENCE
Definition:
Advantages:
Disadvantages:
D: Removes limitations around physical location and can include having an eBay shop front.
A: Attracts customers Australian wide or possibly international, Removes limitations on physical location
D: Not as reliable as website could crash, Spend more on deliveries
SOURCES OF FINANCE
Equity:
The funds contributed by the owner(s) of a business to start and build the business.
SOURCES OF FINANCE
External:
Most external sources of finance are in the form of dept, which refers to the funds provided by banks, other financial institutions, government and suppliers.
SOURCES OF FINANCE
EXTERNAL > DEPT > LONG TERM
Mortgage:
A loan on a property, secured by the property at the borrower (the business)
SOURCES OF FINANCE
EXTERNAL > DEPT > LONG TERM
Leasing:
A way of financing the purchase of assets without a large initial capital outlay.
- Don’t need the total amount of money up front
- Decrease your profit
- Usually cannot be cancelled without an exit fee
- Pay interest, other than trade credits
SOURCES OF FINANCE
EXTERNAL > DEPT > SHORT TERM
Bank Overdraft:
When a bank allows a business or individual to overdraw their account up to an agreed limit for a specified time to help overcome a temporary cash shortfall. E.g. Ice Cream shop thriving over Summer but struggling over Winter
SOURCES OF FINANCE
EXTERNAL > DEPT > SHORT TERM
Trade Credit:
When a supplier provides products to a business with an agreement to charge for the goods and services later.
- No interest
ESTABLISHING A NEW BUSINESS
What are the benefits?
- The owner has freedom to set up the business exactly how as they wish
- The owner can determine the pace of growth and change
- There is no goodwill for which the owner has to pay
- If funds are limited, it is possible to begin on a smaller scale
ESTABLISHING A NEW BUSINESS
What are the costs?
- There is a high risk and difficulty to obtain finance
- Time is needed to develop a customer base, employ staff and develop lines of credit from suppliers
- If the start up period is slow, then profits may not be generated for some time
PURCHASING AN EXISTING BUSINESS
What are the benefits?
- Sales will be to existing customers
- A good business history increases the likelihood of business success
- A proven track record makes it easier to obtain finance
- Stock has already been acquired
- The seller may offer advice and training
- Equipment acquired
- Current employees experienced
LEGAL STRUCTURES
Unincorporated:
- Sole traders
- Partnerships
Unlimited liability means the owner may have to sell assets to pay for the losses of the business
LEGAL STRUCTURES
Incorporated:
- Private companies
- Public companies
As a seperate legal entity with limited liability, the owner’s assets are protected from the losses of the business
LEGAL STRUCTURES
Private limited company:
- Most common type of structure in Australia
- At least one shareholder
- Maximum of 50 non-employee shareholders
- At least one director
LEGAL STRUCTURES
Public listed company:
- Minimum of one shareholder with no maximum number
- No restrictions on the transfer of shares
A requirement to issue a prospectus when selling its shares for the first time - Minimum requirement of 3 directors (whom 2 live in Australia)
- The word Limited or Ltd in its name
FACTORS AFFECTING CHOICE OF BUSINESS STRUCTURE
What are they?
Some key factors:
- Does the owner need the extra legal security offered by limited liability?
- Will the business need public finance, as is possible with a public company?
- Will the owners be willing to relinquish control of the company to unknown investors by going public?
- Is it worth the extra costs associated with establishing a company and preparing separate yearly tax returns?
