Putting a business idea into practice is a fun topic which we have covered in the lessons below. Watch each lesson and take the tests to get yourself ready for the exam.
1.3.1 Business aims and objectives
What business aims and business objectives are.
Business aims and objectives when starting up:
● financial aims and objectives: survival, profit, sales, market share, financial security
● non-financial aims and objectives: social objectives, personal satisfaction, challenge, independence and control.
Why aims and objectives differ between businesses.
1.3.2 Business revenues, costs and profits
The concept and calculation of:
● revenue
● fixed and variable costs
● total costs
● profit and loss
● interest
● break even level of output
● margin of safety.
Interpretation of break even diagrams:
● the impact of changes in revenue and costs
● break even level of output
● margin of safety
● profit and loss.
1.3.3 Cash and cash-flow
The importance of cash to a business:
● to pay suppliers, overheads and employees
● to prevent business failure (insolvency)
● the difference between cash and profit.
Calculation and interpretation of cash-flow forecasts:
● cash inflows
● cash outflows
● net cash flow
● opening and closing balances.
1.3.4 Sources of business finance
Sources of finance for a start-up or established small business:
● short-term sources: overdraft and trade credit
● long-term sources: personal savings, venture capital, share capital, loans, retained profit and crowd funding.
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