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Business Management - Coggle Diagram
Business Management
Reasons for starting a business
the wish to be independent
being unhappy working for an employer
The challenge of creating a successful business
the freedom to choose working hours
new market opportunities
the opportunity to make a lot more money than they could earn as an employee
Business management skills
willingness to work hard and learn from mistakes
positive outlook and an enthusiastic approach to the business
managerial skills
'people skills' to deal with customers
Structures of a business
Types of small business operations
Trading firms: sell goods, wholesale, retail
Service firms: providing services to individuals and other businesses
Manufacturing firms: physical production of goods
Many firms are a combination of two or more of these classifications
Forms of business ownership
Sole proprietorships: businesses owned by a single person
advantages: easy to set up, minimal legal requirements; business profits aren't shared; owner has complete control
disadvantages: limited starting capital; limited borrowing opportunities; limited skills; heavy workload; minimal holidays; losses suffered by one person; unlimited liabilities
Partnerships: businesses co-owned by several (2-20) individuals who share a common profit motive
advantages: easy to set up; capital contributions can be combined; skills can be combined; workloads can be shared; decision making is shared; tax benefits; losses are shared
disadvantages: profits are shared; disagreements; unlimited liability; limited life; limited capital and borrowing ability
Companies: when a business is incorporated (a legal entity is created separate from owners)- 2-50 shareholders- Pty. Ltd.
advantages: limited liability (protected from debt after payment of shares); increased access to capital; specialised skills; legally exists; ownership is transferable
disadvantages: loss of personal input into decision making, potentially thousands of shareholders, loss of personal touch
Sourcing of finance
debt finance: external lender
e.g., financial institutions, retailers, suppliers, finance companies, factor companies, family or friends
equity finance: internal sourcing
e.g., self funding, family or friends, private investors, venture capitalists, stock market, government, crowdfunding