Talking rubbish Who sells both a certain type of fish and the base of shoes What do you get when you take half a dance partner and add half a premiership Source of happiness is in a Parisians country ID: 711414
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1.1.5 Options for starting up a business
Talking rubbish!
Who sells both a certain type of fish and the base of shoes?What do you get when you take half a dance partner and add half a premiership?Source of happiness is in a Parisian’s country?
1.1.5 What options exist for starting up a businessSlide2
What do all these have in common?
1.1.5 Options for starting up a businessSlide3
Franchising for small business start-ups
A franchise is when one business
(the franchisor) gives another person or business (the franchisee) the right to trade using its name and to sell its products or provide its servicesThe franchisee normally pays a licence fee and a percentage of profit to the franchisor1.1.5 Options for starting up a business
Why might an entrepreneur choose to set up a franchise rather than an independent business?
Scroll down to watch the Maid2Clean video
If you were to set up a cleaning business would you choose a franchise such as Maid2Clean or your own independent cleaning business?Slide4
Franchising for a small start-up business
MeritsLower risk option
Already establishedRecognised brandHelp and supportNational advertising and promotionTried and testedDisadvantagesSet up and running costs can be highShare profitReliant on othersLess independence in decision making
1.1.5 Options for starting up a businessSlide5
Franchises
1.1.5 Options for starting up a business
Use the video link to visit the franchise direct website, select up to 3 franchises you think you may be interested in and watch the video
Team Task
Select one of the franchise opportunities from the ones viewed above and prepare a short presentation to explain why, if you were to open a franchise, you would choose this one.
Present your choice and reasons to the rest of the class.
As a class what were the common features of the franchises chosen?
What were the common reasons given to justify the choices made?Slide6
Other business start-up options
Sole trader
PartnershipPrivate limited company (ltd)We will look at sole trader and private limited company in more detail in 1.4.31.1.5 Options for starting up a businessSlide7
1.1.5 Options for starting up a business
Partnerships
A partnership is where two or more people run the businessEach partner is equally responsible for debts incurred.Each partner will take a share of the profitsEach partner usually shares in the decision making. ‘Sleeping’ partners invest in, but do not run, the business.
Partnerships have unlimited liability – can you define this term?Slide8
1.1.5 Options for starting up a business
Great Partnerships
Can you name the partner?Bonnie and Romeo and Laurel and
Napoleon and
French and
Holmes and
Morecambe and
What makes a good partnership?
What qualities would you look for in a business partner?Slide9
1.1.5 Options for starting up a business
Partnerships
Benefits and disadvantages of being a partnershipBenefitsRisks and responsibilities are shared
More specialist skills
Simple and flexible
Competitors can’t see your accounts
Easier to raise finance than a sole trader
Drawbacks
Unlimited liability
Arguments can occur between partners
If a partner dies, resigns or goes bankrupt the partnership is dissolved
Trust becomes a significant element between partners
Partners draw up a legal document explaining how their partnership will work, this is called a ‘deed of partnership’.Slide10
Choosing the appropriate option
1.1.5 Options for starting up a business
Sarah has arranged to meet with a small business adviser at her local business link. She has decided to take advice on the most appropriate option for a start-up business.
Question time
1. The business adviser suggests that the most appropriate
option
for Sarah would be a
Franchise.
To what extent do you agree? Justify your answer.
Over to you! Time to show off what you have learnt.Slide11
Number Ciphers - Start-up options
A=1, B=2, C=3 etc. You have two minutes to work out the following terms:
12 9 13 9 20 5 4 12 9 1 2 9 12 9 20 2516 1 18 20 14 5 18 19 8 9 1619 15 12 5 20 18 1 4 5 186 18 1 14 3 8 9 19 5 19 8 1 18 5 8 15 12 4 5 18
End
1.1.5 Options for starting up a businessSlide12
Say what you see
1.1.5 Options for starting up a businessSlide13
2 Minute Test
State 2 reasons why businesses exist
State 2 sources of business ideasState two reasons for starting a businessState two advantages and two disadvantages of a franchise
End
1.1.5 Options for starting up a businessSlide14
1.1.5 Options for starting up a business
Do football club nicknames tell us anything about what the area is famous for?
Match each club to its nickname and state the reason ClubNickname
Reason?
Northampton Town
The Blades
West Ham United
The Tractor Boys
Sheffield United
Potters
Everton
The Cobblers
Stoke City
The Minster Men
Ipswich Town
The Hammers
York City
Toffees
How to identify a suitable start-up locationSlide15
1.1.5 Options for starting up a business
Factors influencing start-up location decisions
In this section you need to understand the factors influencing where a business is located. The location factors should include:
Transport
Labour
Competition/other businesses
Technology
Proximity to the market
CostsSlide16
1.1.5 Options for starting up a business
Factors influencing start-up location decisions
Transport The local infrastructure will include transport links such as roads, railways and airports.
Start-up businesses will need access to good transport links in order to provide their good or service. If customers find it difficult to access a firm they will go elsewhere.
The significance of transport will depend on the nature of the business. Businesses that do not rely on face to face contact might be able to set up anywhere, even a remote location. On the other hand, a retailer needs access to customers in order to succeed.
Where would you locate?
You are a small business importing cheese and wine from France
You are a warehouse supplying retailers across the UK
You are an internet retailer selling computer partsSlide17
1.1.5 Options for starting up a business
Factors influencing start-up location decisions
Labour There needs to be an adequate supply of labour.
The local labour force must have the appropriate skills e.g. finance in London and Leeds.
The needs of the start-up will depend upon the nature of the product – the more specialised and skilled the product, the harder the task of recruiting a qualified workforce.
Slide18
1.1.5 Options for starting up a business
Factors influencing start-up location decisions
Competition/other businesses A lack of competition in an area provides an incentive for a start-up business – is there a gap in the market?
Other businesses can provide a support mechanism - banks, recruitment agencies and IT services
Where do you live?
Is there a gap in the market for a business or a product?
Is there the need for:
nursery care, a nightclub, games shop, an Italian restaurant?
What business can you think of? Why?Slide19
1.1.5 Options for starting up a business
Factors influencing start-up location decisions
Competition/other businessesWould you choose to locate close to your competitors or far away?
In each of the following circumstances choose near or far and justify your choice.
Business
Near or far?
Justification
A car showroom
A convenience store
A shoe shop
A
travel
agent
A taxi rank
An Indian restaurant
A seaside B&B
What are the advantages and disadvantages of choosing a location famous for a particular product or service?Slide20
1.1.5 Options for starting up a business
Factors influencing start-up location decisions
Technology Technology includes forms of communication and information provision through such mediums as the personal computer, the Internet, fax and mobile phones.
New technology allows the start-up business to communicate with customers, gathering, processing and sending information through, for example, the Internet
Can you unscramble these advances due to new technology?
LAKE RAVING TRIM
A INTERLOCKING SOW
REALIGN TIE
RESENTING THIN POPSlide21
1.1.5 Options for starting up a business
Factors influencing start-up location decisions
Proximity to the market The significance of the market to a firm’s location decision will depend upon the nature of the business.
Many service sector businesses must be in an area where there is a large footfall. Restaurants, salons and newsagents need to be in areas where the customers are. These are often town centres.
If the start-up business is a supplier to a larger firm it will wish to be as close to that business as possible.
Team Time
In teams either draw or print off a map of
your closest village, town or city centre.
Locate on your map where you would
locate the following new businesses:
a Chinese restaurant and take away a card and gifts shop
a hand car wash a newspaper stand
a cash and carry wholesalers a barber shop
Present and justify your decisions to the rest of the class.Slide22
1.1.5 Options for starting up a business
Factors influencing start-up location decisions
Costs A start-up business faces a number of costs:
Cost of premises
. Most start-up businesses will remain in the geographical area in which they live
Town centres are more expensive than out of town areas. For this reason, many firms will choose to locate away from the town centre or even at home
Labour costs
. Often, a firm might employ young people on minimum wages to try to keep these costs down. However, specialist jobs might be more expensive e.g. an accountant or lawyer
Costs of premises and labour will vary regionally
Sometimes high costs force an industry to relocate abroad.
Should the Government give tax breaks to UK animators?Slide23
Cost of locations?
Monopoly – is it just a board game or a lesson in business?Why does Old Kent Road cost less than Mayfair?Can you put these colours from a monopoly board in order from cheapest to most expensive?
1.1.5 Options for starting up a business
What factors influence the cost of different locations?Slide24
Choosing the location
1.1.5 Options for starting up a business
Sam and Peter have worked for a firm of local estate agents since leaving college three years ago. Frustrated by doing all the hard work and seeing relatively low salaries they have decided to leave the comfort of paid employment and go it alone. They are setting up a new estate agents, “Key Moves”, as a partnership. Sam is keen to find vacant premises on the local high street but Peter suggests they could work from home operating an internet based agency.
Question Time
What is meant by the term ‘partnership’?
Explain two factors that Sam and Peter should consider when choosing a location.
Explain one advantage and one disadvantage of operating as an internet based agency. Slide25
30 Second Test
End
List 6 factors that influence location decisions
1.
2.
3.
4.
5.
6.
1.1.5 Options for starting up a businessSlide26
MULTIPLE CHOICE
1.1.5 Options for starting up a business
1. Which type of organisation gives an individual the right to trade using its name
□
A
Sole trader
□
B
Partnership
□
C
Private limited company
□
D
Franchise
2.
Which
two
of the following are important in spotting a business opportunity
□
A
Improving cash flow
□
B
Analysing customer habits
□
C
Producing the right product
□
D
Finding a gap in the market
□
E
Locating in the city centre