P2
Write your answer on the worksheet – question one. Starter Activity You have three minutes to decide on a new business idea… Some ideas… New shoe shop Clothing shop Hair dressers Beauty salon Write your answer on the worksheet – question one.
Lesson Objectives By the end of this lesson you should be able to: Describe the laws and regulations affecting businesses (P2) Analyse the impact of these laws and regulations (M2) Evaluate why it’s important each issue is considered (D2)
Legal Status? Sole trader Partnership Private limited company (Ltd)
Sole Trader You own the business on your own and have a few other people working for you Advantage is you have the freedom to do what you want to do Disadvantage is you may not have all of the skills/knowledge to run the business successfully Also, unlimited liability – if the business fails the owners can lose their personal belongings e.g. house, car etc. to pay for the debt.
Partnership You own the business with one other person and have other people working for you Advantage is you can share the problem solving Disadvantage is there may be arguments when making business decisions Also has unlimited liability – but this time the debts are spread evenly amongst the owners
Private Limited Company (Ltd) You own the business either alone or with other individuals Advantage: limited liability, which means that if the business fails your personal possessions can not be taken to pay the debt Disadvantage is there is more paperwork and laws that need to be completed and considered.
Activity Decide which legal status would be most suitable for your business. Complete question two and three on your worksheet. You have three minutes to complete this!
Licences… Licences are needed to sell certain goods such as alcohol or to restrict parking. These are obtained from local authorities. Do you require any licences? Answer question four on your worksheet.
Acts Health and Safety at Work Act National Minimum Wage Act Data Protection Act Sales of Goods Act Supply of Goods and Services Act Disability Discrimination Act Copyright Act Sunday Trading Act Pick at least three Acts that would apply to your business and answer question 5.
Marketing Reaching and retaining customers Customer care Marketing information Market research Analysing and meeting customer needs (unique selling point) Competition Building customer relationships Cost and price of products or services
Business Preparation
Environmental Issues Environmental Protection Act – makes sure businesses limit the impact on the environment
Financial Issues How are you going to raise money? Own savings Partnership: where two or more people own the business Bank overdrafts Bank loans Grants from the Government
Costs How are you going to control your expenses? Cash flow forecast is a plan of the money going in and out of your business Keep financial records
Measuring financial success Cash flow Costs and income Profit Assets Financial sate of the business
Risk Losing money Security of income Other financial changes e.g. the bank taking the overdraft away