What is the purpose of this task? To consider the factors involved in setting up and running a business What will you learn from this task? How to think.

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Presentation transcript:

What is the purpose of this task? To consider the factors involved in setting up and running a business What will you learn from this task? How to think about some key aspects involved in running a business You will need Internet access Business planning sheet Business planning answer sheet SWOT chart

Task: Research a business idea In groups of up to four, choose one of the following business types: – A garage – A market stall – Selling from the internet – A café Using the internet or local business directory, how many of this type of business can you find in your area. Limit your search to two minutes

Task: Factors to consider in running a business Using the business planning sheet and working in groups, fill in as many items as you can under each heading. Limit this to ten minutes Using the business planning answer sheet, compare your answers. Note there is no absolute right or wrong answer but there are many variables to consider

Task: SWOT Analysis Using what you learned in the previous exercise, and your chosen business again – think of the strengths, weaknesses, opportunities and threats that might be attached to setting up your business in your local area. Complete as much as you can in the SWOT chart Limit this to ten minutes

Task: Profit and Loss Profit is the amount of money you have left after a given time period (usually 12 months) once you have taken out everything you spent. If you spent more than you earned you have made a loss. A profit and loss account is a summary of your business transactions over time. By deducting your total expenditure from your total income, it shows on the 'bottom line' whether your business made a profit or loss at the end of that period Read the scenario on the next slide and try to answer the questions. When you have finished, compare your results to the answer sheet

Profit and Loss: Scenario Scenario: You decide to set up a sandwich shop in your local town centre. The location is busy, particularly at the weekends. In addition to shoppers there are some large office premises nearby and a bus station. You have enough money saved for the lease in Year 1 but you think the shop could do with some refurbishment so you decide to try and borrow £5000 from the bank to upgrade the decorations and buy a new coffee machine. Look at the account sheet overleaf and answer the following questions:

Profit and Loss: account sheet

Profit and Loss: Questions What are your total business related costs in Year 1? You also need £1250 a month to pay for your own living costs, add this in and what are your total costs now in Year 1? Have you made a profit or loss in Year 1? In year 2 you decide to employ a helper so your costs have gone up. Fortunately your sales have also gone up; your sales have reached the value of £115,000. What are your total business related costs in Year 2? What is your total expenditure in Year 2? What is your profit in Year 2 less tax? In year 2 you must pay corporation tax of 20% on all your profits – how much corporation tax do you owe (to the nearest pound)? In year 2 you must pay 20% in VAT on your whole turnover. How much VAT do you owe? How much do you pay in total taxes in Year 2? How much profit did you make in Year 2 after tax (to the nearest pound)?

Profit and Loss: answer sheet

Review What was easy or difficult about this task? Should you locate your business in an area where there are similar businesses or not? What are the advantages and disadvantages of working on your own (sole trader)? What are the advantages and disadvantages of running a mobile business vs. one with fixed premises?