Business Start-up - Business Revision Notes

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Contents

Business Startup 4

Production Options 4

Job Production 4

Batch Production 4

Mass Production 4

Finance Options available for Business Startups 5

Business Plan 6

Business Startup

Production Options

Job Production

  • This involves making one off products to suit the needs of each individual customer.
  • It uses highly skilled workers.
  • It uses machines that can do many different jobs and are flexible.
  • Products tend to be expensive.
  • Example: a tailor making a bespoke suit for a customer.

Batch Production

  • Involves making a large amount of products that are the same in one go.
  • Products are made in advance, they are ready for the customer when they come looking for it.
  • It uses workers that are not as highly skilled.
  • Uses flexible machines capable of doing different tasks.
  • Products are cheaper than those made by job production. This is of a result of economies of scale.
  • Example: a baker baking a batch of cakes.

Mass Production

  • This involves making a product continuously, sometimes through the night.
  • This form of production is only suitable for products that are in continuous demand,
  • The product will probably need to be replaced at intervals by the customer.
  • The product is the exact same for all customers.
  • Mainly uses machinery that are not adaptable and does not require skilled workers.
  • Products that are mass produced are the cheapest.
  • Example: toilet paper.

Finance Options available for Business Startups

COST

RISK

SECURITY

CONTROL

ACCRUED EXPENSES

This is a free option- no interest is charged.

Damage to credit rating.

None- assets are not at risk.

Full control- no shares are given away.

BANK OVERDRAFT

There are high interest rates.

Damage to credit rating- bank can ask for full repayment at any time.

Often, yes

Full Control

TRADE CREDIT

Free- usually interest only charged if repayments are not in time.

Damage to credit rating- will be difficult to buy goods on credit in the future.

None

Full Control

HIRE PURCHASE

Expensive- high int...

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