Unit 1 Exam Jan 2011 Learning exam technique. Edexcel Unit 1 Marks: ____ Time: ____ No of supported multi-choice Qs: _____ When reading the text, identify:

Unit 1 Exam Jan 2011

Learning exam technique

Edexcel Unit 1

Marks: ____ Time: ____ No of supported multi-choice Qs:

_____ When reading the text, identify: 2 distinctive features of the

Business 2 distinctive features of the People 2 distinctive features of the Start-

Up

Section B, summary of text

A Community Learning Centre (CLC) wants to open a ‘Leisure Library’ offering sports equipment for hire to local groups

Primary market research has been used to assess demand and identify the most necessary types of equipment

Launch funding is from a grant; regular operations must be funded by charges

Section B, what’s distinctive?

It’s a business plan based on a social objective; the only financial objective is (probably) to break even

Although no profit motive, it seems professional, e.g. ‘robust procedure to control lending & recovery of equipment’

There’s a contingency plan in case demand proves disappointing

10. Why may the primary research (Evidence B) be inadequate? (4)

Primary research asks potential users specific questions relating to the needs of a specific business/organisation (1 mark)

Here, the research question asked ‘what’s lacking?’ but didn’t ask whether people would pay to hire equipment – so effective demand is uncertain (2 marks)

The sample might be biased (schools?)

13. Assess the likely implications for a private sector leisure business of changes in any two economic influences. (12)

NB they are marked as 6 x 2; one third of the marks are for evaluation (‘balance’)

Rising unemployment could have quite an impact on demand; in some towns, a large factory or business closure might have a huge effect on non-necessity spending; so a locally-based independent leisure business might be hit hard (or, in a posh area, might be affected minimally)

Quick Question – be quick

Cardel Ltd sells 50 units a day. Price is £80 and variable costs are £20 per unit. Fixed costs are £1,200 per day A) Calculate current daily profit B) Calculate the daily break-even point C) Calculate the daily margin of safety D) Calculate the new profit if sales

volume doubles

Evaluating a Business Plan

Ian Marcouse, 2010

The keys to start-up success

Full understanding of ‘the market’ … …i.e. consumers, competitors and

retailers (who buys, who competes & who sells)

A clear idea of where the business or product fits into the market (the gap – perhaps new, or perhaps replacement)

A real commitment to providing customers with what they really want.

Personal qualities required

Confidence without arrogance Hard-working – see Scoop (B Rev

Nov 08) Resilient (things will go wrong; are

you strong enough to cope?) Understands risk should be

calculated, not shied away from Can show initiative and creativity

Being prepared financially

Has saved enough to provide the bulk of the funding (most start with no external finance)

Knows the need for funds to finance the early, loss-making months

Is willing to make short-term sacrifices

Always keeps the cash balances high enough to cope with crisis

Having (or finding) a Plan B

i.e. willing to rethink the business plan when needed (e.g. in winter 2008/9)

The estate agent switches from sales to managing rented property … or the new café switches from £2 lattes to £1 white coffees

If you understand the market, you’ll understand how and why it’s changing

What’s in a good business plan?

A convincing case for the product’s distinctiveness and how it can be protected

Consistent logic backed by figures; see how the Dragons demand ‘Yr 3 projections’

Contingency plans and budgets, i.e. a numerical look at What if? possibilities. What if sales are 20% below target? Or what if our planned high prices wont stick?

Part of GF Ltd. business plan

Cumulative cash flow - first 13 weeks of start-up

-£60,000

-£50,000

-£40,000

-£30,000

-£20,000

-£10,000

£0

1 2 3 4 5 6 7 8 9 10 11 12 13

Weeks

Part of GF Ltd. business planCumulative cash flow - first 13 weeks of start-up

-£100,000

-£80,000

-£60,000

-£40,000

-£20,000

£0

1 2 3 4 5 6 7 8 9 10 11 12 13

Weeks

£65,000 of long-

term finance

£30,000 of agreed overdraft

facility

What’s in a good business plan?

The people: their passion, their planning and their commitment

The ‘exit strategy’ for the investor The practical detail on how the great

idea is to be turned into a consistently good customer experience

Understanding of now.

What’s in a bad plan?

Nothing convincing about what makes this business/product stand out

Lots of figures with too little justification

Based on a fad, not a trend Overly dependent on the

entrepreneur’s dreams rather than passions

Good(ish) idea but bad timing

Economy 2010 for Unit 1

Economic context for start-up

Key 2010 Economic Topics

Starting a business when in recession Which business might be suitable?

(99p stores; seaside camping/caravan site etc)

Which opportunities arise? High Street locations become available; business closures may open new opportunities

2010 start-up is different: bank finance harder than ever; be willing to start poor

Key 2010 Economic Topics (2)

The £ has been weak for more than a year; many predict it’ll get weaker; so it’s a good time to start a manufacturing business; or a retail business selling UK goods overseas

The expectation is for several years of tough ‘public’ (govt) spending; perhaps govt may switch to smaller suppliers

Questions – True or False?

1. A fall in the £ makes UK imports cheaper

2. A rise in interest rates makes people keen to spend more in the shops

3. A rise in inflation makes people better off

4. A rise in the £ makes UK exports more expensive

5. Rising unemployment leads to lower govt revenue and higher government spending

Unit 1 Exam - Evaluation

Mastering a key exam technique

What is good evaluation?

Judgements rooted in own argument

… … and in answering the question set Clear sense of what is important and

what is less so; well weighted conclusions

Based upon the case, not on prepared cliches, stock phrases or kneejerk Crunch

Show your judgement After a 300% rise in the world oil price in the past 5

years, Kamal decided it was time to launch his ‘Fuelite’TM product. One Fuelite capsule dropped into a car fuel tank could cut fuel consumption by up to 15%. For a price of £49.99, the average UK driver would save £20 a month. The capsule would keep working for 5 years – well beyond the average ownership timespan for a car.

Launching the product would cost £500,000, but the world market of 1,000 million drivers made the market potential as high as £49,990 million – enough to buy out Richard Branson many times over! If you had the money, would you invest in Kamal’s business?