4.

COMPANY

Entrepreneur: someone who takes initiative and starts a business, must be motivated and should
believe in what he/she does, must have good interpersonal skills

Setting up a business:

- careful preparation
- planning
- taking risks (financial investment)
- considering your skills and abilities
- products, services to sell
- competition
- legal structure of business
- financing of business
- business plan (summary of goals for 1-2-3 years, describes how goals will be achieved)
 executive summary/management summary (contains purpose, analysis and conclusion)
 industry profile (provides a detailed overview of the business and its environment,
trends, players, sales, market analysis, contrasts competitors)
 marketing plan (marketing strategy, sales and distibution plan, pricing plan, advertising
activities)
 operational plan (physical (production, process, information and technology) and
personal requirements of the business, facilities, equipment)
 financial plan (balance sheet, income statement, cashflow statement):
 balance sheet: assets, liabilities, shareholders’ equity at a given date (what the
company owns and owes, what is invested)
assets = cash, inventory, properties, facilities, equipment
liabilities = pending payments, long-term debts, interest payments, taxes
equity = capital investments, profits, retained earnings
 income statement (profit and loss statement): shows a company’s financial
performance through operating and non-operating activities over a specific period,
shows net profit or loss
operating activities = sale of goods and services
non-operating activities = not directly related to the core activities of the
business
 cashflow statement: shows the movement of cash into and out of a company over a
specific accounting period, operating activities, investing actitives (sale or purchase
of assets) and financing activities (sale of common stock)
 break-even analysis: determines the break-even point that is the level of sales at
which profit is zero, the point where the revenue from sales equals the amount of
total cost
 risk analysis: identifies factors that may pose a threat or prevent the success of the
business, helps find the ways to reduce the occurence of such factors and how to deal
with them
 SWOT analysis: useful tool for examining the environment of the business
  contingency plan: emergency plan for exceptional risk which is unlikely to happen
e.g. natural disasters, accidents
 appendix: analyses, surveys, contacts, legal documents, photos etc.

Setting up a company in the UK:

- Memorandum of Association (certificate issued by the Registrar of Companies as

confirmation of the incorporation and existence of the company) and Articles of Association
(name and legal form of the company, address of office, objects, authorised share capital,
running of the company, the issuing and transferability of shares, shareholders’ rights and
liabilities, dividend policy, directors meeting, appointment of decisions)
- these are sent to a Registrar of Companies or Companies House, filled  certificate of
registration is given out which allows the company to start its operation