Making the Business Effective

What Making the Business Effective covers

Making the Business Effective is examined in Paper 1, Investigating small business (Theme 1). It covers business ownership and limited liability, franchising as a start-up option, business location, the marketing mix and business plans.

The 5 subtopics

Each one has its own page.

• Business ownership and limited liabilityLimited and unlimited liability, separate legal identity, sole traders, partnerships and private limited companies with their advantages and disadvantages, and the role of Companies House.Open →
• Franchising as a start-up optionWhat a franchise is, the franchisor and the franchisee, fees and royalties, why a franchise is less risky but costly to start, and how the agreement protects the brand.Open →
• Business locationLocating near the market, labour, materials or competitors, how the nature of the business decides location, and how trading online changes the decision.Open →
• The marketing mixProduct, price, promotion and place, balancing the mix, how competition and changing needs alter it, and how e-commerce, digital communication and technology have changed each element.Open →
• Business plansWhat a business plan contains and why, from market research to forecasts, finance and location, how it reduces risk and wins loans, and its limitations.Open →

What you need to know

Answer each one before you reveal it.

Take Making the Business Effective further

The same content, four other ways.

Commonly confused

Pairs that lose marks when they are blurred together.

• Limited liability vs Unlimited liability

  Limited liability: a rule that owners can lose only the money they put into the firm. Unlimited liability: personal responsibility of owners for every debt the firm owes.

• Sole trader vs Partnership

  Sole trader: a business owned and run by one person. Partnership: a business owned by two or more people who share the profits.

• Franchisor vs Franchisee

  Franchisor: the firm that owns a brand and sells the right to use it. Franchisee: the person who buys the right to trade under a brand.

Questions from this topic

Each one with the model answer underneath.

1. 1

   What is unlimited liability?

   Model answer

   Unlimited liability means the owners are personally responsible for all the debts of the business. Owners may have to sell personal possessions, such as their house, to pay them.

2. 2

   What is limited liability?

   Model answer

   Limited liability means the owners can lose only the money they invested in the business. Personal possessions are protected if the business fails.

3. 3

   Why does limited liability matter to a business owner?

   Model answer

   Limited liability lowers the personal risk of starting a business. Owners can invest without fearing the loss of their home.

4. 4

   What does it mean for a business to have a separate legal identity?

   Model answer

   A limited company exists in law separately from its owners. The company can own property, sue and be sued in its own name.

5. 5

   What is a sole trader?

   Model answer

   A sole trader is a business owned and run by one person, who has unlimited liability. The owner can employ staff but keeps all the profit.

6. 6

   Give two advantages of being a sole trader.

   Model answer

   A sole trader is easy and cheap to set up. The owner keeps all the profit and makes every decision.

What is inside Levo

Six ways to work the same material.

Making the Business Effective revision questions

What does Making the Business Effective cover in Edexcel GCSE Business?

5 subtopics: business ownership and limited liability, franchising as a start-up option, business location, the marketing mix and business plans. Each one has its own page with questions and model answers.

How is Making the Business Effective organised?

By the Edexcel 1BS0 specification, subtopic by subtopic, so it matches the order you are taught it in.