Putting a Business Idea Into Practice

What Putting a Business Idea Into Practice covers

Putting a Business Idea Into Practice is examined in Paper 1, Investigating small business (Theme 1). It covers business aims and objectives, business revenues, costs and profits, cash and cash flow and sources of business finance.

The 4 subtopics

Each one has its own page.

• Business aims and objectivesAims and SMART objectives, financial aims from survival to market share, non-financial aims such as social goals and independence, and why objectives differ between businesses.Open →
• Business revenues, costs and profitsRevenue, fixed and variable costs, profit and loss, the break even point, break even revenue and the margin of safety, worked calculations, and reading a break even diagram.Open →
• Cash and cash flowWhy cash matters and how its shortage causes insolvency, cash against profit, cash-flow forecasts with inflows, outflows and balances, and worked forecasts for real businesses.Open →
• Sources of business financeShort and long-term finance, overdrafts, trade credit, personal savings, venture capital, share capital, bank loans, retained profit and crowd funding, with interest calculated as a percentage.Open →

What you need to know

Answer each one before you reveal it.

Take Putting a Business Idea Into Practice further

The same content, four other ways.

Commonly confused

Pairs that lose marks when they are blurred together.

• Fixed costs vs Variable costs

  Fixed costs: spending that stays the same whatever the level of output. Variable costs: spending that rises and falls directly with output.

• Cash vs Profit

  Cash: money available to spend now in notes, coins and the bank. Profit: the surplus left when all costs are taken from revenue over a period.

• Aim vs Objective

  Aim: a broad long-term goal setting the overall direction. Objective: a specific measurable target with a deadline.

Questions from this topic

Each one with the model answer underneath.

1. 1

   What is a business aim?

   Model answer

   A business aim is a broad, long-term goal that states what the business wants to achieve. An aim sets the overall direction of the business.

2. 2

   What is a business objective?

   Model answer

   A business objective is a specific, measurable target that helps a business achieve its aim. An objective usually has a deadline.

3. 3

   Give an example of an aim and a matching objective for a new café.

   Model answer

   A suitable aim is to become the most popular café in town. A matching objective is to serve 200 customers a day within its first year.

4. 4

   Why are objectives often written to be SMART?

   Model answer

   SMART objectives are specific, measurable, achievable, realistic and time-bound. A SMART target lets the owner check clearly whether it has been met.

5. 5

   Name the five financial aims and objectives a start-up may have.

   Model answer

   The five financial aims are survival, profit, sales, market share and financial security.

6. 6

   Why is survival the main objective for most new businesses?

   Model answer

   Many start-ups close in their first years because of weak sales or cash shortages. A business must survive before it can grow or make large profits.

What is inside Levo

Six ways to work the same material.

Putting a Business Idea Into Practice revision questions

What does Putting a Business Idea Into Practice cover in Edexcel GCSE Business?

4 subtopics: business aims and objectives, business revenues, costs and profits, cash and cash flow and sources of business finance. Each one has its own page with questions and model answers.

How is Putting a Business Idea Into Practice organised?

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