Week 19 Case Study-From ice cream van to Dragon's Den - Duncan Bannatyne

From ice cream van to Dragon's Den-Duncan Bannatyne

1) What are the three main forms of business?

- The three main forms of business are:

• Sole Traders-The company which is owned by a single person, where he bears all the profit and loss is known as sole traders. Duncan's first ice cream van was an example of sole traders.

• Partnership-This type of business is owned by two or more than two person where they are ready to share the profit and bear the loss is known as Partnership business. Duncan started this type of business when he was about to open first home care and huge amount of investment was taken from the Bank.

• Limited Companies-Limited Companies might be private as well as public. It issues share for getting the investment. In private company share can be easily transferable only to it's existing share holders. In public limited company shares are freely transferable to anyone. Duncan offered  shares for building more care homes.

2) Identify at least four key factors that needed to be considered when  starting a business and explain why these are important.

- Four key factors that needed to be considered when starting a business are:

• Identify a gap in the market-We must try to identify, what is the most important key factor that can help the growth in the market. We must research internal as well as external factors of the market. If we research, we get to know what is missing out there in the market. So, we can cover up those missing points.

• Do something better than or different to competitors-When we start up a new business, we must plan to do something better and different from our competitors. If we do something better or different from our competitors, there will be high chance to gain customer satisfaction. Duncan introduced new innovative idea i.e. he improved his sale by introducing a new scoop that speed up serving and made a shape like a smile in the ice cream. This was something better and different from his competitors.

• Have a Business Plan-Before starting up a new business, we must make a detailed business plan . The plan must contain what will be start-up and running cost, what kind of resources are needed, the estimated value of sales and whether the business will give right return on investment.

• Be Prepared to take risks-Every business might contain profit as well as loss. We must be ready for both situation. We know that higher the risk, higher the profit. If we can tackle with the risk, we can earn high rate of profit. Before setting up a new care home, Duncan had to sell his ice cream business as well as his house, car and colour television.

3) Describe the benefits of having a detailed business plan.

- Before starting up a new business, every business organization must have a detailed plan. Business plans have many benefits. If we have a business plan, we get to understand about the products, customers and the market strategy. What type of resources are required and from where can we get those resources. Who are the competitors out there in the market. We must estimate the values of sales of that we cannot face any kind of difficulties in upcoming futures. We must plan whether the business will give back 20-25% of investment, there is no worth of risking.

4) Evaluate the advantages and disadvantages of using external sources of finance.

-The advantages of using external sources of finance are:

Government grants loan often at cheaper rates in compare to that of banks. So, the business organizations do not have to pay high rate of interest . Banks grant large amount so, they can invest more and expand their business. If bank overdraft occurs, security is not required. If Funds are invested by the investors or share holders, it enables large scale investments. The venture capitals or business angels may give tax benefits to investors.

The disadvantages of using external sources of finance are:

If we use credit cards there will be high rate of interest rates. If we take investments from the share holders, their might be risk like rise and fall in the share values which affects the companies value. When the government grants the loan, its use may be restricted. If loan taken from bank, it may be loss to the company. If the bank overdraft occurs there often might be high rate of interest.