The Language of Small Business Texts and Vocabulary Training (for students of Economics) Part 2. Учебное пособие

How to Set a Price

the difference between the price received for a product and the amounts paid as rewards to the factors of production; to land as rent, to labour as wages and salaries, and to capital as interest. What remains is profit or loss depending on whether the amount received in greater than the amounts paid. Profit has been variously described by economists as reward for the businessman’s enterprise in accepting the risks and uncertainties of business, and as a payment for skilled management.

Discount (1) COM. – a reduction from list price or catalogue price or marked price, such as a trade discount, quantity discount, etc.

At a discount – at a price below par or face value. Opp. – at a premium. (2) BRG. a sum of money allowed for immediate payment of a sum due at a later date. If the sum is secured by a bill of exchange, the party who buys the bill and receives the discount is said to discount the bill. (3) STK. EXCH. the amount by which the market price of a share stands below its paid-up price, or par value or face value. (4) INSCE. a reduction in the premium to allow for the special nature of the risk.

Forecast (1) an account of what may be expected to happen in the future, usu. by looking at conditions that lie ahead. (2) ECON. any methodical attempt to tell the nature, extent and direction of future changes in the economic system, such as a change in the size of the population. Such forecasts, called projections, are essential aids when deciding government policy.

Leader (1) COM. an article or commodity that a shopkeeper sells mainly to attract customers and to tempt them to buy other goods. (2) STK. EXCH. a leading stock or share; a security that is usu. bought and sold in larger numbers than other securities.

Premium, adj. COM. of specially good quality and therefore sold at a higher price. n. (1) ADVTG. a special effort, lasting only a short time, to attract buyers by a temporary price reduction or by providing a gift with each article sold. Syn. special offer; deal.

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(2)STK EXCH. the amount which is paid for a stock or share over and above its nominal or face value. At a premium, at a price higher than the face value of the security.

Opp.: discount

(3)BKG. the amount by which the market rate of exchange of a particular currency is above the par rate.

(4)INSCE. the money paid by the insured to the insurers in return for instance cover or benefits payable under the conditions in the insurance policy.

For Discussion

1.What are the ways of increasing profits?

2.Is that right to say that the price should be set by what the market can bear?

3.What is «a range of prices»?

4.What are the exceptions when the price may be lower than the cost?

5.When and where is the highest price possible and appropriate?

6.Why is it said that high prices attract competitors?

7.What are the ways to beat competitors?

8.Explain: «direct costs» «indirect costs».

9.What do forecasts have to do with setting the price?

10.What is meant by easy payment terms? And why are they a form of discount?

11.In which situations are sales sensitive to price changes?

12.What may the reasons for setting a top price be?

13.What does the price tell the consumers?

14.What are non-price benefits?

15.What are the policies of pricing with more than one product?

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How to Set a Price

Summary

1.Есть целый диапазон цен, которые вы можете назначить за свой продукт или услугу.

2.Наименьшая цена определяется накладными расходами. Никогда нельзя опускаться ниже этой цены. Устанавли- вайте эту цену, если только у вас есть дополнительные производственные мощности и не предвидится возмож- ности или времени продавать продукт по более высокой цене.

3.Не следует использовать производственные затраты в качестве основы для установления цен, по крайней мере не попытавшись установить цену на продукт с учетом того, что покупатели готовы платить.

4.Если вы намерены установить наивысшую цену на рын- ке, вам придется ограничить то количество, которое вы можете продать. Это не принесет вам максимально воз- можный уровень прибыли. Однако особая ниша такого типа может быть привлекательный для малого бизнеса.

5.Когда речь идет об установлении цены, вам надо срав- нить ваш продукт с другими, определить, насколько со- ответствуют продажи изменениям цен, выработать стра- тегию, если ваш продукт новый или срок его действия подходит к концу, проанализировать то, что цена сооб- щает покупателям, и решить, какую позицию должен ваш продукт занять на рынке.

6.Привлекающий товар имеет несколько преимуществ; основные состоят в том, что вы можете достичь большего объема продаж по более высокой цене, чем конкуренты.

7.Обоснуйте более высокую цену, подчеркнув преиму- щества продукта, не связанные с ценой, такие как каче- ство, надежность, условия доставки и другие.

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8.Избегайте установления слишком низких цен из-за бо- язни или неправильного понимания того, в чем заинте- ресованы покупатели.

9.Стратегия расширения (увеличения) доли на рынке пу- тем установления низких цен опасна для малого бизнеса.

10.Если вы сталкиваетесь с жесткой ценовой конкуренцией, постарайтесь отвлечь внимание покупателей от цены, подчеркивая преимущества своего товара.

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Choosing your Workplace

UNIT 7.

Choosing your Workplace

One of the jokes that can be made about someone starting a small business is that the first thing they want to do is search for premises. It is an understandable desire, as premises are tangible proof of the creation of an enterprise. However, if the business is to stand any chance of success, it is not the first step. There is a whole host of other jobs to be done first, researching the market, positioning the product or service, drawing up the business plan and so on.

Nevertheless, finding a workplace is a very important step to take. It can also prove to be extraordinarily difficult to find the right premises at just the right location for just the right price. It is a problem which is particularly acute for those starting in the UK, especially in the South-east. If your business were transported to the US, the problem would seem much less immense. But the UK is densely populated and land values and hence property values are proportionately high.

The problem looms ever larger for those businesses where premises are critical to success or failure, such as a retail business. If you are planning to start a shop, a large part of the setting-up process will be devoted to a search for a good location. And you cannot afford to compromise and take premises which with a bit of luck will be OK. You have to be satisfied that they meet all your criteria; if they do not, carry on the search until they do.

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WHERE IS YOUR BUSINESS TO BE LOCATED?

An important first exercise would be to start with a blank piece of paper and think about location from first principles. What is the ideal location for the type of business you have in mind? At a later stage, you can introduce the constraints placed on location, such as home and family. You should know the ideal location so you can estimate the effect of concessions you are making to these outside non-business constraints. There may be further business constraints, such as the lack of finance, which may cause you to compromise and choose a less than perfect location.

COMMUNICATIONS

How dependent is the success of your business on communications: road, rail, air, bus? This could be important if your business falls into one of the following categories:

−you deliver your product;

−your business is service-based to particular areas of population;

−you sell your product direct, using salespeople;

−your business is dependent on import and export.

In these, and other categories of business, an ideal location

would allow easy access to the relevant parts of the country. For example, if import / export is your trade, a location within reach of a major airport could be an advantage. Or, if you direct sell to the whole country, you need to be on the motorway system.

LABOUR

If your business is dependent on the use of certain skills, you may find that one part of the country is more abundantly endowed with potential employees who have already acquired those skills than other parts. On the other hand, skills may be irrelevant;

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what you may need is a ready pool of unskilled labour, in which case some areas have higher unemployment than others.

CENTRES OF POPULATION

Your business may need to be located near particular centres of population. If you are trying to sell your product in large volume, being in a large centre of population may be an advantage. Or you may want to choose an area with a specific structure of population if your product or service is sold only to particular sectors. For example, if you plan to open a bookshop, you need a town or population area of a certain size. You also need a population well endowed with the particular characteristics of those who buy books. Your market research will help you identify what those characteristics are.

SUPPLIERS

Your business may depend on supplies of a particular raw material or some other product. Costs would be lessened if your business was located near the source of supply. This could either be the main distributor of the item or it could be where the item is grown or produced.

GOVERNMENT AND LOCAL AUTHORITY ASSISTANCE

Your business may be location-independent. Thus you can look at some of the deals which the government and local authorities produce to stimulate the founding of new businesses in particular areas, in the hope of increasing employment.

Setting up in an enterprise zone brings the following benefits, which last for the life of the enterprise zone (ten years from the date it was started).

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These are:

−no rates to pay on industrial and commercial property (this does not extend to water rates);

−capital allowances of 100 per cent can be claimed in the first

year;

−exemption from paying industrial training levies and from the requirement to supply information to Industrial Training Boards. You may, however, still be entitled to get grants from the Boards;

−a greatly simplified planning regime. If what you plan to do conforms with the published scheme for the zone, you will not need to obtain individual planning permission;

−planning applications, if needed, are speeded up. Most enterprise zone authorities have set themselves the target of accepting or rejecting planning applications and building regulation approvals within fourteen days;

−applications from firms in enterprise zones for certain customs facilities will be processed as a matter of priority and certain criteria are relaxed;

−government requests for statistical information will be reduced.

Other initiatives exist to encourage the growth of new businesses and jobs in certain locations. For example, an area which has been designated as having development area status might offer some of the following:

−units which provide guidance to new businesses;

−help with rents initially;

−discounts of up to 40 per cent on the rates;

−regional selective assistance, which enables you to establish the viability of a business project. The amount of the grant is negotiable;

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Choosing your Workplace

−regional enterprise grant, which is available for firms employing less that twenty-five people. The grant can finance investment (15 per cent of the cost of fixed assets up to a maximum of £15,000) or can finance innovation (50 per cent of the agreed project cost up to a maximum of £25,000);

−consultancy.

THE FINAL CHOICE OF LOCATION

It would be unrealistic to assume that domestic constraints are not important in locating a business. The extra benefits gained from moving to another area may simply not outweigh the domestic upheaval and cost of moving house when you want to start your business.

If you decide not to move your home, it makes sense for your offices to be close to your home, as long as other business considerations do not apply. If it would not adversely affect your business to be near your home, it can be an advantage as it cuts down on your wasted travelling time from home to office when you probably need all the time you can get to solve initial business problems.

WHAT SORT OF PREMISES DO YOU NEED?

After settling on a location, your search can home in on the premises you need. There are two aspects. First, you need a tighter specification of location, for example, town, district, neighbourhood or even street. This very tight specification mainly applies to retail business. The second aspect is the type of premises.

The factors which influence your choice of premises include: − appearance. If customers and suppliers are likely to come to your offices, the appearance of your premises can affect your

credibility and your image;

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−cost. You obviously want to keep your costs as low as you can, consistent that is with achieving your business objectives;

−size and layout. Your business activity may impose constraints on the amount and exact physical layout needed;

−physical environment needed for maximum work efficiency. Cold, noise, dirt, dark can all mean people do not operate at their best.

The type of business may well dictate your choice of premises among office, factory, workshop or warehouse, for example. But there are a number of specialized options open to small businesses.

HOME

Many small businesses will start off in the back bedroom. Some, especially if they are part-time businesses, may stay there permanently. The big advantages arе cost and convenience. But there are a number of disadvantages or even obstacles. Introducing a business into the home can disrupt family life; it may also mean that it is difficult to leave your work cares and worries behind at the end of the working day. Another disadvantage of using your home as working premises is the poor impression it could create on customers if they need to visit you.

The obstacles which could exist include the possible need to get planning permission. This may occur if your business breaks town planning regulations because you have made a «material change in the use of land». Unless your business is very noisy, annoys your neighbours or means that there is a large increase in the number of visitors coming to your house, you may find that planning permission is not necessary. The moral is: keep a low profile.

Other possible obstacles include:

− the existence of restrictive covenants on the land (check with your solicitor);

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