1.1 Enterprise & Entrepreneurship

• Businesses are constantly faced with change. Some of these changes will be outside the control of the organisation.​
• Examples of external changes that businesses face include new legislation, changes in the economy, new technology, political events and social trends. ​
• sources of business ideas include original ideas, adapting existing products, business experience, personal experience, observation.
• Advances in technology may cause change. New techology is constantly allowing new products to be developped and launched for sale.
• Fashions and consumer tastes are always changing. Could be in clothes, cars, funiture, building, more consumer goods. Could also be healthy eating fitness and specialist types of holidays.
• Main risk is that the business will fail and that entrepreneur will lose their investment/money. Entrepreneur may also end up personally liable if they were a sole trader or in a parternship.
• Risk for a new business is not having enough custmers to generate sufficient revenue to cover costs. This could lead to the entrepreneur having a lack of security.
• Questions the entrepreneur may ask for risk of a start-up?​

  • Will they have enough funds to continue to trade successfully in the future, without being reliant on other sources of finance to keep the firm going? ​
  • Will the entrepreneur have enough money to pay themselves a decent wage, to maintain his/her desired standard of living?
• If the entrepreneur can learn from these mistakes, the business will have a better chance of survival and success.​
• Reasons for Business Failure invludes poor management, poor market research, sales lower than expected, start-up costs are too high, unexpected shocks, too reliant on a a small number of customers, and poor quality.
• to reduce business risk (1): plan (realistic plan), research (specific to needs), be cautious (avoid growing too fast), finance with care (loans, etc.), take calculated risks
• to reduce business risk (2): keep costs down (staff, etc.), protection ( limited liability), monitor and review (business on track, finances, aims & objectives = progress)
• rewards for enterprise include profits (made by business), capital gains (selling business), self-esteem, personal development, sense of control, satisfaction from building something
• businesses exist to produce goods and services on a commercial basis to customers
• goods are actual objects, can be touched/felt/held, produced and consumed
• services are activities, provided by other people/businesses
• needs are goods/services that we have to consume if we are to live, e.g. food, shelter, warmth
• wants are goods/services that we would like but don't have to consume, e.g. holidays, smartphones, other luxeries
• "Enterprise" - another name for a business; describes the actions of someone who takes a risk by setting up, investing in and running a business.
• entrepreneur - someone who takes a calculated risk through starting a business
• entrepreneur - take initiativein exploiting a business, understands and calculates risks, makes an investment (often their own money), risk that business venture might fail
• reasons for starting business: making profit, investing money, work-life balance, skills and interest, being their own boss
• Adding value to a product/service is the transformation process that describes what happens inside the business. Where the value is added to inputs to create outputs.
• adding value = difference between the price of the finished product/service and the cost of the inputs involved in making it
• ways to add value: build a brand, deliver customer service, add product features and benefits that customer want, operate efficiently
• business benefits of adding value: chage higher price, create point of difference, protection against competitors offering lower prices, focuses business on its target market segment
• adding value = the difference between the price of the finished product/service and the cost of the inputs involved in making it.
• adding value is the transformation process describes what happens inside the business. Where value is added to inputs to create outputs.
• ways to add value: build a brand, deliver excellent customer service, add product features + benefits that customers want, operate efficiently
• benefits of adding value: charge higher price, create a point of difference with competitors, protection against competitors offering lower prices, focus business on target market segment