Business!

• why do businesses exist?


  • be your own boss

  • entrepreneur has an idea

  • to provide goods and services we need / want
• what is a entrepreneur?


  • an individual who has a business idea

  • takes a risk

  • develops that idea into a business
• 3 skills of an entrepreneur?


  • Can identify a gap in the market

  • problem solving

  • communication
• 3 qualities of an entrepreneur?


  • risk taker

  • persuader

  • creative
• Needs Vs Wants - Needs are essential for survival, while wants make out lives more comfortable.
• Goods Vs Services - Goods are physical products, while services are intangible products.
• Tangible Vs Intangible - Tangible is physical, intangible is non-physical.
• Durable Vs Non-durable - Durable is a product that can be used for a long time. Non-durable is a product that cannot be used for a long time.
• Business Cycle - 


  > Customers have needs and wants that have to be satisfied.

  > Market research is conducted to identify what those needs and wants are.

  > Goods and services are produced for those customers

  > Customers buy those products to satisfy their needs and wants.
• Factors of production

  • Land - Natural resources used to produce the goods/services.
  • Labour - Human resources. The people that work to produce the goods/services.
  • Capital - Tools, machinery and equipment used to produce the goods/services.
  • Enterprise - having an idea and risk taking to combine the other factors to produce a good/service.
• Sectors of Industry - Primary, Secondary, Tertiary.

  • Primary - Growing and extracting of raw materials. E.g. Farming, mining, oil drilling.
  • Secondary - Manufacturing of the products. Taking raw materials from primary and converting into a product for sale. E.g. Car manufacturer.
  • Tertiary - Providing a service. E.g. Banking, Travel agent. OR sells the goods manufactured from the previous sectors.
• Wealth Creation - Value is added to products as it goes through the production purposes. Businesses will sell goods to customers for more than they bought them for, this is because they have added value from packaging to displaying and selling the product.
• Business Plan - A document that outlines the businesses objectives, strategies, and financial requirements.

  • Outlines the business
  • Identify gaps in information
  • Obtain source of finance
  • Can eventually compare actual with planned.
  • Planning for success
• Business Plan Sections -

  • Executive Summary - Product/Service, target market and business structure.
  • Market Overview - Size and growth of the industry and key competitors.
  • Finance - Where will money come from? Cash flow? (Money coming in and going out) and expected profits.
  • Marketing strategy - Practicing strategy, promotional activities planned and unique selling point.
  • Employees and Operations - Number of employees, job titles of employees, production plan and factory location(s).
• Sectors of Economy - Public, Private and Third.
• Public Sector - Made up of government organisations and agencies, they are set up to provide services for individuals and communities.

  > Ownership - Government.

  > Control Level - Elected Politician.

  > Aim - Provide a quality service for UK citizens.

  > Financed - Taxation
• Private Sector - Made up of profit making businesses, this range can be from large companies such as Tesco to a local personal trainer.

  • Ownership - Shareholders (Private Individuals)
  • Control Level - Board of directors
  • Aim - Make a profit
  • Financed - Selling shares, Bank loan or Owners Own Savings. (Equity)
• Third Sector - Made up of social enterprises, charities and voluntary organisation. They are set up to raise funds for causes or provide services/facilities for members.

  • Ownership - Trust
  • Control Level - Board of directors
  • Aim - Raising money for the benefit of others
  • Financed - donations, sponsorships and fundrasing events
• Third Sector - Types of Businesses - Voluntary Organisations

  • Ownership - "Volunteer"
  • Controlled by - Elected committee
  • Aim - provide a service for members and the local commuinity
  • Financed - membership subcriptions, sponsorship and fundrasing events.
• Third Sector - Types of Businesses - Social Enterprises

  • Ownership - Operate as a private sector
  • Controlled by - Board of directors
  • Aim - Make a profit to benefit a social, evironmental or cultural cause
  • Financed - fundraising events and government grants
• Third Sector - Types of Businesses - Charities

  • Ownership - Trust
  • Controlled by - Board of trustees
  • Aim - raising money for the benefit of others
  • Financed - Donations, sponsorship and fundraising events.
• Private Sector - Types of Businesses - Sole Trader

  • One Owner
  • Owner makes all decisions
  • Finance - Owners own money (Equity), Bank overdraft or Government grant

  Advantage -

  1. Makes all decisions
  2. Keeps all profit
  3. Owner can choose when to work

  Disadvantage -

  1. Unlimited Liability
  2. Nobody to share workload with
  3. Nobody to share workload and responsibilitys with