Bee

• Sources of business ideas

  • Hobbies and activities
  • Own surroundings and locality
  • Families, friends and relatives
  • Internet and magazines
  • Qualifications and experiences
• Characteristics of good business ideas

  • Innovative
  • Uniqueness
  • Attractive
  • Growth potential
• Generating business ideas is the first step towards setting up an enterprise
• The internet, business magazines, family and friends are some of the sources of business ideas
• A good business idea is the key to success for any enterprise
• Business organisation


  An enterprise set up by entrepreneur/s to produce or trade in goods and services
• Sole trader


  A business owned and controlled by one entrepreneur only
• Sole trading business


  • Only one owner
  • Unlimited liability
  • Capital is brought in by owner only
  • Owner bears all risks and keeps all profits
• A sole trader is the only risk-taker in the business
• In a sole trading business, there is one owner who run the enterprise
• A sole trading business can employ many workers
• The sole trader takes all business decisions
• A sole trader wants to maximise profits
• Advantages of sole trading business

  • Easy to set up and simple to operate
  • Little capital is required to set up the business
  • All profits belong to the sole trader
  • Decisions are taken quickly
• Disadvantages of sole trading business

  • Lack of capital to expand the business
  • The sole trader bears all the risks and responsibilities
  • Lack of continuity: Death of sole trader may result in closure of business
  • The sole trader suffers from unlimited liability
• A sole trading business is owned and controlled by one person only
• The sole proprietor may decide to employ other people to work in the business
• An entrepreneur operating as a sole proprietor keeps all profits for himself/herself
• A sole trader has freedom to choose his/her hours of work
• Unlimited liability


  Where the owner may have to sell his/her personal belongings to pay the debts of the business
• Partnership


  A business owned and controlled by more than one person
• Partnerships


  • Accountants
  • Lawyers
  • Building contractors
• Production


  The process of using resources to manufacture goods or provide services
• Entrepreneurs


  Producers = Service providers
• Examples of production


  • Production of bread in a bakery
  • Retailing service in a supermarket
  • Manufacture of furniture in a carpenter's workshop
  • Providing education in a school
• Production process


  The steps involved in transforming factor inputs into output
• Inputs


  Resources or factors of production
• Output


  Goods and services produced
• Production process in a restaurant

  1. Buying ingredients

  2. Food preparation

  3. Serving the food
• Production process in a sunglasses factory

  1. Buying raw materials

  2. Designing models

  3. Making frames

  4. Polishing

  5. Fixing

  6. Finished product ready for sale
• Types of production process

  • Labour intensive
  • Capital intensive
• Labour intensive production process

  When an enterprise uses more labour than capital in the production process
• Businesses using labour intensive production process


  • Hotels
  • Catering services
  • Law services
  • Accountancy firms
  • Retail shops
• Capital intensive production process

  When an enterprise uses more capital than labour in the production process
• Businesses using capital intensive production process

  • Car manufacturers
  • Oil drilling
  • Telecommunications
  • Printing press
• Complex production processes which cannot be carried out effectively by labour

  Firms use capital intensive production process
• Firms produce on large scale


  They use capital intensive production process
• Firms find capital to be cheaper and more productive than labour


  They use capital intensive production process
• Capital intensive production process

  An enterprise uses more capital than labour in the production process
• Businesses using capital intensive production process

  • Car manufacturers
  • Oil drilling
  • Telecommunications
  • Printing press