Business activity

• Entrepreneur


  A person who sets up a business by taking on the financial risks in the hope of making a profit. They are responsible for bringing together the other factors of production, land, labour and capital, to create a business.
• Functions of an Entrepreneur


  • They have the idea / show the initiative / innovation
  • They take the risks/face the uncertainties / suffer the consequences of failure of e.g. not selling/low demand particularly with unlimited liability
  • They invest/put money into the business
  • They earn the profits/earn an income → to fund their lifestyle to further invest
• Qualities/characteristics of an entrepreneur


  • Determined
  • Organised
• Reasons why people want to set up their own business


  • Personal ambition/satisfaction → always wanted to do it building your own business may help individuals reach higher goals in life
  • Interest may be passionate about the product or service they provide
  • Challenge
  • To keep a family business running → taken over from family member
  • Reward for own efforts to make profits → earn income
  • Can exploit an opportunity/identify a gap in the market to increase wealth
  • Provide a service to local community/ social enterprise
  • Use skills → learnt in previous job/ experience/interests/hobbies → knows own strengths/weaknesses
  • Be own boss/to be in control this will give greater flexibility than employment → to be able to make own decisions
  • No work available to get a job may be no similar business locally
  • Use qualifications gained in school/ college or in previous job
  • Encouragement by external/government agencies to set up own business → support and advice offered by agencies → e.g. GO Wales, Careers Wales, Prince's Trust
  • To use redundancy pay to take advantage of the opportunity to set up a business
  • Easy to set up→no qualifications needed → no formal documentation may need limited finance → site available
• Rewards of being an entrepreneur


  • Be their own boss
  • Flexible working hours
  • Pursue an interest
  • Good customer feedback
  • Earn more money (profit)
  • Dissatisfaction with current job
  • Greater work life balance
  • Self-esteem from building something new
  • Self-satisfaction
  • Provide employment for self and others
• Risks of being an entrepreneur


  • Financial loss of income and money invested
  • Low sales
  • Unexpected costs e.g. rise in rent
  • Unexpected events e.g. new competitor
  • Potentially long hours and stress
  • Loss of security
  • Pressure on friends and family
  • Damage to reputation if fail
  • May lose home
• Motives of entrepreneurs


  • Generate a profit
  • Provide employment for self
  • Financial security for self and family
  • Self satisfaction/challenge
  • Be own boss
  • Fill a gap in the market
  • Create employment for others
  • Social/community
• Social enterprises


  Those whose prime objective is to do good in society rather than to make a profit. Surplus revenue is used to support a specific cause e.g. a children's charity or community group.
• Business enterprise


  The formation of a new business or development of a new good or service to be introduced to the market.
• Factors of Production


  • Land
  • Labour
  • Capital
  • Enterprise
• Land


  The natural resources that are needed to produce goods
• Labour


  Physical and mental element that is needed to produce goods and services
• Capital


  The money (working capital) and fixed capital that is needed to produce goods and services
• Enterprise


  These people have the ideas to start a business and organise the other 3 factors of production
• Goods


  Tangible items that you can physically touch
• Types of Goods


  • Consumer Goods
  • Producer (Capital) Goods
• Consumer Goods


  Goods which are produced for the final consumer
• Consumer Goods


  • cars
  • food
  • clothes
• Producer (Capital) Goods


  Goods which are produced for other businesses to be able to produce other goods and services
• Producer (Capital) Goods

  • vehicles
  • computers
  • robots
  • furniture & fixtures
• Types of Consumer Goods

  • Durable Goods
  • Non-Durable (Single Use) Goods
• Durable Goods


  Consumer goods which are not used at once and do not have to be bought frequently because they last for a long time
• Durable Goods


  • TV
  • mobile phone
  • washing machine
• Non-Durable (Single Use) Goods


  Goods which are immediately consumed or which have a lifespan of less than three years
• Retailers


  Sells goods to consumers. Small retailers buy their stock from wholesalers but large-scale retailers buy directly from manufacturers
• Functions of a Retailer

  • Display goods
  • Promote goods
  • Sell to consumers/sell goods and services
  • Give customers advice / provide customer service
  • Deal with faulty goods/complaints
  • Distribute goods / deliver goods
  • Buy from wholesalers / manufacturers/suppliers
  • Break bulk/buy in large quantities and sell in small quantities
  • Closer to consumer/Local
  • Can offer credit
• Sectors of Industry

  • Primary
  • Secondary
  • Tertiary
• Primary Sector


  Where the raw materials are produced, e.g. farming, mining, forestry
• Secondary Sector


  Where the raw materials are manufactured into goods, e.g. factory
• Tertiary Sector


  Businesses in this sector provide a service, e.g. retailer, hotel, school
• Chain of Production


  This process links the primary, secondary and tertiary sectors together in the production process
• Consumers


  The final users of goods and services. They are at the end of the distribution channel
• Needs


  • Food
  • Water
  • Warmth
  • Clothing
  • Shelter
• Wants


  • TV
  • mobile phone
  • holidays
  • cars
• Services


  Things you cannot touch; they are non-physical intangible items
• Types of Services


  • Personal Services
  • Commercial Services
• Personal Services


  Services provided for individuals. They include services for personal grooming, house maintenance, car repair etc.
• Commercial Services


  Services that provide mainly to businesses such as transport and warehousing, but they may also be available to individuals such as insurance and banking
• Markets


  Where buyers and sellers meet in order to exchange goods and services, often for money
• Examples of business types

  • Sole traders
  • Partnerships
  • Ltd.'s
  • Plc.'s