1.1

• Goods


  Physical product that someone is willing to pay for
• Services


  Non-physical product that someone is willing to pay for
• Production process


  1. Use raw materials

  2. Suppliers buy from

  3. Business sells to customers
• Supplier


  A business which sells (or supplies) products to another business
• Customer


  Any person (or organisation) which buys or is supplied with a product by a business
• The world is dynamic and ever-changing allowing entrepreneurs to spot business opportunities and encourage them to develop new business ideas
• Entrepreneur


  Someone who creates a business, taking financial risks with the aim of making profit
• Qualities/skills of an entrepreneur

  • Initiative - doing things without needing to be asked
  • Risk taking - doing something that might have a negative outcome
  • Undertaking new ventures - starting new businesses/projects
• Reasons new business ideas come about

  • Changes in consumer wants
  • Advances in technology
  • Products becoming obsolete
• Total revenue = selling price x quantity sold
• Total cost = fixed costs + variable costs
• Profit = total revenue - total cost
• Risks of running a business

  • Business failure - not attracting new customers
  • Financial loss - losing money
  • Lack of security - no job security
• How to reduce business risks

  • Market research
  • Strong business plan
  • Enough money to deal with potential problems
• Rewards of running a business

  • Personal success - feeling good, extra money
  • Independence - choosing your own hours
• Added value


  Making a good or service more appealing so customers will pay more for it than it costs to produce
• Ways businesses can add value

  • Branding
  • Reputation for quality
  • Convenience
  • Unique selling point
  • Design
• Benefits of added value

  • Charging a higher price
  • Helping to stand out from competition
  • Increasing chance of repeat business