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• Entrepreneur


  Someone who is setting up a business and is willing to take a risk
• Spotting an opportunity


  The ability to see what customers need and want in a product or service
• Enterprising characteristics


  • Determination
  • Creativity
  • Ability to take risks
• Why businesses exist


  To provide goods and services to satisfy customer needs and wants, and to make a profit
• Businesses sometimes copy new revolutionary products or services that are successful
• Enterprise


  Seeing an opportunity to provide a product or service that people are willing to buy
• Entrepreneurs


  • Banksy
  • Alan Sugar
  • Usain Bolt
• Pros of risk taking


  • Financial gain
  • Independence
  • Self-satisfaction
  • Changing customer habits
• Cons of risk taking


  • Financial loss
  • Health issues
  • Strained relationships
• Business plan


  A plan that is set out at the start when originally setting up a business, detailing things like products/services, where money will come from, marketing and market research
• Business plan


  • It is a written document that is completed on a yearly basis
  • The business and key people within the business will look at it and adapt it as things change
• Finance


  Money needed at the start of a business to set up, buy machinery, find a location and premises
• Success


  Can mean making a lot of profit, just surviving, or providing services to customers
• Market


  Where buyer and seller meet
• Resources


  Things a business needs to make it work, more than just money, can include staff and materials
• Operate


  How a business works
• Aims and objectives


  Things a business is trying to achieve, like expanding, growing, or making more profit
• Business plan


  • Usually written by the owners
  • Reduces risk and helps the business succeed
• Things expected to be found in a business plan


  • The business idea
  • Who is running the business
  • Any market research gathered
  • Detailing of any finance and who has put money into the business
  • The objectives of the business
  • The target market
  • The competitors
• Purpose of a business plan

  • Helps identify the market
  • Can help obtain finance
  • Can help identify resources needed
  • Can help achieve aims and objectives
• Company


  A business that has a separate legal identity from its owners
• Business


  An organisation that has not yet become a company
• Types of business ownership


  • Sole trader
  • Partnership
  • Private limited company
  • Public limited company
• Unlimited liability


  The responsibility of all the debts lies with the owner
• Limited liability


  The business and the owners have a separate legal identity, so owners only lose what they originally invested
• Deed of partnership


  A document that sets out the operations of a partnership
• Sleeping partner


  Someone that puts money into a business but is not interested in taking an active part
• Dividend


  A monetary reward paid out to shareholders if a business makes a profit
• Sole trader


  • Owned by one person
  • Can have employees but not more owners
  • Easy and cheap to set up
  • Owner has full control
  • Keep all profits
  • Don't have to share financial information
  • Unlimited liability
  • May have to work long hours
  • Business likely to cease if sole trader dies
  • Shortage of capital and skills
• Partnership


  • 2 to 20 owners
  • Relatively easy to set up
  • More capital and skills
  • Workload can be shared
  • Financial information still secure
  • Unlimited liability
  • Profit has to be shared
  • Potential shortage of capital
  • Slower decision making
  • Business could cease if a partner dies
• Private limited company (Ltd)


  • Owned by at least 2 shareholders
  • Limited liability
  • Continuity after death of shareholder
  • Can raise more money
  • Control over share sale
  • Some financial information available
  • More tricky to set up
  • Restricted share sales
  • Shareholders expect dividends
• Public limited company (PLC)


  • Owned by shareholders
  • Shares can be bought and sold on stock exchange
  • Ability to raise large amounts of capital
  • Easier to borrow money
  • Limited liability
  • More risk of takeover
  • Need at least £50,000 in shares
  • Can become inefficient
  • Financial information available to public
• Limited liability partnership (LLP)


  A special type of partnership with limited liability
• Suitability of business ownership types


  • Most businesses start as sole traders, then grow to partnerships, then private limited companies, then potentially public limited companies
  • Amount of money required may determine starting as Ltd or PLC
  • Personal wealth may make Ltd or PLC more suitable to limit liability
• There is an exam case study and exam questions provided
• Satisficing


  The owner of the business is not trying to make as much money as possible and trying to expand and be the greatest business ever, they're just making enough money to get by
• Business objectives


  What the business aims to achieve
• Examples of business objectives


  • Survival
  • Profit
  • Growth
  • Providing a service
• Profit


  The difference between revenue and costs
• Survival


  When the business is just trying to make sure it keeps going