1.1

• Good


  Something that is produced for the public
• Service


  An act for the public or bought by a customer
• Goods are tangible and service can be intangible
• Goods and services are often connected
• Nature of business

  Decision-making organisation established to produce goods and/or provide services
• Product


  Refers to goods and services
• Generate added value


  The difference between what a business spends to produce goods or services and the prices customers are prepared to pay
• Business


  The role of a business is to combine human, physical and financial resources to create goods and services in order to satisfy the needs and wants of people, organisations, and governments
• Inputs


  • Land
  • Labour
  • Capital
  • Enterprise
  • Human resources
• Process

  • Production
  • Marketing
• Outputs

  • Product = goods and services
  • Wants and needs = "to satisfy customers" → government/public
• Customer


  Pays and purchases a product
• Consumer


  Uses a product and doesn't necessarily pay for it
• Types of goods

  • Consumer goods
  • Producer goods (Capital)
• Services


  An act purchased or provided for the public that benefits society
• 3 key things each manager does

  • Human Resources: Recruiting, Hiring, Training and managing employees
  • Marketing and Communications: ICS website, Social media platforms
  • Finance and Accounting: Budgeting, Financial analysis, Prepares and processes salaries paid to employees
  • Operations: Maintaining Campus, Adequate supplies and equipment to meet the needs of the students, Assures physical safety
• Stages of Production

  • Primary sector
  • Secondary sector
  • Tertiary sector
  • Quaternary sector
• Challenges for start-ups

  • Income
  • Time
  • Connections
  • Communication
  • Market gap
  • External factors, credit line
• Challenges for start-ups

  • Lack of finance
  • Unestablished customer base
  • Cash flow problems
  • Marketing problems
  • People management problems
  • Production problems
  • Legalities - red tape
  • High production costs
  • Poor location
  • External influences
• Lack of finance


  All business need finance for the purchase of fixed assets, many new businesses lack the necessary finance to have sufficient liquidity to run the business on a daily basis
• Cash flow problems


  Due to lack of working capital, surplus of stock, pressure to honour long credit periods from customers
• Marketing problems

  Lack of market research, overestimating the size of their potential market, inexperience in supplying the right product, to the right customer at the right time
• Unestablished customer base


  It may take time to attract customers and build customer loyalty, difficult if well-established competitors already exist
• People management problems

  Newly established businesses often find it difficult to attract suitable skilled and experienced staff, may be inexperienced in understanding suitable organisational structures or staff motivational techniques
• Production problems

  Inaccurate forecast levels of demand can lead to overproduction (stockpiling, wastage and increase in costs) or underproduction (loss of potential sales and dissatisfied customers)
• Legalities


  The paperwork and legal requirements for new business can be confusing, time-consuming and expensive
• High production costs

  New business are likely to have high set-up cost and running cost due to the large amount needed to pay for capital equipment, machinery, stocks, rent, advertising, insurance, and not being able to avail of economies of scale
• Poor location


  Location can play a key factor in business survival, fixed costs like rent/mortgage payments
• External influences


  Exogenous shocks like Covid-19, global financial crisis, extreme weather, new businesses are more vulnerable
• Capital growth


  Personal gain due to the appreciation in the value of the business
• Earnings


  You can never get rich earning money from someone else
• Transference and inheritance

  Money being passed down, many self-employed entrepreneurs pass on their businesses to their children
• Challenges


  Some people are driven by personal challenges, they enjoy the satisfaction of achieving what they perceive to be greatness and striving for self-actualization
• Autonomy


  Independence, freedom of choice and flexibility in the workplace
• Security


  If successful - being your own boss creates sense of job security, potential to accumulate personal wealth
• Hobbies


  Turning your passion into a career, successful entrepreneurs have a passion for what they do