Theme 1

• What are the risks when starting a business?

  Financial loss

  Lack of security

  Business failure
• What are the rewards when starting a business?

  Independence

  Business success

  Profit
• How can risks be reduced?


  Make a business plan

  Carry out market research
• How do new business ideas come about?

  New idea: spotting a gap in the market

  Existing idea: adapting the existing idea and add value
• How can business add value?

  Better design

  More convenient

  Branding

  Better quality

  Unique selling point
• Why do business want to add value?

  Because it increases the chance of success, survival and long term growth.
• What are some entrepreneur skills?

  Leadership

  Risk taking

  Make business decisions
• How do entrepreneurs benefit to the economy?

  They create products and services to meet the customers need.

  They create job opportunities.

  Pay tax to the government

  Generate economic activity
• Understanding customers needs


  Family needs: have different needs between customers with children and a couple with no children

  Personal taste: all customers have different taste in styles, colours.

  Financial needs: different customers with different level of income will buy products and services at different price point.

  Emotional needs: some customers might have strong emotional connections to a certain brand.
• What are some of the factors of customers needs?

  Price

  Convenience

  Quality

  Choice
• What are the purpose of market research?


  Identify and understand customers needs

  Identify competitors

  Identify the gaps in the market
• What are the two types of market research?

  Primary and secondary research
• What are the examples of primary research?

  Surveys

  Social media

  Focus groups
• What are the examples of secondary research?

  Internet sites

  Sales data

  Market report
• What are qualitative data and quantitative data?

  Qualitative: People's opinion

  Quantitative: data with numbers and statistics
• Why does small business only do a little market research?


  Because it is expensive
• What is market segment?


  It is when the business split customers into different group base on their characteristics

  E.g.

  Age

  Lifestyle

  Demographics

  Location

  Income
• Benefits of market segment

  Can meet specific customers needs

  Focus and target specific customers
• Limitations of market segment

  Can be expensive

  Focusing on one group of customers may cause a business to miss another opportunity.
• What is market mapping?

  Market mapping is a diagram that is used to position and compare the products in the market. Businesses can identify the gaps in the market
• Benefits of market mapping

  Can identify the gaps in the market

  Can identify competitor.
• Limitation of market mapping

  Can only use two variables

  Based on opinions or perspective of the person creating
• What are the ways to compete in businesses?

  Lower price:

  The business can use cheaper raw materials to make cheaper value products. Then they set a lower price and aim to have a large quantity to overcome the cost and make profit.

  Higher quality:

  to attract customers as they seek for good function and durability

  More convenient:

  They would choose business that is more easy to access

  Wider product range:

  they would pick a business with a larger range than a business that has a smaller range

  Better customer service:

  customers will feel valued and have a positive reputation
• What is a competitive market?


  It is a market that has a lot of competitor that sell very similar products.
• What might a business do in a highly competitive market?

  Improve efficiency

  Lower price

  Cut cost
• What are the drawbacks for businesses in a competitive market?

  Need to monitor competitors

  Lower price to compete
• What are aims and objectives?

  Aims are general goals that the business sets

  Objectives are the steps to the aim, which is more specific.
• List some financial objectives

  Profit

  Market share

  Financial security
• List some non-financial objectives

  Personal satisfaction

  Independence
• What might be the financial objectives of a small business?

  Survival

  Financial security
• What might be the financial objectives of a large business?

  Be the market leader
• Formula for revenue


  Revenue= price x quantity
• What are the two main types of objectives?

  Financial objective

  Non financial objective
• Examples of fixed cost

  Rent

  Wages
• Examples of variable cost

  Raw materials

  Delivery costs
• What is the formula of variable cost?

  Variable cost= cost of one unit x quantity
• Formula of total cost

  Total cost= total fixed costs + total variable costs
• Profit formula


  Profit= revenue-cost
• Interest formula


  (Total repayment - borrowed amount)/ borrowed amount
• Total revenue


  The total amount of money earned by a business