Business GCSE (1.1-1.4)

AQA Paper 1 Theme 1

1.1 Entrepreneurship: Personal Qualities (Part 1)

1. Business Thinking: Identifying gaps in the market and creating new products or services.

2. Risk-taking: Willingness to invest capital into a business with the possibility of failure.

3. Organisation: Being able being to organise resources.

1.1 Financial Motives for Starting a Business

• Profit: to make money after all costs have been paid

• Income: to earn a regular wage for the owner

• Financial security: to create a stable source of money in the long term

1.1 Non-Financial Motives for Starting a Business

• Independence: Desiring to be your own boss and make your own decisions.

• Personal Satisfaction: Turning a hobby into a career.

• Social Objectives: Benefit the community or environment.

1.2 Market Research: Primary Research (Field)

Collecting new data yourself for a specific purpose.

• Examples: Questionnaires, interviews, and focus groups.

• Pros: Specific to needs, up-to-date, and competitors don't have it.

• Cons: High cost and time-consuming.

1.2 Market Research: Secondary Research (Desk)

Using data that already exists.

• Examples: Competitor websites, government statistics (ONS), and market reports.

• Pros: Cheap and quick to obtain.

• Cons: May be outdated or not specific enough for the business.

1.2 Market Segmentation: Demographics and Geographics

• Demographics: Dividing by age, gender, occupation, or income level (e.g. high-end luxury goods).

• Geographics: Dividing by location (e.g. city vs. rural or specific regions).

1.2 Market Segmentation: Behavioural and Psychographic

• Behavioural: Dividing by usage rate, brand loyalty, or specific occasions.

• Psychographic: Dividing by lifestyle, personality, and social class.

1.3 Finance: Total Revenue Formula

Total\ Revenue = Price \times Quantity\ Sold

1.3 Finance: Total Costs Formula

Total\ Costs = Fixed\ Costs + Total\ Variable\ Costs

1.3 Finance: Variable Costs vs. Fixed Costs

• Variable Costs: Costs that change directly with output (e.g. raw materials, packaging).

• Fixed Costs: Costs that remain the same regardless of output (e.g. rent, insurance, salaries).

1.3 Finance: Profit Formula

Profit = Total\ Revenue - Total\ Costs

1.3 Finance: Break-even Point Formula

Break-even\ Point = \frac{Fixed\ Costs}{Selling\ Price - Variable\ Cost\ per\ Unit}

1.3 Finance: Margin of Safety Formula

Margin\ of\ Safety = Actual\ Sales - Break-even\ Sales

1.4 Legal Structures: Sole Trader

• Owned and managed by one person.

• Unlimited Liability: The owner is personally responsible for all business debts.

• Pros: Easy to set up, owner keeps all profit.

• Cons: High risk, high workload.

1.4 Legal Structures: Private Limited Company (Ltd)

• Owned by shareholders (usually family/friends).

• Limited Liability: Shareholders only lose what they invested.

• Pros: Easier to raise finance through shares, more credibility.

• Cons: More complex legal paperwork.

1.4 Marketing Mix: Product and Price

• Product: Must have a Unique Selling Point (USP) to stand out.

• Price: Strategies include Penetration (low price to start) or Skimming (high price for new tech).

1.4 Marketing Mix: Place and Promotion

• Place: Distribution channels (e.g. retail stores, e-commerce/online).

• Promotion: Methods to inform customers (e.g. social media ads, sponsorship, discounts).

1.4 Business Objectives and Planning

A business plan is a formal document used to:

• Mitigate Risk: Anticipate problems before they happen.

• Obtain Finance: Convince banks or investors to lend money.

• Set Targets: Measure progress against goals.