1.1 What is a Business?

Business

decision-making organization ⟶ goods/services that meet needs and wants

Interdependent

departments must work together (ex. demand forecast affects production, staffing, finance)

Primary sector

extract natural resources (ex. farming)

Secondary sector

manufacture (ex. factories)

Tertiary sector

services (ex. retail)

Quaternary sector

knowledge / information (ex. R&D); specialized part of tertiary

Added value

selling price − cost of bought-in materials (≠ profit: other costs remain)

Sectoral change

economy shifts primary ⟶ secondary ⟶ services

Sectoral change: + / −

+ GDP ↑, more tax revenue / − migration to towns ⟶ housing problems

Entrepreneur

manages a business, accepting financial risk

GET CASH

Growth, Earnings, Transference, Challenge, Autonomy, Security, Hobbies

Start-up challenges

limited finance, weak customer base

Cash flow

money flowing in and out

Cash flow ≠ profit

profitable firm can still lack cash (customers pay later, wages due now)