Business GCSE topic 1.1 - Enterprise and Entrepreneurship

Entrepreneur

Someone who takes a calculated risk through starting a business

Features of an entrepreneur

* Make investments to setup business
* Take a calculated risk
* Make accurate business decisions

Two types of objectives an entrepreneur may desire

Financial

Non - financial

Reasons for financial objectives

**Make profit** - Generating more revenue than costs

I**nvesting capital** - Entrepreneur have sum of money gained through redundancy/inheritance and want it to provide a return to them

Reasons for non-financial objectives

Being own boss - Desire to be independent and make their own choices unlike working for someone

Skills and interests - Incorporating entrepreneur’s ideas into business without any judgements which can be motivating for them

Skill

What you learn through the means of other people

Characteristic

Traits you’re born with

Example of skills

Good communication

Time management

Financial management

Examples of characteristics

Honest

Patient

Integrity

Factors that can change a business

* New legislation
* Economy changes
* New technology
* Changes in trends/consumer wants
* Product becoming obsolete

How new technology can change a business

New product ideas come about due to technological advance such as computers/smartphones as examples of how it allows new products to be developed and launched

How change in consumer wants can change a business

Consumers tastes such as fashion are always changing. Businesses need to adapt to the changes to gain sales revenue

How products and services becoming obsolete change a business

Products become outdated as new products get developed which may be linked to changes in technology or changes in economy. For example, increased wealth will decrease demand for inferior products such as supermarket value products

How original ideas come about

Identifying a gap in the market. No competition for a while meaning customers would only go to your enterprise maximising sales revenue

Advantage of adapting products

Staying competitive in the market because they offer new and innovative products.

This leads to attracting new customers who are interested in the new products.

Therefore increasing revenue by diversifying the product line

Characteristics of a good business idea

* Finds a way around a problem
* Offer cheaper/better way of doing something
* Clear focus on meeting needs of customer

Risk

* Chance of loss/damage
* Chance of something going wrong

3 risks an entrepreneur may face

* Lack of security
* Business failure
* Financial loss

Reasons why businesses fail

* Poor quality products
* Unexpected shocks (inflation/floods/recession)
* Sales lower than expected
* Poor market research

Reducing risk

* Plan - Make realistic business plan
* Research - Valid market research/up to date/ specific to business needs
* Being cautious - Avoid business growing too fast

Rewards from enterprise

* Business success
* Profit
* Independence

4 factors of production

* Land
* Labour
* Capital
* Enterprise

Land

Somewhere to produce the goods

Labour

People who work in the business

Capital

Money to start the business

Enterprise

Drive or motivation from owners to start business

Purposes for enterprise activity

* Producing goods and services
* Meeting customer needs
* Adding value

Purpose of producing goods and services

Entrepreneur bring resources required to ensure good/services are produced efficiently and will reach consumer for profit

Purpose of meeting customer needs

If product gets produced without a demand in the market the business will end up with unsold stock

Adding value

Difference between what a business pays its suppliers and price it’s able to charge for its product/service

Factors of things to add value to

* Convenience
* Branding
* Design
* Quality
* Unique selling point

Adding value for convenience

Customers prepared to pay for home service rather than shop in person

Adding value for branding

Business that establish a good reputation/reliable brand may allow business to charge more for its products

Adding value for design

Aesthetics/Cost of a product may add value to its production

Adding value for quality

The more the product meets or exceeds customer’s expectations for the quality of product, the more value will be added for production

Adding value for Unique Selling Point

If product stands out towards the other products, business may be able to charge higher prices.