Investigating small business

Why do new business ideas come about

• when entrepreneurs recognize opportunities

• Changes in technology

• Changes in customers wants e.g growing demand for plant based foods

• Products becoming obsolete e.g CD’s

How do new business ideas come about

• original ideas

• By adapting existing products

What are original ideas

These are new and unique concepts that are not based on existing services

What are existing products services

This involves taking a new concept and making it better

What is a risk

This is anything that poses danger or harm

What are the risk of business activity

• business failure

• Financial loss

• Lack of security

What are the rewards of business activity

• profit : measure of tye success of a business

• Independence

• Business success

What is the purpose of a business activity

These are the activities that business engage in to produce goods or services that meet customers needs while adding value

The purposes of business activities are

• to produce goods

• Meet customers wants

• Add value

What is adding value

This is the difference between the price that is charged to the customer and the cost of inputs required to create the product

What are the methods of adding value

• branding

• Convenience

• Quality

• Design

• Unique selling point

What is an entrepreneur

This is a person that is willing and able to create a new business idea and take risks in pursuing success

What are the roles of entrepreneurs

• they organize resources

• Take risks

• They make business decisions

What is a market

A place where sellers and buyers can meet

What is a need

Something that is essential

What is price

This how much a business is willing to sell a product and a customer is willing to pay for a product at a given time

What is quality

This is the standard of excellence one expects from a good or service

What is market research

This is the objective collection, compilation and analysis of information about a market

What are the uses of market research

• helps understand competitors

• Helps identify customers wants and needs

• Helps identify gaps in the market

• To reduce risk when starting a business

What is primary research

Process of gathering information directly from customers in a target market

What is secondary research

This is the collection compilation and analysis of previously existing information

What are the examples of primary research methods

• survey

• Observations

• Questionnaire

• Interviews

• Focus group

What is quantitative data

This is based on numbers

What is qualitative data

This includes descriptions based on conversations

What are the limitations of qualitative data

• sample size used to gather information maybe too slow

• Bias means researchers can guide respondents to a certain answer

• Respondents in focus group maybe influenced by others responses

• The process of gathering it is expensive and time consuming

What are the limitations of quantitative data

• information might not be relevant

• Can be expensive to purchase market specific secondary data

• Numerical data maybe out of date

What is market segmentation

This is the process in which a single market is divided into sub markets

What are the advantages of market segmentation

• recognizes that not all customers are the same

• Products can be altered to needs of different segments

• Less expensive than marketing products at wide market segments

What are the disadvantages of market segmentation

• not everyone in a segment acts the same

• Segments are hard to identify

• Requires more detailed market research

What is a market map

A two dimensional program that shows the attributes of a product compared to its competition

What is competition

This is when at least two businesses are selling goods or services to the same target market

What are the types of competition

• direct

• Indirect

What is indirect competition

This is when firms sell different products but compete with each other for the same target market

How does competition benefit customers

• businesses offer lower prices

• Businesses produce better quality products

• Businesses provide better customer service

What factors do you use to access competition

• price

• Location

• Product range

• Quality

• Customer service

What decisions do competitors affect

• pricing

• Product development decisions

• Marketing decisions

• Operational