1.1- Enterprise and entrepreneurship Flashcards
Insolvent
When a business can no longer afford to pay its debts
Obsolete
When a product or service is no longer in demand
Reasons why new business ideas come about
1.Changes in technology
2.Change in customer needs and wants
3.Goods or services becoming obsolete
How new business ideas come about
- Through original ideas
2.Through adapting existing products or ideas
Original idea
An idea that hasn’t been used before
Adapting existing products
The process of modifying an existing product to appeal to more customers’ needs
3 Main risks of starting a business
- Business failure- being forced to close
- Financial loss- risk losing money used to set up business
- Lack of security- give up job w regular income
Calculated risk
A risk that has been given careful thought and consideration
Three main rewards:
Business success
Generating profit
Independence
Roles of a business enterprise
To produce goods or services
To meet customer needs
To add value
Customer needs
Price, convenience, quality, choice
Added value
The difference between the cost of making a product and what the product sells for.
Four main methods of added value
Convenience, branding, quality, USP
Three roles of an entrepreneur
Organise resources- ensure business has money & supplies
Take risks- give up current job and take calculated risks
Make business decisions- how to grow, who to employ
Risk
Possibility that an entrepreneur will have lower profit than expected or have a loss
3 ways to minimise risk
-Carrying out research to find out customer needs
-Writing business plan to identify potential problems
-Ensuring sufficient cash is available
