Enterprise Flashcards
Why do people start their own business?
- to gain a profit
- to turn a hobby or pastime into a business
- to use redundancy money and provide
themselves with employment - to be their own boss.
What is business opportunities
Needs and wants are not fixed. They can change quickly as fashions and lifestyles change, and also over the longer term as incomes increase and population changes. This means that markets are always changing. The business world does not stay still – new opportunities are constantly arising. An entrepreneur with an idea, commitment, funds and a little luck can succeed even in the most competitive of markets.
Importance of the entrepreneur to the success of the economy
Entrepreneurs tend to be single-minded,
prepared to work hard, passionate/
determined/ambitious, have ability to organise
production, are prepared to take risks and
are innovative – possible use of examples of
entrepreneurs to illustrate points.
* Many entrepreneurs are innovators. They
bring new ideas to the market and drive the
development of new technologies. James
Dyson, of Dyson vacuum cleaner fame is a
classic example of an entrepreneur, bringing a
range of new products to the market.
* Entrepreneurs are important because they
are innovative, they can provide better ways
of doing things and can also lead to new
business, thus increasing profit for businesses
and their stakeholders.
* Entrepreneurs have the vision and the
willingness to take risks which drive business
forward.
* Entrepreneurs help the economy by creating
new jobs.
* Help to boost the economy by providing new
products.
* Without entrepreneurs, our economy would
not benefit from the boost they give from
added business and ideas and wealth creation.
* Increasing exports – helps balance of
payments.
* Government benefiting from taxation that is
generated from the revenues of the business.
What is an entrepreneur
An entrepreneur is someone who
starts and runs a business. Perhaps they make
a product and then sell that product, or perhaps they provide a service. They quite possibly employ people and, of course, try to make a profit.
What is needs
People have a limited number of needs that
must be satisfied if they are to survive. These
would include physical needs such as a minimum amount of food, water, shelter and clothing and psychological and emotional needs, e.g. self-esteem and love.
What is want
Wants are unlimited (infinite) people constantly aim for a better quality of life. For example, better/more food, better housing, longer holidays, better education, entertainment – in effect any example that is not a basic need.
What are the characteristics of an entrepreneur
*being a risk taker – they risk capital
* product knowledge
* be hard working
* be passionate/determined/ambitious and
have perseverance – new businesses have
low success rates
* taking the initiative and being proactive –
adapting to change if required
* having creativity and innovation – being able
to come up with concepts and ideas
* being an effective organiser – organises
labour, raw materials, etc.
What are the 3 sectors of industry
*Primary
*Secondary
*Tertiary
What is the primary sector
Extractive – produces raw materials, e.g. iron ore (that goes into making steel) and oil (that makes petrol, plastics, etc.), as well as producing final products like fish and oranges.
What is secondary sector
manufacturing and construction industries make, build and assemble products
What is tertiary sector
services give value to people but are not physical goods.
Services are sometimes classified as direct services (to people),e.g. the police, hairdressing, etc. and commercial services
(to business), e.g. business insurance, financial services, etc.
What is the rise and decline in the employment sector
Primary: Declined as raw materials have run out
and are now found elsewhere in the world.
Decline in secondary employment:
* De-industrialisation – decline in once
prosperous industries such as shipbuilding,
steel, textiles and car manufacturing.
* Changes in consumer demand in favour
of foreign goods – better quality products
from countries like Japan, Korea, etc. at very
competitive prices/better quality/reliability/
innovation.
* Lack of competitiveness of UK
manufacturing firms in world markets/
increasing overseas competition.
* Lack of investment in manufacturing both by
government and industry.
* Technology has replaced workers.
* Trade union problems can cause markets to be
lost to foreign competition.
* Relocation of UK manufacturers abroad due
to lower costs.
* Education system not producing as many
graduates, e.g. engineers who are able to work
in manufacturing – manufacturing has become
‘unfashionable’.
Increase in tertiary employment:
* Tertiary business created businesses that did
not exist until fairly recently, e.g. fitness centres,
internet cafes, on-line shopping services.
* Greater affluence during that period has led to
growth in demand for services – finance, travel,
leisure, etc.
* Education system more geared to tertiary
employment.
* Manufacturing has become ‘unfashionable’–
people wish to work in more pleasant
environments.
What is the importance of each sector of industry to the UK economy
In terms of employment, the tertiary sector is by far the most important in the UK employing
approximately 80% of those who are in employment. The secondary sector accounts for 18%, with 2%
in the primary sector. A similar picture emerges if we look at the contribution each sector makes to the
value of our output (GDP).
* Many entrepreneurs believe that that manufacturing in the secondary sector creates wealth when
compared to the service sector. However, the secondary sector in the UK and the manufacturing
sector in particular have rapidly declined due in part to competition from cheap foreign imports from
developing countries. They cannot compete with low labour costs in China and India.
* The key issue for the secondary sector is that of ensuring they can turn raw materials, or semifinished components, into something that consumers will pay for. The problem is about maintaining
competitiveness by adopting suitable strategies and investing in high tech industry (computers,
telecommunications, aerospace) where there is a significant emphasis on research and development.
* Within the secondary sector, there needs to be a greater emphasis on hi-tech manufacturing industries
and the UK needs to build on its success in this area so that it can manufacture goods for export and
earns money for the UK in the future. This is important in helping UK’s balance of payments.
* The tertiary sector has grown considerably over the past twenty years and it can be argued that the
tertiary sector is the most important even if the banking crisis and the recession have shown that an
over dependence on financial services has not generated as much wealth for the UK as was supposed.
* In some rural areas e.g. West and mid Wales, Scottish Highlands the primary sector is crucial to the
local economy. We also still get a great deal of food from the UK agricultural industry, even though
numbers employed are very small.
What is a business plan
A statement that outlines the way
in which a business will attempt to achieve its
objectives - giving a clear idea of its operation and direction.
What are the core parts of a business plan
The introduction or overview/Executive
Statement
This provides an overview of the business’s
aims, objectives and strategy, and is evidence
that the proposal is viable. It sets out how the
business is going to be run.
* The Marketing Plan
Important part of any business plan based on
both field and desk research. Market research
carried out needs, if possible, to establish the
size of the market, the needs of the customers
and the level of competition. When market
research findings have been examined then the
marketing plan can be prepared.
* The Operations Plan
Include details of where the business will
be located, production methods and any
equipment needed. Plus, information on the
costs of production and where the business will
buy supplies may be included.
* The Human Resources Plan
The number of employees and the skills,
experience and qualifications they require will
be outlined. Any management team will also be
identified.
* The Financial Plan
A variety of forecasting will be necessary:
* a sales forecast indicating potential revenues
* a cash flow forecast for the first 12 months
* a profit and loss and balance forecast for the
end of the first year
* a break-even analysis.
In addition, information on where the finance
for starting and running the business will come
from, indicating the available start-up capital as
well as any potential borrowing
What advice is available to start-up businesses
Business Wales
https://businesswales.gov.wales/
This is a government run website-based
information resource for those individuals
who are thinking of starting a business or
wanting to grow their business and are
seeking information, advice and guidance.
* Commercial Banks
Many of the high street banks offer a
dedicated service to small businesses and
offer advice on how to construct a business
plan and gain financial approval.
* The Princes Trust
https://www.princes-trust.org.uk/
They work with 18 to 30-year-olds to turn big
ideas into a business reality through their
Enterprise programme, and offer training and
mentoring support to funding and resources.
* British Chambers of Commerce
http://www.britishchambers.org.uk/
They provide continued advice and support
for local businesses. The BCC is a strong
campaigning voice for the interests of
business delivers services that help business
grow, and is the premier private sector source
of advice and support for international trade.
WHat are the Benifits and however of a business plan
Benefits of having a business plan:
Sets out their objectives and strategy - outlines
the way in which they will attempt to achieve their
business objectives.
Outlines its marketing strategy – researches vital
information such as the size of the potential market,
the strength of the competition, etc.
Clear idea of direction and operation – Strategic
planning/setting objectives.
Helps to convince banks and lending institutions
of its ability to pay back loans – cash flow forecast
– without one, obtaining finance from banks, etc. is
less likely.
Highlights strengths and identifies possible
problems which can then be dealt with in advance.
Sets out what personnel/skills will be required to
run the business effectively.
Helps them think ideas through – giving a clear
idea of direction and operation. May help to identify
difficulties that may occur and allow the business to
deal with them before they become a problem.
Useful as a monitoring tool – e.g. compare actual
performance with forecasts in the business plan.
However:
May succeed if the product or service proves so
popular that sales are very high, and profits are
made consistently.
May succeed without one if a small, easily managed
business e.g. window cleaner.
No business can be guaranteed success however
good the business plan.
External factors may make the business successful
even if business plan not drawn up – economic
upturn, change in the law/government policies.
Those businesses that have a clear plan are more likely
to be successful compared to those that do not.
What is a market
A meeting place between buyers and sellers
where goods and services are exchanged, usually for money.
What is a global market
Global marketing is all about selling
goods or services to overseas markets. Different marketing strategies are implemented, based on the region or country the company is marketing to
What are the advantages of global markets
Higher earnings – likely to be higher
earnings, if margins in overseas markets
exceed those at home.
Spread risks – by moving into new markets
risks are now spread.
Economies of scale – this move into
global markets is likely to lead to increased
economies of scale.
Survival – some businesses need to be global
to survive.
Saturation of the home market – the
business may have the finance to expand, but
be unable to do so because of competition so
they take advantage of entering a new market.
What is trade market
[b2b]
* Trade marketing is the marketing role that
focuses on selling and supplying to distributors,
retailers, wholesalers, and other supply chain
businesses instead of the consumer.
* Objective of trade marketing is to increase
demand for products/services supplied within
the supply chain.
* Trade marketing is not an alternative to brand
and consumer marketing, but rather acts as
a support to traditional consumer-focused
marketing strategies.
What is a market share
This measures the sales of a business
relative to the market size
What is the calculation for market share
Sales of a business / total sales in a market } x 100
What is market share used for
Market share is important as it might indicate
that a business is the market leader. This
might influence the strategy or objectives of
the business. A business with a small market
share may set a target of increasing its share
by a certain amount over a fixed period of time.
Market share might be an indication of the
success or failure of a business or its strategy
