Topic 1.1 - Investigating Small Businesses Flashcards
Entrepreneur
Business people who see opportunities and are willing to take risks in making them happen in order to earn a profit.
Dynamic nature of business
The idea that business is ever-changing because external factors, such as technology, are always changing.
Venture capital
risk capital provided by an investor (venture capitalist) willing to take a risk in return for a share un any alter profits; the venture capital provider will take a share stake in the business.
Demand
the number of units that customers want, and can afford, to buy.
Customer
An individual who BUYS a good or a service (product). They may not necessarily USE the product.
Consumer
An individual who USES a good or a service (product). They may not necessarily BUY the product.
Obsolete
A good or service (product) with sales that have declined or come to an end as customers find something new.
Adapting existing products
Finding new products based on the original one, such as Wall’s White Chocolate Magnum.
Competitive advantage
A feature of a business that helps it to succeed against rivals.
Original ideas
ideas that have not been done before
Invention
An original idea for a product. This may need to have a copyright or a patent to protect it from being copied by rivals.
Innovation
Adapting/improving the process of producing a product, for example, Warburton’s extra-large crumpet.
Business failure
The collapse of a business, probably leading to its closure.
Independence
The need by many business owners to make their own decisions and be their own boss.
Lack of financial security
Uncertainty for the business owner about day-to-day family income and assets.
Risk and reward
The balance between the worst that can happen and the best that can happen.
Customer needs
The products individuals need to make life comfortable.
Basic needs
There are five basic needs that an individual needs in order to survive: water, food, shelter, warmth and clothing.
All other ‘needs’ are seen as a want.
Customer wants
what individuals choose to spend their income on, once the weekly bills have been paid.
Goods
This is a tangible and physical product (it can be touched). For example, products that may be fresh such as apples or manufactured such as Heinz Baked Beans.
Services
A product which is intangible (it cannot be touched). It is the skill provided by the worker. For example, a GP, a dentist, an engineer, a plumber or a hairdresser/barber.
Branding
Giving a product or service ‘personality’ with a name and a logo that makes them stand out from rivals.
Unique Selling Point (USP)
An original feature of a product that rivals are not offering.
Value added (i.e. adding value)
The difference between the selling price and the cost of brought-in goods and services. The extra the firm has added to the product before selling it onto the customer. The difference creates the possibility of earning a profit.
Business decisions
The choices that have to be made, usually within a short time period.
Human Resources (HR)
A term used by organisations that simply means employees (workers).
Resources
The things or individuals that can be used/hired to help build and run the business.
Resources could mean employees (human resources), but also raw materials, work-in progress materials - components (parts) and finished products.
Risk taking
Making decisions where unknown factors or chances of failure loom large in the decision-maker’s mind.
Calculated risk
A risk that has been given thoughtful consideration and for which the potential costs and potential benefits have been weighted and considered.
Entrepreneurs take calculated risks everyday, since they take decisions everyday. Each time they take a decision they are weighing up the significance of the options and (often intuitively) working out whether to go ahead.
