U1, AOS 1: KK1 - Reasons for establishing a business Flashcards
What are the main reasons for going into business?
- To make a profit
- Be your own boss - greater independence
- Identified a market opportunity
- Currently unemployed
Profit motive is…
Rightly or wrongly, many people think that owning a small business is a gateway to financial riches and see becoming an owner as the best way to improve their income.
Although wealth and security are by no means guaranteed, the profit motive is a powerful factor in the decision to purchase or start a business.
A desire for greater freedom/independence is…
Many people become frustrated as employees, either because they think they have a better way of doing things or because they feel that their efforts are under-recognised.
By owning their own business, small business owners gain their independence as well as all the financial rewards that their hard work has gained. This extends to being able to choose the hours they work and the way that work is done.
Identifying a market opportunity is…
A business opportunity can sometimes present itself in a way that an ambitious or creative person cannot ignore. An idea for a new or cheaper/better quality product, or a service that is not currently being
provided can be a strong incentive to go into business
for yourself so that the market demand is satisfied (not
to mention the recognition – and hopefully profits – that will eventuate).
Starting a business due to unemployment refers to…
Some individuals may discover that self-employment is their only option. The old saying about one door closing and another one opening is apt for those who are forced into what can turn out to be a highly rewarding small business.
List three costs involved with leaving salaried employment to become a business owner.
Loss of secure income and other benefits (e.g. paid holidays, sick pay, superannuation, secure salary)
How many small businesses are there in Australia?
The business sector in Australia is dominated by SMEs (small and medium enterprises). In fact, 97.3% of all business in Australia (or around 2.5 million) are small businesses (0-19 employees) and a further 2.5% are medium businesses (64,559), employing 20-199 employees
