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Business Studies Revision- Enterprise Enterprise Almost any business or organisation can be called an enterprise, but the term usually refers to any process by which new business is formed and new products and services are created and brought to the market. Enterprises are usually led by an entrepreneur Entrepreneur Individuals who have an idea that they develop by setting up a new business and encouraging it to grow are called entrepreneurs. They take the risk and the subsequent profit that come with success or the losses that come with failure.

Characteristic of successful entrepreneurs include: Passionate (about their business idea) – This is important motivation and commitment to turn their idea into a successful business . Creative – in order to come up with an idea for a business / new products / services. . Willing to take responsibility – Entrepreneurs are responsible for organising the resources . Self-confident – This is important in inspiring confidence in and motivating others, including employees, lenders / investors, suppliers. Optimistic – Setting up a business can be tough and not always go according to plan. An optimistic nature will help to ensure an entrepreneur does not give up on he idea they first thought of. . Willingness to take risks- possibly the most important quality of an entrepreneur, Entrepreneurs often invest their own personal funds in an idea for which there is no guarantee of success. . Ability to spot and take advantage of opportunities- entrepreneurs should be fast at making decisions and taking advantage of golden opportunities.

The Importance of Risk The majority of new businesses fail for the following reasons: . Lack of finance . Skills shortages . Good idea but poor execution Calculated risks cannot be avoided in business. Entrepreneurs need to understand here significant risks arise, than asses the probability of the risks happening, this had to be estimated, and then the affects of the risk on cost, cash etc. They should be able to decide whether the potential rewards make the risk worth taking The Importance of Rewards . Profits . Satisfaction .

Control Opportunity Cost Opportunity cost is what we sacrifice, the forgone opportunity when we decide to take once course of action over another. I. E. the next best thing that could have been chosen but was not. In business terms, opportunity cost is the value of the benefit(s) f the next best alternative course of action forgone, when making a choice between alternative courses of action Motives for Becoming an Entrepreneur . Turn a hobby or an interest into a business . Achieve and be recognised for their achievement . Be their own boss and make their own decisions .

To make money . To provide employment for the local community, sometimes in the form of social enterprises.. To Gain more freedom at work Government support for enterprise The government has introduced measure to make it easier to start up in business, to run a business to make a business grow. It has done this by: . Reducing business taxes . Reducing the regulatory burden on enterprises . Reducing barriers to raising finance for small businesses . Improving the support for small and new businesses . Introducing legislation to promote completion .

Reviewing how to encourage unemployed people to move into-self-employment Generating and Protecting a Business Ideas Sources of Business Ideas: . Spotting trends and anticipating their impact on people’s lives- tapping into what is happening in society around us or in a market and responding quickly to these changed . Identifying a market niche- involves noticing something missing in a pecific market section or something that can be improved on.. Copying ideas from other countries- Travelling to different countries and discovering different cultures enables entrepreneurs to pick up ideas that have worked elsewhere..

Taking a scientific approach- some entrepreneurs spend time inventing new products Niche Markets Niche marketing is aiming a product at a specific type of consumer. A niche market is usually a smaller segment of a larger market. Companies using a niche market often get fewer sales than they would if they aimed at a mass market so they have to make up for this by charging a higher price Advantages: Less hassle . Easy to research . High Prices Disadvantages: . Small market . People might not be prepared to pay that high . Idea might not be successful .

Competition might copy your idea Franchises This is a business structure in which the owner of a business idea (The franchisor) sells the right to use that idea to another person (The Franchisee), usually in return for a fee and a share in any profit Benefits of operating as a franchise are: . Least risk in starting a business . Franchise business usually has established brand names with proven success . Easier to get finance . Usually incur lover marketing costs Relationships with suppliers may have been established by the franchisor .

Franchisor often offers support, training and advice Drawbacks of operating as a franchise include: . Costs may be higher than expected . Other franchisees may give the brand a bad reputation . Agreements often have restrictions on how the business should be run . Heavvy reliance on success and methods of franchisor Protecting a business idea Copyright- legal protection against copying for authors, composers and artists Patent- an official document granting the holder the right to be the only user or producer of newly invented product Trademark- a sign, logo, symbol or words displayed on a company’s products for its protection.

Transforming Resources into Goods and Services Resources In order to produce goods and services, a business will need to use resources. These resources are the inputs into the production process, but are more commonly known as the factors of production. They are: . Land- all the natural resources that can be used for production, including land itself, but also natural and mineral resources involving in production . Capital- goods that are made in order to produce other goods and services (e. . Factories, machinery, Lorries) .

Enterprise- bringing together the factors of production to create goods and services Inputs, Outputs, and Process Business transforms Raw Materials into finished products and sells them. There are three steps: Input, Process, and Output . Inputs mainly consist of Raw Materials . Processes consists of workload that transforms the raw materials . Outputs are the finished product The Transformation Process . The transformation process is how a business turns its inputs into outputs . Feedback is important, as it allows a business to make changed to the process e. . Suppliers Adding Value Adding values the process of increasing the worth or resource by modifying them. The transformation process is a major factor in adding value. For example, the value of the components used to make a car is much less than the value of the finished car. The level of added value can be calculated using the following formula: Added value = sales revenue the cost of bought-in materials, components and services Business can also add value by getting customers to pay higher prices or buy more. This could be achieved by: .

Producing High- quality products . Offering good after-sales service Using marketing to persuade customers to buy more and/ or pay huger prices Developing a Business Plans Purpose ofa business plan A business plan is a report describing the marketing strategy, operational issues and financial implications ofa business start-up. Benefits ofa business plan: . It is useful in helping entrepreneurs clarify their objectives . It enables owner to know precisely what needs to be done to meet their business objectives . It identify problems .

Its essential document in persuading lenders to invest capital in the business Drawbacks ofa business plan: . Time consuming . Expensive . Requires lots of research Constant changes . Time- it is time consuming, but the more time taken, the better the plan is likely to be . Determination- an entrepreneur needs to remain determined to complete the plan accurately even if it proves difficult . Vision- the entrepreneur needs a clear idea of the business . Numbers- an entrepreneur cannot avoid financial information and cant afford to be afraid of numbers Content of a Business Plan The business plan should contain: .

Details about the business, including its name and location, its legal structure nd a description of its product or service . Personal information about the owner and angers, details of nay support they are receiving, and details of key staff and staffing requirements . The objective of the firm . A marketing plan . A production plan . Details of fixed assets, including how these are to be financed . A projected profit and loss account . Balance sheet for the next 2-3 years . Details of pricing and breakeven level .