1.1 The Nature of Business Activity

Satisfying people's needs by adding value to resources.

Resources needed by businesses to operate and produce goods/services.

Natural resources, like raw materials and land itself.

Workers, both skilled and unskilled, needed to produce output.

Manufactured resources (machinery, tools, factories) for production.

Initiative and risk-taking by entrepreneurs to organise production.

Adding value to resources while meeting people's needs.

An organization that uses resources to meet customer demands.

A short-term loan from a bank, allowing a business to spend more than their account balance.

Ensuring customers pay their debts on time, minimizing financial risks for the business.

Skills needed to guide and direct people, making impactful choices for the business.

Skills in efficiently collecting, storing, and using money within a business.

Skills in creating a roadmap, working together, and sharing information effectively within a business.

Skills in promoting and selling products/services to attract and keep customers.

Someone who starts and manages their own business, taking risks and seeking opportunities.

Someone who acts like an entrepreneur within an existing company, bringing new ideas and initiatives.

A detailed roadmap for a new business, outlining goals, strategies, and financial projections.

The ability to develop new ideas and approaches, setting a business apart from competitors.

Passion, dedication, and drive to succeed, working hard even when faced with challenges.

Having a broad range of skills, from product creation to promotion, accounting, and people management.

Ability to guide and inspire others, motivating and empowering employees to achieve goals.

Belief in oneself and one's abilities, bouncing back from setbacks with a strong attitude.

Willingness to take calculated chances, investing personal resources in the hope of a successful outcome.

Creating goods or services that are worth more than the cost of producing them, leading to profit.

The scarcity of resources compared to unlimited human wants, forcing choices and opportunity costs.

The value of the next best alternative forgone when making a choice.

Constantly changing factors (competitors, laws, economy, technology) affecting business success.

Common reasons for business failure include poor record-keeping, lack of cash, ineffective management, and poor customer understanding.

Lack of accurate records, like sales, expenses, and inventory, hindering financial management and tax compliance.

Insufficient funds to cover operating expenses, leading to difficulties in buying supplies, paying suppliers, and offering credit.

A plan predicting future cash inflows and outflows, helping businesses manage funding and avoid cash shortages.

Funds needed for day-to-day operations, inventory, and offering credit to customers.

Knowing what customers need and want, leading to effective marketing and sales strategies.

Minimising waste, controlling costs, and optimising resource usage to maximize profit.

Adapting to change by embracing new opportunities and adjusting strategies.

Securing sufficient funds at the right time to support growth and expansion.

Key elements for business success include understanding customers, efficient management, flexibility, and sufficient funding.

Common reasons for new business failure include poor planning, insufficient capital, lack of experience, and inadequate marketing.

Industries often started by entrepreneurs due to low capital requirements and their skills, like fishing, market gardening, crafts, and building trades.

Entrepreneurs often face difficulties securing finance due to insufficient savings, lack of financial knowledge, no trading record, or poorly presented business plans.

Choosing an affordable location is vital for new businesses, especially with limited capital. Operating from home can be cost-effective, but may have downsides like lack of visibility and potential family conflicts.

Established businesses often have advantages over new ventures in terms of resources and market knowledge. Entrepreneurs need to stand out with unique products or exceptional customer service.

New businesses need to quickly attract customers and build loyalty to survive. Providing excellent customer service, like personal attention, knowledge, and unique solutions, helps retain customers.

Risk is a chance of failure that can be assessed and mitigated. Uncertainty is unpredictable and unmeasurable, like a sudden economic downturn.

Entrepreneurs can reduce risk by analyzing past failures, creating a well-thought-out business plan, and avoiding mistakes made by other businesses.

Governments often create policies to encourage entrepreneurship, recognizing the benefits to the economy.

Starting a business generates jobs for the entrepreneur themselves and often for others, contributing to lower unemployment rates.

Increased output from entrepreneurship boosts a country's gross domestic product (GDP), leading to economic growth and higher living standards.

While many new businesses fail, those that survive can expand and become significant players in the economy, creating jobs and replacing declining industries.

Entrepreneurs often drive innovation and technological advancements, creating new products and services that can make a country's business sector more competitive.

Many new businesses cater to local market demands, but some may also develop products for export, further boosting the economy.

Key factors that increase the chances of a business succeeding include: adequate funding, a good location, a strong business plan, addressing customer needs, and offering innovative solutions.

Entrepreneurs play a crucial role in economic development by creating jobs, driving growth, fostering innovation, and contributing to a country's competitiveness.

Expanding a business's operations to sell goods or services in other countries, increasing a nation's exports and competitiveness.

Starting and running a successful business can help individuals develop valuable skills and achieve personal fulfillment.

Successful and expanding small businesses can reduce social problems like unemployment by creating jobs, opportunities, and positive role models.

The process of encouraging employees within a business to be innovative, take risks, and create new opportunities, similar to entrepreneurs.

Intrapreneurship can benefit a business by injecting creativity, developing new ways of working, driving innovation, creating a competitive advantage, and retaining talented employees.

Business plans are essential for securing investment, providing a roadmap for the business, and demonstrating a clear understanding of the venture.

A business plan typically includes an executive summary, business opportunity description, marketing and sales strategy, team information, operational details, and financial forecasts.

The main purpose of a business plan is to secure funding for a new venture, presenting a clear and convincing proposal to investors and creditors.

Creating a business plan forces entrepreneurs to think strategically, identify strengths and weaknesses, and develop a clear plan of action to guide the business.

While business plans are valuable, they don't guarantee success and can create a false sense of certainty, relying on forecasts that may not be entirely accurate.

Business plans should allow for some flexibility to adapt to changing market conditions and seize emerging opportunities that were not initially anticipated.

Business plans should be detailed and supported by evidence, such as market research, to increase their credibility and convince potential investors.

A poorly written business plan can cause delays in securing funding as investors might wait for a more comprehensive and convincing proposal.

Entrepreneurs should be cautious of becoming too inflexible and rigid in following their plans, as they might miss out on new opportunities that arise.