Business Basics

Study Notes

A business is an organization or activity that provides goods or services to meet the needs of customers, aiming to make a profit.
Profit is achieved when a business receives more money than it spends.
Goods are physical things that people buy, while services are actions or tasks performed for another person.

Traditional Economy: a bartering system where people exchange items they have for things they need, creating a direct swap of goods or services.
Controlled Economy: the government decides what gets produced, how much, and how it's distributed.
Free-market Economy: individuals and businesses make most of the decisions about buying and selling goods and services, with minimal government control.
Mixed Economy: both people and the government have a part in decision-making, ensuring a balance between individual freedom and government regulation.

Market research involves checking if an idea will work or can be improved by researching the competition, market pain, and customer reviews.
Secondary market research uses companies to find information about other companies, while primary market research involves conducting one's own research, such as surveys, which is the most accurate but time-consuming method.

A business plan is a roadmap that helps entrepreneurs figure out what they want to do, how they'll do it, and what might come up along the way.
It enables making smart decisions and being prepared for potential challenges, ultimately leading to business success.

The target market is the specific group of people a business aims to sell its products or services to.

Business risks are factors that may cause a company to fail or lose money.
Market risk occurs when customers no longer want a company's products or services.
Financial risk involves unexpected expenses or financial obligations.
Environmental risk includes external factors like weather, pandemics, or earthquakes that can impact a business.

Supply channels are the ways in which a business gets its products or services to customers.
Direct supply involves sending goods or services directly to the customer.
Indirect supply involves using intermediaries, such as stores, between the company and the customer.

SWOT analysis is a tool that helps businesses identify and address potential risks and opportunities.
Strengths: what a business does well.
Weaknesses: what a business does not do well.
Opportunities: goals or areas for improvement that can enhance a business.
Threats: potential roadblocks or obstacles that a business may face.