Topic Information Advantages Disadvantages
-Business ideas stem from
-Can adapt their products so
original ideas or products or
customer needs are met, -Risk of failure and loss,
Dynamic nature of services that become obsolete,
innovation and creativity, obsolescence, high pressure
busines or there is a change in
opportunity for growth, and competition.
technology/change in customer
improve competitiveness
wants and needs.
An entrepreneur considers the Rewards: Profit, business
Risks: Business failure,
Risks and rewards different outcomes when success, independence,
Financial loss, Lack of security.
starting a business challenge, social objectives
To provide what customers
need through a product or Higher profit margins, brand Increased costs, lower initial
The role and purpose
service. A business can add differentiation, customer margins,operational risk
of a business, adding
value through convenience, loyalty, premium pricing, because of pressure, increased
value.
branding, quality, design and a competitive advantage. time to produce.
unique selling point.
Autonomy and flexibility, Financial risk, uncertainty in
Role of an To organise resources, make
creative freedom, financial income, large workload, total
entrepreneur business decisions, take risks.
potential accountability
Customer loyalty and
Price, quality, convenience, retention, increased sales and Higher operational costs,
Customer needs
choice. profitability, improve brand increased staff burnout
reputation
Identify and understand
Market research: customer needs, identify gaps
Purpose of in the market,reduce risk and
inform business decisions
Up to date information,
New information collected first
Market research: questions tailored to the Time consuming, often more
hand by the business :Survey,
Primary market business,direct contact with expensive, open to bias
questionnaire, focus group and
research existing and potential depending on research used.
observations.
customers.
Gathers data that already
Cheaper than primary, less
Market research: exists and collected by Not specific or relevant to the
time consuming, information
Secondary research someone else: Internet, market business, out of date.
easy to find.
reports, government reports.
, Enhanced target market,
Grouping characters based of Increased costs,narrowing the
improving the product,
shared characteristics such as market and makes it smaller
Market segmentation increased loyalty by
Location, lifestyle, income, age (too niche), rapidly changing
customers, identify niche
and demographic behaviours and trends.
markets
Can be biased or limited to
A diagram that helps a
Identify a gap in the market, opinions of the person making
business position their product
Market map visualise competition, refine it,high time or cost investment.
and others across a map,
product positioning. May be a gap just because
plotted against two variables.
there is no demand.
Many businesses selling a
Increased innovation and
similar product, each trying to Lower profit margins, reduce
quality, efficiency and lower
Competitive attract the same customers. market share,high stress and
costs, appeal to customers,
environment Compete over quality, price, poor morale, costly to keep up,
employee motivation, market
location, product range and risk of overproduction
expansion
customer service.
Aim is long term and objective
is short term. Financial;
Survival, profit, sales, market
Business aims and share, financial security. Non Provides a direction and focus,
objectives financial: social objectives, motivation and structuring,
personal satisfaction,
challenge, independence and
control.
Insolvency: A business
Cash flow doesn't have enough money to
pay its bills when due.
Short term source, agreement Flexibility, no fixed
High cost, repayable on
with the bank that allows a repayments, immediate
demand, exceeding agreed
Finance:Overdraft business to spend more than availability, only pay interest
limit can result in other fees or
they have in their bank account on the amount of the overdraft
penalties, credit score impact.
up to an agreed limit. they use.
Costs of late payment, missing
Short term source, business Improved cashflow, often no
on early payment discounts,
receives goods from a supplier interest, can buy in larger
can be over-reliant and leave
Finance: Trade credit but doesn't have to pay back volumes, convenient and
business vulnerable if supplier
until after an agreed amount of easier to secure, strengthen
tightens terms, not always
time. supplier relations
available to start ups
Won't have funds available for
Long term source, owners can Retain full control, no debt or anything else/limited resources,
Finance: Personal
choose to invest their own interest payments, keep all high personal risk, lack of
savings
funds into the business profits, fast and east. outside expertise, emotional
stress
Long term source, finance Significant funding, no
Ownership dilutes, loss of
raised from successful immediate repayment,
Finance: Venture control, high growth pressure,
entrepreneurs, banks and experience and expertise,
capital time consuming process, risk of
private equity companies for a shared risk, networking and
conflict.
share of the business credibility
-Business ideas stem from
-Can adapt their products so
original ideas or products or
customer needs are met, -Risk of failure and loss,
Dynamic nature of services that become obsolete,
innovation and creativity, obsolescence, high pressure
busines or there is a change in
opportunity for growth, and competition.
technology/change in customer
improve competitiveness
wants and needs.
An entrepreneur considers the Rewards: Profit, business
Risks: Business failure,
Risks and rewards different outcomes when success, independence,
Financial loss, Lack of security.
starting a business challenge, social objectives
To provide what customers
need through a product or Higher profit margins, brand Increased costs, lower initial
The role and purpose
service. A business can add differentiation, customer margins,operational risk
of a business, adding
value through convenience, loyalty, premium pricing, because of pressure, increased
value.
branding, quality, design and a competitive advantage. time to produce.
unique selling point.
Autonomy and flexibility, Financial risk, uncertainty in
Role of an To organise resources, make
creative freedom, financial income, large workload, total
entrepreneur business decisions, take risks.
potential accountability
Customer loyalty and
Price, quality, convenience, retention, increased sales and Higher operational costs,
Customer needs
choice. profitability, improve brand increased staff burnout
reputation
Identify and understand
Market research: customer needs, identify gaps
Purpose of in the market,reduce risk and
inform business decisions
Up to date information,
New information collected first
Market research: questions tailored to the Time consuming, often more
hand by the business :Survey,
Primary market business,direct contact with expensive, open to bias
questionnaire, focus group and
research existing and potential depending on research used.
observations.
customers.
Gathers data that already
Cheaper than primary, less
Market research: exists and collected by Not specific or relevant to the
time consuming, information
Secondary research someone else: Internet, market business, out of date.
easy to find.
reports, government reports.
, Enhanced target market,
Grouping characters based of Increased costs,narrowing the
improving the product,
shared characteristics such as market and makes it smaller
Market segmentation increased loyalty by
Location, lifestyle, income, age (too niche), rapidly changing
customers, identify niche
and demographic behaviours and trends.
markets
Can be biased or limited to
A diagram that helps a
Identify a gap in the market, opinions of the person making
business position their product
Market map visualise competition, refine it,high time or cost investment.
and others across a map,
product positioning. May be a gap just because
plotted against two variables.
there is no demand.
Many businesses selling a
Increased innovation and
similar product, each trying to Lower profit margins, reduce
quality, efficiency and lower
Competitive attract the same customers. market share,high stress and
costs, appeal to customers,
environment Compete over quality, price, poor morale, costly to keep up,
employee motivation, market
location, product range and risk of overproduction
expansion
customer service.
Aim is long term and objective
is short term. Financial;
Survival, profit, sales, market
Business aims and share, financial security. Non Provides a direction and focus,
objectives financial: social objectives, motivation and structuring,
personal satisfaction,
challenge, independence and
control.
Insolvency: A business
Cash flow doesn't have enough money to
pay its bills when due.
Short term source, agreement Flexibility, no fixed
High cost, repayable on
with the bank that allows a repayments, immediate
demand, exceeding agreed
Finance:Overdraft business to spend more than availability, only pay interest
limit can result in other fees or
they have in their bank account on the amount of the overdraft
penalties, credit score impact.
up to an agreed limit. they use.
Costs of late payment, missing
Short term source, business Improved cashflow, often no
on early payment discounts,
receives goods from a supplier interest, can buy in larger
can be over-reliant and leave
Finance: Trade credit but doesn't have to pay back volumes, convenient and
business vulnerable if supplier
until after an agreed amount of easier to secure, strengthen
tightens terms, not always
time. supplier relations
available to start ups
Won't have funds available for
Long term source, owners can Retain full control, no debt or anything else/limited resources,
Finance: Personal
choose to invest their own interest payments, keep all high personal risk, lack of
savings
funds into the business profits, fast and east. outside expertise, emotional
stress
Long term source, finance Significant funding, no
Ownership dilutes, loss of
raised from successful immediate repayment,
Finance: Venture control, high growth pressure,
entrepreneurs, banks and experience and expertise,
capital time consuming process, risk of
private equity companies for a shared risk, networking and
conflict.
share of the business credibility
