Enterprise and Entrepreneurship Flashcards
Why New Business Ideas Come About
Changes in technology.
Changes in what customers want.
A product becomes obsolete. This means it is no longer used, often as it has become outdated and replaced. Businesses have to come up with new ideas to survive.
Opportunities Brought About By Changes In Technology
Making expensive technology affordable. This allows technology to be more affordably used in products.
E and M commerce. This means businesses can sell all over the world and start ups to not have to rent a physical store to sell products.
-Social Media. This allows businesses to interact with customers all around the world. Businesses can use it as an inexpensive way to promote itself.
Changes In What Customers Want
-Businesses need to listen to their customers in order to see what they are looking for and how their needs are changing.
-This allows businesses to keep up with changing trends, retaining existing customers and attracting new ones.
How Can Businesses Identify Customer Needs
-Trialling new products. This can raise awareness of a brand and show what customers prefer or dislike.
-Use data as it is very detailed so can help businesses make their customers shopping experiences easier.
-Data also helps a business to rethink the way they design, produce and market their products.
How Entrepreneurs Come Up With New Business Ideas
-Adapting existing products to keep up with changes in consumer trends
-Create a completely original product to satisfy a new or previously unknown customer trend
Adapting Existing Products
-Adaption is the process of modifying an existing product so that it is suitable for different customers or markets.
-It can be seen as less risky than launching a brand new product. A business may adapt a product physically to appeal to different customers or cultures.
-However, adaption does not always succeed. Even if a product succeeds, it may not do well enough to make the adaption worthwhile.
-A business will have to balance customer needs, costs and return on investment to decide whether to adapt.
Why Might a Business Adapt Products
-Customising existing product can cut development costs.
-It can be faster for a business to launch new products adapted from existing ones.
-Some businesses might not have a choice: they might need to make significant adaptions to their main products if their customers begin to change.
How Original Business Ideas Come About
-The entrepreneur may have a passion or interest
-A gap in the market may have been spotted
-A business may have carried out research into the wants and needs of customers and created a product from this.
Business Risks: Lack of Security
-An entrepreneur will often have given up their job to follow a business idea.
-This means if things go wrong, they may end up with no job and lose their money, causing a poor quality of life.
-Insecurity may also negatively impact quality of life as having to make all of the businesses’ decisions for themselves can cause entrepreneurs a lot of stress.
Business Risks: Financial Loss
An entrepreneur will have spent money on start up costs, often borrowing money to do so.
-This means if things go wrong, they can lose their own money and fall into debt.
-If a business makes financial loss, it won’t be able to pay back borrowed money and may struggle to survive.
-This may damage their reputation as it may have an impact on being able to raise finance for a start up in the future.
Business Risks: Business Failure
-There is always the chance a business will fail.
-This means the entrepreneur risks the money, time and effort they put in starting the business
How to Minimise Business Risks
-Carrying out market research to find out what customers want.
-Writing a business plan to identify potential problems.
-Ensuring that there is sufficient money available.
Business Rewards: Business Success
-Many entrepreneurs are motivated by the satisfaction of building a business from nothing or thinking of an original idea.
-Many entrepreneurs value receiving industry rewards as they are physical signs of success.
-Others signs of success are: fame, survival, growth and making more money than than would have been made from working for someone else
Business Rewards: Profit
-Despite the risk of financial loss, a great amount of money can be made if a business succeeds.
-If a business makes a lot of profit, the entrepreneur could earn more money than they did before they started. This could give them a better quality of life.
-Entrepreneurs require a great deal of hard work and skill to succeed but the idea of a large profit motivates most.
Business Rewards: Independence
-Many entrepreneurs are motivated by the idea of working for themselves rather than someone else.
-This also has its risks but most consider the rewards of running their own business is greater than working for someone else.
-Although mistakes will be made, independence allows an entrepreneur to choose what they do day to day and choose what direction the business goes in.
-Entrepreneurs are more likely to take risks and try out new things they think might work rather than sticking to more conventional or expected ideas.
