1 Starting a Business

1 STARTING A BUSINESS

Who am I?Can you work out who these famous entrepreneurs are?

A GALA SIR RUNSCRAB DRAINS HORNBEHEADED ROMAN

1.1 STARTING A BUSINESS ENTERPRISE


In this topic you will learn about:

Sources of business ideas

Looking for a gap in the market

Identification of a product or market niche

Reasons for starting a business

Franchises


WHAT IS A BUSINESS?

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You have 30 seconds to write down as many businesses as you can think of starting from NOW!


What is a business?Why do they exist?Who owns them?

What do the businesses you thought of have in common?

ENTERPRISE AND ENTREPRENEURS

Enterprise

The formation of a new business or development of a new product or service to be introduced to the market

Entrepreneurs

A person who having generated a new business idea develops it by setting up a business

Often viewed as someone who is willing to take risk in setting up a new business


ENTREPRENEUR

What does an entrepreneur look like?

What are the characteristics of an entrepreneur?

What skills does an entrepreneur need?


Entrepreneurs are often thought to be creative – are you?Draw an entrepreneur

Add labels to your entrepreneur to answer the questions posed above

ENTREPRENEUR

Match each word from the first column with a word from the second column to give the characteristics of an entrepreneur

opportunity taker

risk motivator

decision spotter

creative communicator

self thinker

strong maker

Explain what is meant by each characteristic and why it is important to an entrepreneur.


WHY DO BUSINESSES EXIST?

To produce goods

To distribute products

To provide a service

To help others

To meet the needs of society


To make a profit

Not for profit / social enterprises

Add an example of each of the above from your local area

SAY WHAT YOU SEE


IDEA

SOURCES OF BUSINESS IDEAS

Personal experience

Business experience

Market research

Eureka moment

Brain storming




Rowena Mead is a young mum and entrepreneur who has invented a new style of toothbrush called

The Bugbrush. It looks a little bit like a caterpillar and is designed so that small children can brush their own teeth

without the dangers of a hard handle or the temptation to just chew the handle. She came up with the idea after getting

increasingly frustrated with bed time tantrums by her daughter every time Rowena tried to brush her teeth.

Question Time1 Explain two ways an entrepreneur such as Rowena can generate business ideas. ( 4 marks)

Extension: Read more

about Rowena and

other inventors in

this BBC news article.


Have you ever thought

There must be an easier way of doing this?

I wish there was a gadget that did this for me?

I would like to be able to buy a “thingy”?


The greatest inventors of all time!!!

Team TaskWhat would you invent to make your life easier?

Could it be a viable business idea?How would you start to research your idea?

SAY WHAT YOU SEE


MARGAPKET

LOOKING FOR A GAP IN THE MARKET

It is important to identify whether or not there is a gap in the market

And

Whether that gap needs filling Sometimes there is a good reason for something not existing already!

Where might you look?

Trends in the market

Bring in an idea from abroad

Market research

Meeting a personal need


What about a dog wash?

IDENTIFICATION OF A PRODUCT OR MARKET

NICHE

What is a niche?

A niche is a gap in the market

An identified need that has not yet been met May be a specific type of person

A new product

A geographical location


Niche or no niche?We have pet hotels, pet walkers, pet parlours and even designer pet

clothes so what about bottled water for pets?

THIRSTY CAT! AND THIRSTY DOG!

These brands were launched to meet a presumed gap in the market for bottled water for pampered pets

Delicious ‘thirst quenching’ flavours

Crispy beef

Tangy fish

Top cat or in the dog house? Vote now


A SCIENTIFIC APPROACH

TO IDENTIFYING A PRODUCT OR MARKET

NICHE Market research

Finding out what the customer wants

What already exists Can it be improved?

Technical research

Experimenting

Testing new ways of doing something or new materials

Product development

Prototypes

Innovative thinking


CAN YOU SPOT THE NEW PRODUCT OR

MARKET?

A bagless vacuum cleaner

You shop we drop

Share and discover what's happening anywhere in the world right now

Games console that promotes a new form of player interaction (exercise)

Europe’s leading low cost airline


REASONS FOR STARTING A BUSINESS

Why might someone want to start up their own business?

Challenge and satisfaction

To make money

Be own boss

Government encouragement

Would you want to be your own boss?


Draw a table with two columns, labelled risks and rewards.Make a list of the risks of starting a business and the rewards

A NEW BUSINESS START-UP


Asif started working at PC World following his work experience when he was 15. He enjoyed the extra money and independence he gained

from having paid employment and continued working there throughout his GCSEs and A Levels. In the sixth form Asif studied Business, ICT and Product Design, he considered university but

eventually decided against it and took a full time trainee managers job at PC World. Asif is now 25 and plans to set up his own mobile

computer repair and servicing business.

Question time1.Explain the source of Asif’s business idea (2 marks)2.Explain two reasons why Asif might want to set up his own business (4 marks)3.Do you think Asif has spotted a gap in the market? Justify your answer (6 marks)

WHAT DO ALL THESE HAVE IN COMMON?


FRANCHISES

A franchise is when one business (the franchisor) gives another person or business (the franchisee) the right to trade using its name and to sell its products or provide its services

The franchisee normally pays a licence fee and a percentage of profit to the franchisor


Why might an entrepreneur choose to set up a franchise rather than an independent business?

Scroll down to watch the Maid2Clean videoIf you were to set up a cleaning business would you choose a franchise such as Maid2Clean or your own

independent cleaning business?

FRANCHISES

Merits

Lower risk option

Already established

Recognised brand

Help and support

National advertising and promotion

Tried and tested

Disadvantages

Set up and running costs can be high

Share profit

Reliant on others

Less independence in decision making

Damage to brand reputation


FRANCHISES


Use the video link to visit the franchise direct website, select up to 3 franchises you think you

may be interested in and watch the video

Team TaskSelect one of the franchise opportunities from the ones viewed above and prepare a short presentation to explain why, if you

were to open a franchise, you would choose this one.Present your choice and reasons to the rest of the class.

As a class what were the common features of the franchises chosen?

What were the common reasons given to justify the choices made?

TEA TIME TREATS


Tessa runs a chain of three tea shops in the Lake District, each called Tea Time Treats, followed by the name of the closest lake e.g.

Tea Time Treats in Windermere.The tea shops have built a up a good reputation for fine quality teas

and delicious home made cakes to eat in or take away. Tea Time Treats is now featured in many tourist guides for the area,

always with rave reviews.Tessa is now keen to expand the business and is considering

offering the Tea Time Treat name as a franchise.

Question time1.What is meant by the term franchise? (2 marks)2.Would Tessa be the franchisor or franchisee? (1 mark)3.Explain two reasons why an entrepreneur might choose to buy a franchise from Tea Time Treats (4 marks)

10 MINUTE TEST

State 2 reasons why businesses exist

State 2 sources of business ideas

What name is given to a not for profit business?

What name is given to a gap in a market?

State two reasons for starting a business

State two advantages and two disadvantages of a franchiseEnd


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