Introduction to business

Basic Business Concepts

Enterprise: Refers to a business or company. Can also refer to initiative, risk-taking and innovation in business.
Entrepreneur: An individual who sets up a business or businesses, often taking financial risks in order to do so.
Profit: The difference between the revenue generated by a business and its costs.

Primary sector: The part of the economy that produces raw materials, like farming or mining.
Secondary sector: These are the businesses that transform raw materials into finished goods, such as manufacturing companies.
Tertiary sector: This refers to the service sector of the economy, like retailers or banking.

Sole trader: This is a business owned and run by one individual. The owner may employ other people but has sole responsibility for the running of the business.
Partnership: A business owned by two or more people, who share the risks, costs, responsibilities and profits of the business.
Private Limited Company (Ltd): A type of business structure where the company is seen as a separate legal entity to the owner. Can sell shares to family and friends.
Public Limited Company (plc): A business structure where the business is considered a separate legal entity and can sell shares to the general public.

Business idea: The product or service that the business will sell.
Finance: The initial investment needed to start a business.
Market research: A process of collecting, analysing and presenting data relating to the specific market that the business intends to enter.
Business plan: A formal written document that serves as a road map for how a company plans to succeed.

Survival: This is the number one goal for many new businesses, especially in the first year of trading.
Stability: Once survival is secured, a business may aim for stability, maintaining a consistent level of profits.
Growth: This could be measured by opening more branches, entering new markets or increasing sales.
Profit Maximisation: The business tries to make as much profit as possible.
Increased market share: A firm may aim to increase its share of the market, either by selling more products or services than competitors or buying out other companies.

Owners: Want the business to succeed to maximise their return on investment.
Employees: Want job security, promotion opportunities and good wages.
Customers: Want good quality products at reasonable prices.
Suppliers: Want to sell their products to the business.
Government: Interested in businesses succeeding as they provide employment and pay taxes.
Community: Want businesses to succeed as it can mean more jobs and prosperity for the local area.