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Business Notes
The First Half-Term (Autumn 1)

Needs & Wants
• A need is something essential to survival
...
In an exam
the nature of such goods can be important
...


• A want is something that is not essential to
survival
...


The Purpose of Business
• Simply put, a business is an organisation that trades to
make money
...


Goods and Services
• Goods are physical objects
...
A guitar store
sells guitars, which are tangible objects
...
A retail store, such as Tesco, will partially provide
a service as they are distributing somebody else’s goods
...


Factors of Production
• These are the things needed for a business
...
The
internet may also count
...

• Capital – There needs to be money to start
the business
...


Opportunity Cost
• If there is a choice between hiring a better designer or a
better accountant, the potential loss of choosing one over
the other is called an opportunity cost
...


Reasons to start a
business
• There are many reasons to start your own
business
...

• Businesses may be started to provide a good or
service, or to help others or to fulfill a business
opportunity
...
This is somebody who identifies
a gap in a market (a business opportunity) and
fulfills it
...


Qualities of an
entrepreneur
• Discipline – Must be able to keep control of themselves so
they can keep the business going
...

• Open-minded – Must be open to new ideas and options
...

• Passionate – Why start a business if there is no passion?
• Organised – It is exceptionally easy to lose opportunities (and
therefore money) if they are disorganised
...


The Sectors of
Business

• There are three sectors of business
...

• Each type has different roles in the chain of
production
...

• This includes farmers, dairy farms,
fishermen, foresters, etc
...


• This includes construction, car manufacturing, etc
...

• This includes distribution, retail (Tesco and ASDA
again), gardeners, accountants, etc
...

• For example, the chain of production for a wooden
chair would be:
Wood is harvested
by lumberjacks

The wood is
 seasoned

The chair is

The chair is sold

 assembled  by a retailer

Types of Business
Ownership
• In this half term we identified four types of
business ownership
...


Sole Trader
• As the name suggests, a sole trader is run by a single
person, although they can employ workers
...

• Some advantages of a sole trader are: cheap and easy to
start, you receive all the profits, you have maximum
privacy, you make all the decisions
...


Partnership
• A partnership is a type of business where the ownership is split
between 2-20 people
...

• Advantages: Shared expertise and knowledge, more flexibility in
hours as there are more people, you’ll have a greater loan capacity,
you’ll be able to make high-caliber employees partners
...


Liability
• Liability is debt
...

• Unlimited liability: The owners of the business
must pay off the debt in any way possible, at any
cost to their own lives (they may have to sell their
house, etc
...

• Limited liability: The owners only lose the money
they put into the business
...


Public Limited Companies (PLCs)
• A public limited company can be owned
potentially by thousands of
shareholders
...
A stake is the
percentage of these shares that one
person owns
...

• Advantages: limited liability, able to raise
capital (money) by selling shares, higher
publicity
...


Private Limited Companies
(LTDs)
• An LTD is owned by elected shareholders
...
An example of an LTD is Amazon
...

• Disadvantages: Professional help is needed to set up an LTD,
less ways to raise capital, no shares on the stock market,
more expensive and time consuming to set up than a sole
trader or partnership

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