Reasons why persons may want to establish
their own business.
1. Desire for financial independence
2. Self-fulfillment
3. Self- actualization
Conceptualization
Research
Identification of resources
Creation of a Business plan
Acquisition of funds
Operation of the Business
Conceptualization
The initial business idea must be conceived.
This may be brought about in a variety of
ways. It may be because of a family run
business whereby one may decide to continue
that trend. It may also be from a particular
hobby or simply a business idea where one
believes could produce a lot of profits.
Example may be a floral shop or a catering
service. The business should be given a clear
aim and sense of purpose. This should be in
the form of a mission statement.
Research [Market Probe]
The market research should aim to establish
the size of the market, a customer profile and
the number of competitors.
Once this information has been gathered an
attempt can be made to assess whether the
new business will be able to make enough
sales to earn adequate profits for the
entrepreneur.
Identification of Resources
For many businesses the location of the
premises will be an essential factor in the
final success or failure of the venture. This
would be true with consumer service
businesses, such as restaurants or shopping
malls. Unfortunately, the best locations are
likely to be the most expensive.
For some businesses specific locations will
not be so important, for example, a car repair
business would not have to be in a high street
location as consumers can easily drive to it.
Location is not the only important resource.
The right staff must be recruited and selected
and again this could be a crucial factor for
consumer service businesses. Capital
equipment such as storage and
manufacturing machinery must be leased,
rented or purchased and this must be in the
correct specification and be able to perform
the required tasks.
Creation of a Business Plan
This is a report detailing the overall aims of
the business. The business plan is an
explanation of who is responsible for the
business, what the business is intended to do,
how it is going to get the money to do it, and
what profit it hopes to make.
Business plans are often presented to a bank
or some other financial institution when
applying for a loan.
Acquisition of Funds
Preparing the Business Plan will give a clear
idea to the entrepreneur of the amount of
capital needed to set up the business and
keep it operating in the first few months.
It is essential to raise sufficient finance to
cover start-up costs and the early stages of
the business life.
Operation of the Business
An impressive launch for the business can
lead to immediate customer interest and this
could quickly establish the business within its
market place.
A reception for potential customers, launch
promotions and advertising, a ‘celebrity’
opening – are just some options open to an
entrepreneur for getting the business of to a
roaring start.
Once this is done, the business should always
be operating in alignment with its Mission
Statement. Fraudulent, unsafe and dishonest
practices must never be associated with the
business.
PAST PAPER QUESTIONS
2008 question 4
a. State TWO reasons why an individual may want to
set up a business. [4]
b. Outline THREE ways in which businesses
contribute to the development of a community. [6]
c. Define the following terms, giving an example of
EACH:
i. Public Sector
ii. Private Sector [6]
d. State TWO reasons why a government may
nationalize an industry. [4]
