LESSON 2
People Set Up A Business Because:
- They want to work for themselves (independent)
- They have been made redundant from their last job
- They cannot find another job
- They want to achieve something for themselves (self-actualization)
- It is a natural progression from a hobby or interest
An Entrepreneur is Someone Who:
- Combines resources
- Identifies opportunities
- Takes risks
- Makes decisions
- To achieve the finance to set up a business, individuals often require a business plan.
Business plan: a report showing plans of the business; often used to attract finance from investors. Businesses which put time and effort into their business plans, thinking about the competition and the financial consequences of their proposals, are more likely to be successful than those which do not.
The Main Elements of a Business Plan include:
- A Description of the Business
What does it make? What service does it provide?
- A Statement of its Aims
What are the aims of the business in the short and long term?
- A Marketing Plan
e.g. who needs the product/service? Why?
What makes the business different, i.e. what is its unique selling proposition (USP)?
Who is the competition?
What will the price be?
- A List of Key Personnel
Details of who is setting up the business (background, experience)
- Details of Finance Required
What will it be used for?
What is the expected rate of return for investors?
- A projected profit and loss showing revenue and costs
- A projected balance sheet showing assets
- A projected cash flow statement showing cash inflows and outflows
