1. 2. Understanding Customer Needs
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Topic 1.1: Understanding customer needs
What the syllabus says… • Customer needs are central to starting a business •How to collect and interpret primary and secondary market research in the context of starting a new business • The difference between qualitative and quantitative research data • The value of market knowledge through direct customer contact
2. Understanding Customer Needs

2. Understanding Customer Needs
Unit 1 - Revision
Understanding Customer Needs
Customer focus is crucial

3. Unit 1 - Revision
Topic 1.1: Market Mapping
What the syllabus says… - How to analyse customer buying habits and preferences - How businesses can identify market segments - How businesses can map their market to set out the key features of the market they are planning to operate in and identify a market gap

4. Unit 1 - Revision
Market Mapping
Segmentation

5. Unit 1 - Revision
Topic 1.1: Analysing the competition
What the syllabus says… - That initial planning to set up a business will require an analysis of the competitors in the market - How to analyse competitor strengths and weaknesses - Comparing a business offering with that of its rivals enables an entrepreneur to spot further opportunities

6. Competition What do they have/do better than you???? Product Range
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Competition
What do they have/do better than you????
Product Range
Quality
Design
Selling experience
After-sales service
Price
Brand image
Suppliers

7. Unit 1 - Revision
Topic 1.1: Adding Value
What the syllabus says… - The meaning of the term ‘added value’ - Its importance in business survival and success. - The main sources of added value * Convenience * Speed * Branding * Quality * Design, * Unique selling point

8. Adding value = Business survival
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Added Value
Sources of added value:
Quality
Design and formula
Convenience
Speed and quality of service
Branding
Unique selling point
Adding value = Business survival
& success

9. Unit 1 - Revision
Topic 1.1: Franchises
What the syllabus says… The principles of franchising as it applies to small business start-up. - The advantages and disadvantages of using a franchise as a means of starting a new business. - Assess franchising against other business start-up options. - How to identify a suitable startup location

10. frANCHISING
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FRANCHISEE
FRANCHISOR

11. Unit 1 - Revision
What is Enterprise?
“A willingness by an individual or a business to take risks, show initiative, and undertake new ventures”

12. Unit 1 - Revision
Topic 1.2 – What is Enterprise?
What the syllabus says… - Enterprise involves: - Taking risks, - Showing initiative - Willingness to undertake new ventures - The difference between providing goods or a service

13. = Thinking Creatively Examples of competitive advantage:
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Thinking Creatively =
Examples of competitive advantage:
Have a better product
Better way of producing = lower costs/quality
Give customers better service
Better at selling
Idea that is unique

14. Unit 1 - Revision
Topic 1.2: Thinking creatively
What the syllabus says… - Why thinking creatively is important in developing both competitive advantage and a new business - The role of lateral thinking and deliberate creativity in developing new business ideas - Edward De Bono’s Six Thinking Hats also works well for assessing new business ideas

15. What questions do Entrepreneurs ask?
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What questions do Entrepreneurs ask?

16. What the syllabus says…
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Topic 1.2: What questions do Entrepreneurs ask?
What the syllabus says…
The important questions to ask when coming up with new
Business ideas such as Why? Why not? What if?
The concept of looking beyond the obvious, asking ‘What if?’
Judging the value of outcomes.

17. Innovation and Invention
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Innovation and Invention

18. What the syllabus says… How new business ideas come about
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Topic 1.2: Innovation & Invention
What the syllabus says…
How new business ideas come about
Understand the difference between innovation and invention
Innovation means bringing a new idea to the market
Explain steps an entrepreneur can take to protect their idea through patents and copyright

19. Taking a calculated risk
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Taking a calculated risk
EXAMPLE: What is the risk of a child getting burned from a cooking activity?
ANSWER: If a 2 year old is allowed to use the cooker = very high i.e. 50% chance, if the cooker is in a separate room and children are not allowed in there = 0% chance

20. Topic 1.2: Taking a calculated risk
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Topic 1.2: Taking a calculated risk
What the syllabus says…
Understand the principle of taking a calculated risk
Understand that weighing up the risks and the rewards of a new business idea is an important part of the process of judging outcome and viability of a start-up
To see mistakes as part of the process of learning to succeed
The idea is to encourage thought about the downsides and upsides, as well as the chances of them occurring. ‘Dragon’ venture capital investors may look for huge potential upsides, whereas many entrepreneurs want a safe way of making a living, not a fortune.

21. Important Enterprise skills
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Important Enterprise skills
There are many skills that an entrepreneur needs to be successful. 4 of them are:
Seeing opportunities
Effective planning
Thinking ahead
Drive and determination
Making connections

22. Unit 1 - Revision
Topic 1.2: Other Enterprise Skills
What the syllabus says… - Explain the importance of: - Planning - Thinking ahead - Seeing opportunities, Having drive and determination - Making connections, using mind maps to collect thoughts and see opportunities

23. Objectives When starting up
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Objectives When starting up

24. What the syllabus says…
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Topic 1.3: Objectives when starting up
What the syllabus says…
financial objectives: the range of motives for wanting to start a business including profit or income, financial security and wealth
Non-financial objectives: personal satisfaction, challenge, to help others (starting a charity)

25. Qualities shown by entrepreneurs
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Qualities shown by entrepreneurs
Determination
Initiative
Willingness to take risks
Decision making
The ability to plan
Persuasion
Leadership
Being lucky

26. What the syllabus says… Determination and initiative
Unit 1 - Revision
Topic 1.3: Entrepreneur Qualities
What the syllabus says…
Determination and initiative
The willingness to take risks and make decisions
The ability to plan and persuade
Showing leadership
The role of luck in business success/failure

27. Revenue, Costs & Profits
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Revenue, Costs & Profits

28. Revenue, Costs & Profits
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Revenue, Costs & Profits
Profit =
Revenue – Costs
Total revenue = Price per unit X Quantity sold
Examples of variable costs:
Fuel
Raw materials
Staff wages (paid by hour)
Electric (if used to make product)
Examples of fixed costs:
Loan repayments
Salaries of permanent workers
Website maintenance
Insurance
Rent of premises
TOTAL COSTS FORMULA: Fixed costs + Variable costs

29. 1.3: Revenue, costs and profit
Unit 1 - Revision
1.3: Revenue, costs and profit
What the syllabus says…
How businesses forecast sales volumes and selling prices to estimate revenue
How to determine fixed and variable costs
Understand the difference between price and cost and the concept of profit
Explain how profit is the difference between the total revenue generated over a period and the total costs
The impact of profits and losses on a business and its owners

30. Forecasting Cash Flow Factors that can affect cash flow:
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Forecasting Cash Flow
Jan
Inflows
Capital
Sales
Total Inflows
Payments/Outflows
Supplies
Mortgage
Electricity
Equipment
Other expenses
Total Outflows
Net Cash Flow
(= Inflow – outflow)
Opening Balance
(= balance at start of month)
Closing Balance
(= net cash flow + balance at start of month)
Inflows:
- own money
Loan
sales
Inflows:
Wages
Equipment
Gas, electricity
Interest of loans
Factors that can affect cash flow:
Number of sales a business makes
Costs can change
Credit terms can change
Stock levels (stock sat on shelves is called “dead money” until it is sold)

31. 1.3: Forecasting cash flow
Unit 1 - Revision
1.3: Forecasting cash flow
What the syllabus says…
Understand the role and importance of cash to the operation of a business and to its long-term success
How to estimate monthly cash inflows and outflows to determine net and cumulative cash flows
How cash flows are affected by stock levels and credit terms
Explain how cash flow problems can lead to business failure (insolvency)
Appreciate the role and importance of a business plan in minimising the risk involved

32. Unit 1 - Revision
The Business Plan
A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts.
A business plan helps you to:
clarify your business idea
spot potential problems
set out your goals
measure your progress

33. Unit 1 - Revision
Obtaining Finance

34. Topic 1.3 – Obtaining Finance
Unit 1 - Revision
Topic 1.3 – Obtaining Finance
What the syllabus says…
Explain the main sources of finance for a small business start-up
Long-term sources, such as:
loans,
personal savings,
profit,
venture capital
share capital in the context of a private limited company
Short-term sources such as
- overdrafts
- trade credit