Enterprise and Entrepreneurship AS Business Studies Aims and

Enterprise and Entrepreneurship AS Business Studies

Aims and Objectives Aim: �Understand opportunity cost and the importance of small businesses in the UK. Objectives: �Define and explain opportunity cost �Describe problems entrepreneurs face when setting up a business. �Analyse the importance of small businesses in the UK.

Starter �Define entrepreneurship. �Give 3 characteristics of entrepreneurs. �Explain 4 motives for becoming an entrepreneur.

Opportunity Cost Definition: The cost of missing out on the next best alternative when making a business decision. What is the opportunity cost of the following: 1. Buying a new Audi sports car. 2. Choosing to go to Mc. Donalds 3. Hiring a man from a rival company. 4. Buying a new piece of machinery. 5. Investing in Tesco

Opportunity Cost �Every choice made by an entrepreneur has an opportunity cost. �Entrepreneurs will look at all alternatives before deciding. �However entrepreneurs do not always make the best decision! �E. g. when a start up business borrows money, it gets charged interest. The loss of this money is the opportunity cost, because if the money had not been borrowed, then cash made by the business could go straight back into the business

How Important are entrepreneurs to the UK economy? �Start up businesses are usually small. �Small businesses are therefore important to the UK because they are the start of large businesses. �Small businesses can be defined as follows: q. Fewer than 50 employees q. Sales less than £ 2. 8 million �However a small business could be big if it

Type of Industry Constructio n Retail Hotels and Catering Total All Industries Number of Businesses Total Number of Businesses in Industry 0 -4 Employees 159, 925 5 -9 Employees 21, 635 10 -19 Employees 10, 970 20 -49 Employees 6, 595 166, 430 75, 570 62, 450 32, 295 28, 835 22, 790 13, 180 13, 510 278, 040 151, 625 1, 391, 960 317, 745 178, 820 120, 870 2, 084, 495 Total All • Define a small business. (2 Marks) Businesses 202, 625 • Calculate the percentage of construction businesses that could be classified as small. (4 Marks) • From the data above, assess the importance of small businesses in the three sectors. Use percentages as in question 2 to help you with the answer. (6 Marks) • To what extent does the above data show that small businesses are the most important part of the UK economy?

Problems Facing Entrepreneurs Hard to get finance if business idea is risky. Problems Facing Entreprene urs C B

Gaining Help as an Entrepreneur �Small businesses are vulnerable when first setting up and many fail. �Government grants are sometimes awarded to different businesses for different purposes: �Innovation, Research and Development �Training �Economic regeneration �Encouraging young people to start their own business

Plenary �Define opportunity cost �Describe how important small businesses are in the UK. �Explain 4 problems entrepreneurs face when starting a business.