This document provides an overview of key considerations for starting a small business, including understanding customer needs, conducting market research, analyzing competitors, adding value, and types of purchases. It discusses secondary and primary market research, market segmentation, market mapping, competitive advantages, calculating added value, franchises, and the importance of location. The main takeaways are that understanding customers and competitors through research is essential, and that value can be added at each stage of production to appeal to target market segments.

1. Introduction to Small
Businesses
- Understanding Customer Needs
- Market Mapping
- Analysing competitor strengths and weaknesses
- Added Value
- Starting up a new business

2. Types of purchases
Limited
Routine
decision
purchases
purchases
Extensive
Impulse
decision
purchases
purchases

3. Market research
• Finding out what the customer wants
- who is the target market?
- who are they?
- what are they doing?
- what are our competitors doing?
- How can we do things better?
• Secondary research: Information that has
already been collected before
• Primary research: Information that is newly
created

4. Advantages Disadvantages
Secondary Information is already Information may be
available out of date
Research
It is cheap Can be difficult to
make sense of
Can find out what Information may not
competitors are doing be relevant
Primary Obtain information Can be expensive
that you want
Research
Information is up to Can take long to
date obtain
Competitors will not Difficult to obtain
have the information

5. Market segmentation
• Businesses sell to market segments which
consist of consumers who buy similar
products
• These then become the target market
Regional/
Gender Age
geographical
Socio-
Lifestyle economic
groups

6. Market Mapping
• Is the tool to see how a market is segmented
• Helps spot a gap in the market

7. Competitive
Advantages

8. Added Value
• The increase in the benefits of a good or a
service which are created at each stage of
production
• This means value can be added simply by
making a product more appealing to
customers
Changing raw
materials into branding
products of
use

9. Calculating Added Value
• The value added at each stage of production is
calculated by the formula:
Value Added = Value of Output - Value of Input

10. Franchises
A Franchise is when a large company allows
smaller businesses to use their name
Franchisor
• Allows the use of their business name for an agreed
length of time
Franchisee
• Must provide the money to start their business
• Must make regular payment to the franchisor

11. Advantages of Running a Disadvantages of running
Franchise a Franchise
There is a good chance of Franchise can be removed
success
It’s easier to borrow money Franchisee cannot make all the
because of proven success decisions
Most problems would have Cannot sell the franchise
been already overcome without permission
Advertising is organised and Have to make royalty payments
paid for by the franchisor to the franchisor
Franchisees are usually small so Supplies have to be purchased
can pay attention to detail from the franchisor which may
be expensive

12. Location, Location, Location
• Choosing where to locate a business is vital
• There are numbers of factors to consider
Where the Transport Links
suppliers are
Where the Availability of
competitors are workers
Where the
Government help
customers are
Cost and
History and
availability of
tradition
premises