The purpose of business activity and enterprise Spotting an opportunity, developing an idea for a business, satisfying the needs of customers Written by Sarah Hilton for Revisionstation Characteristics of an entrepreneur Creativity, risk taking, determination and confidence The concept of risk and reward

1. OCR GCSE
Business
1.1 The role of business enterprise
and entrepreneurship
Business 1
(1 Business
Activity)

2. Lesson objectives
• The purpose of business activity and enterprise
• Spotting an opportunity, developing an idea for a business, satisfying the
needs of customers
• Characteristics of an entrepreneur
• Creativity, risk taking, determination and confidence
• The concept of risk and reward

3. Starter
• Which of these best describes you?
1. Creative
2. Risk taker
3. Determined
4. Confident

4. The purpose of business activity
and enterprise

5. The purpose of business activity introduction
• There are lots of purposes of business activities, but the three main
ones that OCR would like you to be able to discuss are:
1. Spotting a business opportunity
2. Developing ideas
3. Satisfying the needs of customers

6. Definition: Entrepreneur
• An entrepreneur is a person who takes a business risk in the hope of
gaining a reward. Usually that reward is profit.

7. 1) Spotting an opportunity
• A successful business will be one
that spots an opportunity to make
a profit
• This could be an idea that no-one
has thought of before, for example
Trunki luggage
• The opportunity could be where
there are lots of businesses already
making a healthy profit
• The entrepreneur may also spot an
opportunity to trade and also make
a difference to society, this is called
a social enterprise Watch the video, how did the entrepreneur
spot a business opportunity?

8. 2) Developing an idea for a business
• Once an entrepreneur has spotted
a business opportunity or had a
good idea they will then need to
turn this into a working business
• The next stage will be to get some
market research to see if there is a
real demand for the product or
service
• Then the entrepreneur will need to
write a business plan to attract
funding so they have money to
start the business Research find out how Kath Kidston
started her business

9. 3) Satisfying the needs of customers
• Customer needs are the things that
customers require when buying a
product or service
• A successful business will identify
the needs of customers
• The entrepreneurs will need to
listen to their customers to find out
what their needs are
• The entrepreneurs will then decide
what products or services they can
provide or produce that will satisfy
these needs
Watch the video, how does this business
satisfy the needs of its customers?

10. The characteristics of an
entrepreneur

11. Definition: Characteristic
• A characteristic is a typical noticeable quality of something or
someone. For example, you might be; musical, funny, artistic, sporty
and so on.

12. Which characteristic best describes you?
calm
good listener
stylish
happy
driven
excitable
joker
dependable
optimistic
introverted
sophisticated
trendy
posh
geek strong

13. Characteristics of entrepreneurs introduction
• There are lots of characteristics that entrepreneurs might have but
the 4 that the OCR exam board would like you to know are:
1. Creativity
2. Risk taking
3. Determination
4. Confidence

14. #1 Creativity
• Successful entrepreneurs are
creative
• Creativity opens the door to new
business opportunities
• Creativity is a way of thinking
that inspires, challenges and
helps entrepreneurs to satisfy
their customers’ needs in a new
and exciting way
• Creativity can make businesses
competitive
Watch the video and get ready to share one fact
you learnt from watching it

15. #2 Risk taking
• There is more on risk and reward
later in this PowerPoint
• An entrepreneur is someone
who we dined as taking a
business risk in the hope of a
reward (usually profit)
• Many entrepreneurs have taken
risks to get their businesses to
where they are now, perhaps
they left a secure job or took out
a loan
• Read this article and find out:
• Who is Adam Frisby?
• What is his business?
• How is he a risk taker?

16. #3 Determination
• Determination means a decision or
the focus to get something done,
the ability to continue to try to do
something although it is difficult
• Entrepreneurs may not succeed at
first they may need to make many
versions of their first product, they
may have to start at the bottom
and work up
• Successful entrepreneurs have the
determination to keep trying with
their business
• Visit this website and find out:
• Who is Jo Nicholls?
• How did she show determination?

17. #4 Confidence
• Confidence is the quality of being
certain of your abilities as an
entrepreneur
• There is an expression in business
that “people buy from people, not
companies” and having confidence
will help the entrepreneur to: make
sales, gain new suppliers, influence
customers and so on
• Are you a confident person? Do
you know someone who is
• Watch this video clip and find out:
• Who is Jamal Edwards?
• How does he demonstrate having
business confidence?

18. The concept of risk and reward

20. Rewards of business introduction
• There are lots of rewards to
owning and running a business.
• Here are some of the main ones:
• Be your own boss
• Keep all profits
• Take holidays
• Sense of satisfaction
• Flexibility
• Motivating
• Job protection
• No commute
• Lifelong learning
• Social enterprise
• Work-life balance
• Career progression
• Get ready to make some notes
on these rewards

21. Be your own boss
• A reward of setting up your own
business is that you could be your
own boss
• Being your own boss means the
entrepreneur gets to make the
major decisions in the business
• They can also change the business
if they want to
• Many people would like to have
this degree of control in their
working lives, which motivates
them to start their own business
• Read this article and find out
about Charlotte, what is her
business?

22. Keep all the profits
• The formula for profit is:
Profit = Total revenue – Total costs
• A reward of setting up a
business is keeping all the profit
that the business makes
• As time passes and the business
trades, equipment may break or
get old and the entrepreneur
may need to invest some of the
profit back into the business

23. Freedom to take holidays
• One advantage of running a business is that
the owner can take holidays when they want
• This means they could have holidays out of
peak times when prices are cheaper
• They could also take more holidays, and book
them when it suits them

24. Great sense of satisfaction
• Opening a business can bring a great
sense of satisfaction to the owner
• If their work is something they love, it
can make them happy to run their
business
• If their work is meaningful, they will
be more likely to stick with it in the
long run, which means they may be
more successful as a result
• Research has shown that finding
meaning in work increases:
motivation, empowerment, career
development, individual performance
and personal fulfilment
• Read this article and find out
• Who is Andrew Brooks?
• What did he invent?
• Why would this product give him
satisfaction to invent?

25. Flexibility
• A good reward of running a business is
that the work pattern can be flexible
• This means the business owner can
start late, finish early, work the hours
they want
• However running a business can mean
they work more hours than a regular
job, especially when it first starts up
• They may also need to hire plenty of
trustworthy staff, who can work
unsupervised, when they are not
there

26. Higher motivation and morale
The government says these are some
of the benefits of starting your own
business:
• Better work autonomy (being able
to make your own decisions)
• Better work challenge
• Financial benefits (capacity to earn
more money)
• Family legacy, which means
starting a business you can leave to
your kids

27. Job protection
• Giving up the security of a full time
job to start a business can be risky
• One huge benefit of having a
business is that the owner is the
boss, so they cannot be fired from
their own company
• The job will last as long as the
business trades
• It is important to have regular
money coming in to meet all the
financial commitments like a
mortgage or car payments
• Read the article and find out:
• Who is Katelyn
• What is her business?

28. Cut the commute / work from home
• Some business owners started their own
company as they grew tired of a long commute
to work
• Having their own business is so that they can
either have a shorter commute or that they can
work from home
• Many business owners are looking to cut their
carbon footprint too, can you explain carbon
footprint?

29. Owners can learn a lot about business
• Owners of a business will find that
they learn a lot from the process of
opening and running a company
• They may learn finances,
accounting, how to manage staff,
customer relations, dealing with
suppliers, purchasing and
production techniques
• Learning while doing is often easier
than learning by reading
• This is why students should
consider joining their school Young
Enterprise program
• Read this article and find out:
• Who is Ellen?
• What is her business?
• How is her business helping her life?

30. Social enterprise
• Owners may wish to open a social
enterprise
• This is a business that is started
with the aim of helping people or
the planet
• For example the business may be
set up to help tackle social
problems like homelessness, or to
improve communities
• Watch the video, can you explain
the difference between a normal
enterprise and a social enterprise?

31. Better work / life balance
• Video HERE
• Being able to have a better work
life balance means being able to
work but still have time to see
the family, watch the TV, or to do
a hobby
• Working for yourself means the
business owner can change the
balance and work less and make
time for their hobbies

32. Open ended career progression
• Some business owners may start-up their own
company so that they can develop their career
• As soon as you start a business you become a
managing director even if you were a sales
assistant before

34. Definition: Risk
• A business risk is one that may lead to failure to achieve the goals of
the organisation, for example to not make a profit (called making a
loss) or to not help (in the case of a social enterprise).

35. Risks of business introduction
• There are lots of risks of owning
and running a business.
• Here are some of the main ones:
• IP issues
• Cyber attacks
• Economic problems
• Poor reputation
• Employment laws
• Financial risks
• Change in tastes and trends
• Cash flow problems
• Natural disasters
• Failure to plan
• Staff training
• Operational risks
• Staff reliability
• Commercial risks
• Get ready to make some notes
on these risks

36. IP issues
• IP stands for Intellectual Property
• IP can be protected by patents,
trade marks and copyright and
gives business ideas their value
• IP rights protects the work of the
entrepreneur: designs, inventions,
writing, performances or research
• If IP is stolen or copied the
entrepreneur risks losing their
business
• Watch the video on Intellectual
Property
• Can you now explain IP to someone
else?

37. Cyber attacks
• A cyber attack is an attempt by
criminals to disable computers or steal
data
• A report from the Federation of Small
Businesses has found that small firms
are collectively attacked seven million
times per year, costing the UK
economy an estimated £5.26 billion.
• Can you name 4 ways that a business
may get a cyber attack e.g. spyware?
• How would a business be impacted by
a cyber attack?

38. Economic problems
• The UK economy is all the activities
that are to do with manufacturing,
production and selling of products
and services in the country
• In a recession or times of economic
or political instability customers
tend to save rather than spend on
non-essential items
• This means that the business may
have less customers and make less
profit
• What do you think happens in an
economic boom?

39. Poor reputation
• If a business provides poor customer
service, or suffers a problem, then it
may have a poor reputation
• This can lead to loss of sales, loss of
revenue and loss of profitability
• This can lead to job losses
• Read the article, how did the Smiler
crash impact Alton Towers?

40. Employment laws and regulations
• All businesses in the UK must
obey the employment laws
• For example they must pay the
minimum wage or above, if they
don’t they are breaking the law
• Research to find out:
• What is the current minimum
wage (for all ages)
• What is the living wage and how is
it different to the minimum wage?

41. Financial risks
• Starting a business can be a financial
risk for the owner
• The owner may put their own cash and
other assets (e.g. a van) into a business
• If the business does not do well then
the owner could lose their money,
which is why many businesses become
a private limited company (ltd) to
protect the owner
• If the owner borrows money from a
bank to finance the business, they still
have to pay this back (with interest),
even if the business does not do well

42. Change in tastes and trends
Consumer tastes change over time
which means that a business is at
risk if they don’t keep up with
current trends
Have a look at this range of toys, how many of
these did you have?
Are they the same as toys available now?

43. Risk of not managing cash flow
• Cash flow is the flow of money in and
out of a business, you will learn more
about this later in the course
• A business needs more money coming
in than going out to survive, and that
money also needs to come in on time
or they cannot pay their overheads
(bills)
• Being prepared for a cash shortage
using an overdraft is a sensible idea
for a start-up
• Most businesses now prepare a cash
flow forecast so they can see when
they might have a cash shortage, and
to arrange finance with a bank

44. Natural disasters
• A disaster can strike any
organisation, large or small. It can
arrive in the shape of storm, flood,
fire, earthquake and even a
tsunami
• It may take some time for the
business to return to normal
operation after an incident
• Climate change means UK
businesses must plan for extremes
of weather such as flooding
• Watch this video and find out:
• What was the impact of the weather
on these farm businesses?

45. Failure to plan for the future
• If a business fails to plan for the
future it may risk losing out to
competitors
• A business must have a clear
strategy and plan if it is to
survive in a today’s dynamic
business world
• For example Blockbuster failed
to take up the Netflix offer as
they had no digital strategy
• Watch the video and find out:
• What was Blockbuster?
• Why did it fail?

46. Staff training and safety
• A business needs to train its staff
so that they can; operate
machinery safely, work a till,
deal with customers or sell
products and services
• Well trained staff can give the
business a good reputation
• A business also needs to look
after the safety of staff an obey a
number of UK laws on Health
and safety at work Have you ever had any fire safety training?

47. Operational risks – break down of equipment
• Many businesses have a variety of machines or
equipment, including computers
• Many businesses run their machines 24/7 and cannot
afford machines to stop in the event of a break-down
e.g. bread factories
• When machines break down there is the cost to fix
the machine plus the cost of lost production time

48. Staff – reliability
• A business will need reliable staff who turn up on time, every day,
ready to work
• Without reliable staff a business will not be able to offer the right
level of customer service
• This can have an impact on reputation, revenue and profit

49. Commercial risks
• If a supplier fails to supply goods or
services to a business, this could be
critical
• If customers cannot get the
product or service they need, they
may go elsewhere, especially if
there are lots of substitute
businesses selling the same good
or services
• If customers do not pay on time,
then this may cause cash flow
problems for the business who will
need to pay their suppliers Research: find out why KFC ran out of chicken in 2018

50. Plenary – take the quiz, would you make a
good entrepreneur?

51. Glossary – business terms to learn
• Entrepreneur; A person who is prepared to take a risk in the hope of
a reward (usually profit)
• Profit; This is what is left when total revenue (money into the
business) minus Total costs (money out of the business). If the figure
is a minus then the business has made a loss
• Product; A product is a tangible item that you can use e.g. a car, a pair
of scissors, a chainsaw
• Service; This is an action that someone performs for you e.g. to cut
down a tree, to give you a haircut. It is intangible which means you
cannot touch it e.g. car insurance.