1.1b Entrepeneurs and Types of Business

What is an entrepreneur?

An entrepreneur is someone who:

Identifies a business opportunity
Sets-up, or helps others to set-up, a new business venture
There is significant risk of a business failing and the entrepreneur losing their investment

Famous entrepreneurs include:

Steve Jobs — Apple and Pixar (Wikipedia)
Elon Musk — Tesla, SpaceX, and Twitter (Wikipedia)
Oprah Winfrey — Harpo Production (Wikipedia)
Anita Roddick — The Body Shop (Wikipedia)
Alan Sugar — Amstrad (Wikipedia)

Most entrepreneurs are not famous — they are just ordinary people with an idea they believe in.

Becoming an Entrepreneur

If starting a business is so risky, why would someone want to do it? Each entrepreneur will have their own reasons, but they often include…

Identifying a gap in the market — they have spotted an opportunity that others have missed.
To make a profit — making a profit is important, but entrepreneurs usually have a passion which is worth more than just money.
Independence / becoming their own boss — the power to make decisions and do things the way they want to do them!
Satisfaction — running a successful business, creating products, and employing people can be a great feeling.
Following a hobby or interest — taking an interest they love and turning it into a job.
Flexibility — fitting work around other commitments, although even running a small business can take huge amounts of time.

Qualities of Entrepreneurs

For an entrepreneur to be successful, they typically have the following qualities:

Hardworking — it requires a huge amount of time and effort to start and run a business.
Determination — must be able to overcome setbacks and problems.
Innovative — good at spotting ideas and thinking of solutions.
Organised — able to keep track of tasks and plans.
Risk-takers — willing to take calculated risks on decisions.
Resilient — things can and will go wrong! The ability to overcome setbacks is vital.

Opportunity Cost

Businesses have limited resources — they do not have the time or money to do everything they want. Working-out the opportunity cost helps a business to make decisions.

Imagine you have a part-time job at a local shop. You earn £10 per hour for your work. You have a free evening and you have to decide between two options: Option A and Option B.

Option A

Spending the evening working at the grocery store and earning money.

You could earn £30 for three hours work.

Option B

Going out with your friends.

You will not earn anything during this time, giving-up the opportunity to earn £30.

In this scenario, the opportunity cost of going to the movie with your friends is £30, which is the value of the alternative she gave up by not working at the shop.

Business Sectors

Businesses can be categorised into three different sectors. Click the arrows to scroll through.

Primary Sector

Produces the raw materials for production.

Usually natural resources obtained from farming, mining, quarrying, fishing.

Example: diamonds and gold are mined from the ground.
Secondary Sector

Takes the raw materials from the primary sector and produces goods.

Example: the diamonds and gold, mined by the primary sector, are turned into jewellery.
Tertiary Sector

The final stage, which provides services such as sales, financial services, and distribution.

Example: the jewellery produced by the secondary sector is advertised, distributed, and sold.

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