Purpose of Business and Enterprise
Purpose of Business and Enterprise
Every business exists to provide goods (physical products) or services (actions performed for customers). Understanding why businesses exist and what drives entrepreneurs is fundamental to GCSE Business.
The Purpose of Business
Businesses exist to:
- Meet customer needs — providing products or services that people want or need
- Generate profit — most businesses aim to make money (revenue minus costs)
- Provide employment — creating jobs for people in the local and national economy
- Create wealth — contributing to the economy through taxation and spending
- Achieve social objectives — some businesses (social enterprises) exist primarily to benefit society
Goods vs Services
| Goods | Services |
|---|---|
| Physical, tangible products | Intangible actions or activities |
| Can be stored and transported | Consumed at the point of delivery |
| E.g. cars, food, clothing | E.g. haircuts, banking, education |
Needs vs Wants
- Needs — essentials for survival (food, water, shelter, clothing)
- Wants — things people desire but can live without (latest phone, designer clothes, holidays)
- Businesses that meet needs tend to have more stable demand; those meeting wants may have more variable demand
Enterprise and Entrepreneurship
Enterprise is the process of identifying a business opportunity and taking the risk to start a business. An entrepreneur is a person who does this.
Characteristics of Successful Entrepreneurs
- Risk-taking — willing to invest money and time with no guarantee of success
- Creative and innovative — coming up with new ideas or better ways of doing things
- Determined and resilient — not giving up when things go wrong
- Confident and persuasive — able to sell their vision to investors, customers and employees
- Hard-working — willing to put in long hours, especially in the early stages
- Good communicators — able to negotiate, lead teams and build relationships
Why Become an Entrepreneur?
| Advantages | Disadvantages |
|---|---|
| Be your own boss — independence and control | Financial risk — could lose your investment |
| Keep the profits | Long and irregular working hours |
| Pursue a passion or idea | Stress and pressure of responsibility |
| Flexible working | No guaranteed income, especially at first |
| Job satisfaction | Loneliness — making decisions alone |
The Role of Enterprise in the Economy
- Entrepreneurs create new businesses, which create jobs and tax revenue
- They drive innovation — developing new products and processes
- They increase competition, which benefits consumers through lower prices and better quality
- They contribute to economic growth — more businesses = more output (GDP)
Exam Tips
- Know the difference between needs and wants, and goods and services
- Be ready to evaluate whether being an entrepreneur is worth the risk
- Use real-world examples of entrepreneurs (e.g. James Dyson, Sara Blakely) to strengthen answers
- For longer questions, consider both financial and non-financial motives for starting a business