HOW DO SMALL BUSINESSES
OPERATE
REASONS FOR SETTING UP A
BUSINESS
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
LEARNING INTENTIONS AND
SUCCESS CRITERIA
Learning Intentions:
I understand why
people start a business
and where they get
their ideas from
Success Criteria:
 I can explain how
business ideas are
identified
 I can explain how
businesses create wealth
 I can describe the
benefits of starting a
business
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
Where do the Ideas come from?
If you were thinking about starting up a new business, where would your
ideas come from?
CHALLENGE!
In small groups, imagine that you have the knowledge, skills
and Capital necessary to start up a new business.
Exchange ideas about new business ideas that you think people
would want and make a list of these.
Discuss each idea carefully prior to selecting the 3 that you
think are the best.
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
Did your ideas come from …

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A completely new idea for a good or service
The belief that your idea for a good or service can
improve existing goods and services
Developing a hobby that you enjoy
Combining 2 existing ideas
Solving a problem that you have identified
Spotting a gap in the market
These are the main ways that business ideas are
identified.
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
Spotting a Gap in the Market
The gap in the market might be providing a
product or service in a completely different
way.
LoveFilm rents DVDs, but they captured the
market by sending them through the post rather
than following the video shop model, adding
convenience and a huge list to choose from.
Moonpig did exactly the same with greeting cards.
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
TASK
Now do Worksheet 3 in your jotters.
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
CREATING WEALTH
Another reason for starting a business is to
create wealth:
 for the business and its owner(s)
 for the staff employed in the business
 for other businesses used as suppliers
We can show this on a diagram
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
Creating Wealth
Businesses produce
goods and services to
meet customers’
wants.
(1)
Customers have
money to spend from
their wages and
want other goods
and services.
(4)
Customers buy goods
and services to satisfy
their wants.
(2)
Wealth is created for
businesses and for
their employees and
owners.
(3)
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
TASK
Using the internet, research the following
local business:
www.hydrasun.com
Write a report or prepare a powerpoint
about how this business creates wealth for
the business, its owner(s) and its staff.
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
The Benefits of Business
What do businesses and their owners get
out of starting a business?
CHALLENGE!
Discuss in pairs what you would hope to get
from owning and running your own
business.
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS
DID YOU HAVE ANY OF THESE …
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Making more money than if you were just
employed in a business
Being your own boss and the boss of
others
Being enterprising and innovative
Helping the local community (creating
wealth)
Being charitable (giving something back)
N4 BUSINESS IN ACTION N5
UNDERSTANDING BUSINESS