Welcome to Business 7138! Your Journey Starts Here
Welcome to your first steps in AQA A Level Business! This chapter, Business and objectives, is the foundation of everything else you will learn. Think of it as the "instruction manual" for why people start businesses and how they decide where to go. We are going to look at the people who start businesses (entrepreneurs), how they plan their moves, and the goals they set to stay on track. Don't worry if some of the terms sound "business-y" – we will break them down into plain English together!
Section 1: Entrepreneurs – The Dreamers and Doers
An entrepreneur is someone who takes a risk to start a new business venture. They are the "engine" of the economy.
Why do people start businesses?
People don't just start businesses for the money (though that's a big part of it!). We categorise their reasons into two groups:
• Financial Reasons: To make a profit, to achieve "financial independence" (not having to rely on a boss for a paycheck), or to build wealth for the future.
• Non-Financial Reasons: For a personal challenge, to have independence (being your own boss), to follow a passion, or for social objectives (helping the community or the environment).
Characteristics of a Successful Entrepreneur
It takes a certain type of personality to handle the "rollercoaster" of business. To remember these, think of the "P.I.F.A.R.R." traits:
• Passionate: They truly care about what they are doing.
• Innovative: They come up with new ideas or better ways to do things.
• Focused: They don't get distracted from their main goal.
• Adaptable: When things go wrong, they change their plan quickly.
• Resilient: This is a big one! It means they can "bounce back" after a failure or a bad day.
• Risk Taker: They are willing to lose time or money for the chance of a bigger reward.
Analogy: Think of an entrepreneur like a professional surfer. They have to be passionate about the sport, risk-takers to catch the big waves, and resilient enough to get back on the board when they get wiped out!
The Challenges and Changing Roles
Setting up a business isn't easy. Common challenges include finding the money to start (capital), competing with big famous brands, and the sheer amount of stress and hard work involved.
As a business grows, the role of the entrepreneur changes. At the start, they are the "worker bee" doing everything (making the coffee, doing the books, serving customers). As the business gets bigger, they must become a leader and manager, learning to delegate (give tasks to others) and focus on the "big picture" strategy.
Quick Review: Entrepreneurs need resilience and a mix of financial and personal motives. As the business grows, they move from "doing" to "leading."
Section 2: Business Planning and Decisions
Success in business rarely happens by accident. It requires a map and a way to make tough choices.
The Business Plan
A business plan is a written document that describes the business, its objectives, its strategies, and its financial forecasts.
Why is it valuable?
1. It helps convince banks or investors to lend the business money.
2. It gives the entrepreneur a "roadmap" to follow so they don't get lost.
3. It helps identify potential problems before they happen.
Making Decisions: What influences a boss?
When an entrepreneur has to make a big decision (like opening a second shop), they are influenced by several factors:
• Objectives: Does this move help us reach our goals?
• Risk vs. Reward: Is the potential profit (reward) worth the chance of losing everything (risk)?
• Market Conditions: Is the economy doing well? Are customers spending money?
• Resources: Do we have enough staff, equipment, and cash to do this?
• Opportunity Cost: This is a key term! It means the benefit you give up by choosing one option over another. If you spend £10,000 on advertising, the opportunity cost is the new machine you could have bought with that same money.
Ethics: Doing the Right Thing
Businesses often face ethical dilemmas. This is the struggle of Profit vs. Ethics. For example, a clothing brand could make more profit by using a factory with very low wages, but is that the "right" thing to do? Modern businesses must decide how much they value their reputation and "doing good" versus just making money.
Quick Review: Business plans reduce risk. Every decision has an opportunity cost (the next best thing you didn't do). Competitiveness is the ability of a business to offer better value than its rivals.
Section 3: Business Objectives – Setting the Target
An objective is a specific target a business wants to achieve. Without objectives, a business is like a boat with no rudder – it just drifts around.
The Purpose and Value of Objectives
Setting goals helps to motivate staff, provides a way to measure success, and ensures everyone in the company is working toward the same thing.
SMART Objectives
To be effective, objectives shouldn't be vague like "we want to be the best." They should be SMART. Don't worry if this seems like a lot to remember; it's a very common tool used by real managers!
• S - Specific: Clear and easy to understand (e.g., "Increase sales of chocolate bars").
• M - Measurable: Can be proven with numbers (e.g., "by 10%").
• A - Accountable: Someone is in charge of making it happen.
• R - Realistic: It’s actually possible to achieve (you can't grow by 1000% in a week!).
• T - Time specific: There is a deadline (e.g., "by December 31st").
Example of a SMART Objective: "To achieve a 5% increase in market share within the UK soft drinks market by the end of the next financial year."
Did you know? Objectives often change over time. A brand-new business might just have the objective of survival, while an established giant like Apple focuses on growth and market leadership.
Common Mistake to Avoid:
Students often confuse Aims and Objectives. An Aim is a general, long-term goal (like "to be the world's favorite airline"). An Objective is the SMART step taken to get there (like "increase passenger numbers by 4% in 2024").
Key Takeaways for Chapter 3.1.1
• Entrepreneurs take risks and their roles change as the business grows.
• Business Plans are essential for getting finance and staying organized.
• Opportunity Cost is the "cost" of the alternative you didn't choose.
• Objectives must be SMART to be effective and useful for a business.