Why Businesses Exist

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  • Why Businesses Exist
    • Businesses Supply Goods or Services
      • Businesses sell products to customers who are willing to pay for them.
        • Products can be goods or services
          • Goods are physical items like books or furniture
          • Services are actions performed by other people to aid the customer, e.g. hairdressers and plumbers
      • Products can be a necessity or a luxury
        • Necessities are goods or services that you need like gas and electricity
        • Luxury goods or services are things you want but don't need like holidays and jewelery
    • Advantages to Owning a Business
      • People set up businesses to make a profit.
        • Profit is where the business makes more money than it spends
        • Starting a business is risky, but many people take the risk because of the possibility of big financial rewards
      • People usually set up their own business if they expect to make more than they could working for another company
      • People may set up their own business so that they can be their own boss and make their own decisions
      • Setting up your own business gives you the opportunity to do a job you're really interested in
    • Most Businesses Need to Make a Profit
      • Businesses have to make a profit of break even to survive
        • This is especially true in the private sector.
          • If a business doesn't make enough money to survive it could go bankrupt and have to close down
      • In the public sector, it's not as clear-cut.
        • Organisations like the army, police, hospitals and state schools aren't there to make money - they provide a service to the community
      • Non-profit businesses, e.g. charities, have social or ethical aims, rather than financial ones
    • Businesses can have Other Aims
      • As well as making profit, businesses may have other aims.
        • To offer the highest quality goods and services possible
        • To give excellent customer service
        • To have a great image and reputation
        • To develop new products ahead of competitors
        • To offer a diverse range of goods or services
        • To become fully sustainable or minimise environmental impact
        • To invest in the local community or social projects
      • Businesses set specific objectives to help them meet their aims


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