New businesses are set up by entrepreneurs. There are both risks and benefits involved in setting up a new business.

The economy is divided into different business sectors. All businesses have inputs and outputs and must add value during production.

Making goods or providing services

Items of fruit are goods

A business is any organisation that makes goods or provides services.

There are many types of business in the UK. These range from small firms owned and run by just one self employed person, through to large companies which employ thousands of staff all over the world.

Businesses exist to provide goods or services.

Goods are physical products - such as burgers or cars.

Compact discs are goods

Services are non-physical items - such as hairdressing.

Customer needs are the wants and desires of buyers.

Nearly half a million businesses start up each year. A business start up is a new firm operating in a market for the first time.

The vast majority of businesses are very small and operate in the service sector.