Before there was a bakery: Three years ago Lena worked nights at a large bread factory. She noticed the nearest bakery to her street had closed, put her savings into a second-hand oven, and opened on a Tuesday with two kinds of bread and no customers.
She spotted a gap, took the risk with her own money and kept going. That is what an entrepreneur does.
An entrepreneur is the person who starts a business: they have the idea, put in the money and take the risk that it fails. A manager runs a business for someone else; an entrepreneur risks their own savings on it.
Sees the chance
- Spots a gap in the market: the closed bakery, the street with nowhere to buy bread.
- Has a vision of what the business could be.
Takes the risk
- Puts in their own money and may lose it.
- Gives up a safe wage for an uncertain one.
Keeps going
- Passionate about the idea, so the empty first week does not end it.
- Resilient: adapts when the first plan does not work.
Makes it happen
- Innovative: finds a new product or a better way.
- Decides, organises and leads, often alone at first.
Features, not a job description: 'Runs a business', 'combines resources' and 'has unlimited liability' describe what a sole trader does or the legal form they chose. They are not features of an entrepreneur.
The features are about the person: risk-taking, vision, passion, innovation, resilience, confidence.
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Lena did not open on a whim. Between the idea and the first loaf there were six steps, and every new business goes through some version of them.
From idea to opening day
Spot the opportunity
A gap in the market: a need people have that nobody nearby is meeting. Lena's street had no bakery.
Find out if it is real
Ask the people who would buy. Lena counted who walked past at seven in the morning and asked forty neighbours what they would pay for a loaf (market research).
Write the plan
What the business will sell, to whom, at what price, what it will cost and where the money comes from, on paper (the business plan).
Raise the money
Savings, family, a bank loan. Lena used her savings and a small loan for the oven; the plan is what the bank read before saying yes.
Choose the legal form
On her own as a sole trader, with a partner, or as a company. This decides who owns it and who pays if it fails.
Set up and open
Rent the shop, buy the oven, register with the tax office, tell people, open the door.
Why the order matters: Lena's first idea was a cake shop. The forty neighbours said they would buy bread every day and a cake twice a year. She changed the plan before she spent a cent on cake tins.
Research before the plan, the plan before the money. Skip a step and the next one is built on a guess.
Two of the six steps get their own topics later in the course: raising money and choosing the legal form. Here it is enough to know where they sit in the order.
See how examiners mark answers
Access past paper questions with model answers. Learn exactly what earns marks and what doesn't.
The document the bank read: When Lena asked for a loan, the bank did not ask to taste the bread. It asked for the plan.
A business plan is a written document that sets out what the business will do, who its customers are, how it will make money, and how much money it needs. It turns an idea into something a stranger can judge.
| Section of the plan | What it answers | In Lena's plan |
|---|---|---|
| The business and its aims | What will it sell, and what is it trying to achieve? | A neighbourhood bakery; break even in a year |
| The market | Who will buy, and who else sells to them? | The 3 000 people within ten minutes' walk; no bakery nearer than two kilometres |
| Marketing | How will customers hear of it, and at what price? | A sign, a leaflet through 800 doors, loaves at $3 |
| Operations | How will it be made, where, by whom? | One oven, one baker, a rented shop with a back room |
| Finance | What will it cost, what will it earn, when will the cash run short? | Set-up costs $18 000; a month-by-month cash-flow forecast for year one |
| The money needed | How much, from where, and how it will be repaid? | $12 000 of savings plus a $6 000 loan over three years |
Two people read it: The lender or investor reads it to decide whether they will get their money back: is the market real, do the numbers add up?
The entrepreneur writes it to find the problems on paper before finding them in the shop. Lena found the cake problem here, not in the till.
A plan is a forecast, not a promise. The numbers in it are Lena's best estimates, which is why the market research underneath them matters: a plan built on a guess looks just as neat as one built on evidence.
How this comes up: Short knowledge questions on the paper with stimulus material: state two features of an entrepreneur, define a business plan, state two things a business plan contains.
Two marks means two items or one full meaning. There is no explaining to do.
The three short shapes
- State two features of an entrepreneur. Two words each: takes risks; spots opportunities. Done.
- Define the term business plan. A written document setting out what a new business will do, its market, its costs and the money it needs.
- State two elements of a business plan. A marketing plan; a cash-flow forecast.
The trap: describing the job instead of the person: 'Runs the business', 'combines the factors of production', 'has unlimited liability', 'keeps all the profit' are things a sole trader does or has. None of them is a feature of an entrepreneur, and none earns the mark.
Name a quality of the person: risk-taker, visionary, innovative, resilient, passionate.
State two features of an entrepreneur.
Model answer plan
See the mark-by-mark plan — for / against / judgement, with marking guidance — in study mode.