What are the challenges of an Entrepreneur?
An entrepreneur face many challenges in setting up a business, as can be found below:
Who is an Entrepreneur?
What is an 'economic problem'?
Problems that arise due to:
These scarcity in resources causes wants and needs not to be met - hence businesses only produce what they can with the resources they have.
This means they would have to choose what they can produce, letting go of the idea of not producing something else that could also be very important to be produced = this is called Opportunity Cost.
What is the difference between these two pictures?
Can you tell the difference between these two pictures? The 'under construction' sign tells us that something is being constructed (perhaps a house) and to your right you see an actual house! These pictures show an unfinished and a finished/final product.
But, what if the construction never completed? Would the house be completed? Should the house be completed? Why is it important for it to be completed?
The above questions brings us to today's topic of 'added value'. The definition of added value states that it is the difference between the raw materials that are used to make the house, against the price of the house that it is sold for. In other words, an uncompleted house holds no value = or to be put simply, raw materials alone holds no value to a business, unless it is being converted into a final product, where the business would be able to set a selling price to the product. Hence if you look at the picture on your right - the final, completed house gives value that customers would be willing to pay for, because they are able to see the effort that the construction company has put into making it as attractive as it looks. This also means, if businesses put more value or effort into creating value for their products, they may possibly have higher chances to set competitive prices that will eventually lead to higher sales volume!
However, this also brings the question to whether added value is the same as profit, since added value talks about the difference between raw materials and selling price. To explain on this, I urge you to watch my video in the 'Videos' Section of this website for you to determine if added value is the same as profit.
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Now that you are able to differentiate between employed and self-employed, let's talk about what the word 'business' means . Businesses are important to an employed person because with a sustaining business, an employed person will continue to be employed.
Broken apart, business is is a combination of the following:
The resources or also known as the 'Factors of Production' are explained below:
The factors of production are essential to help businesses produce the following:
In the last blog, we spoke of two terms - employed and self-employed.
Now, let's put that understanding to test by reading this article about Dulip who is about to start his business.
From this article, we have seen that in order to start a business, it takes a lot of work and effort.
For example - Dulip would have to:
If you were Dulip, what would you do?
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