Producing goods and services
Jaap the carpenter discusses being self-employed and how he manages his business
A successful business meets the needs of its customers. Businesses try to achieve this by carrying out activities such as producing A product that can be touched. or providing Something a business provides that is intangible, ie not able to be touched. with the aim of making a The amount of money made after all costs are deducted.. As such, the purpose of business activity is to provide goods and services that customers want, at a price that they are willing to pay.
Goods
Goods are Something that can be touched and physically held, for example, a book. items that can be used and stored. Businesses make goods and sell them to customers, who then own them. Examples include:
- computers
- food
- clothes
Services
Services are Without a physical presence and therefore unable to be touched. actions that cannot be stored. Businesses provide services to customers, who have access to them for a period of time. Examples include:
- hairdressing
- train journeys
- internet access
The role of entrepreneurship
Jaap talks about what makes a good entrepreneur
To produce goods or provide services, businesses need to organise resources and make decisions about how much An estimate of the probability of an unwanted outcome. It depends upon the chance of it happening and the consequences if it did happen. they are willing to take. An A calculated risk-taker who sets up a business in return for financial gain. will do this by making decisions about what to produce or provide using the resources available to them. Those resources will include land, labour and The money and equipment invested into a business..
For example, an entrepreneur who has identified a need for a new gym will require:
- Land - Naturally occurring resources, such as land and water. A gym will need land for a physical building.
- Labour - Human effort, skills and knowledge. A gym will need staff who can offer advice on health and fitness.
- Capital - Equipment and money used to provide goods and services. A gym will need fitness equipment and money to pay staff.
- Enterprise - The willingness to take risks, make decisions and organise resources. All of these will be needed to open the gym.