Edexcel GCSE Business: Enterprise and entrepreneurship (1BS0) – Revision Notes

These notes condense Theme 1, Topic 1.1 Enterprise and entrepreneurship from the Pearson Edexcel Level 1/Level 2 GCSE (9-1) in Business (1BS0) specification, Issue 2, July 2022. They cover items 1.1.1 (the dynamic nature of business), 1.1.2 (risk and reward) and 1.1.3 (the role of business enterprise). For full explanations and worked examples, read the study guide.

Course links: the Business hub, the printable checklist, the practice questions and the free diagnostics.

Key terms

Term	Short definition
Dynamic	Always changing, so ideas and markets keep shifting
Obsolete	Out of date because something better has replaced it
Original idea	A new product, service or approach not offered before
Adapting	Changing an existing product, service or idea
Risk	The chance of a bad outcome from a business decision
Reward	The gain from taking the risk
Profit	Revenue minus total costs
Independence	Being your own boss and choosing how to work
Goods	Physical items sold to customers
Services	Actions done for customers
Add value	Make the output worth more to the customer than the inputs bought
Unique selling point (USP)	A feature that rivals do not offer
Entrepreneur	Someone who sets up a business, organising resources, making decisions and taking risks

1.1.1 The dynamic nature of business

Why ideas come about

Reason	Think	Typical link to an idea
Changes in technology	New or cheaper methods	Sell through an app; use a machine that cuts costs
Changes in what consumers want	New tastes, incomes, habits	Plant-based food; ethical packaging
Products and services becoming obsolete	Old item replaced	Offer the modern replacement

How ideas come about

• Original ideas: new to the market. No direct rivals at first, but demand is untested.
• Adapting existing products, services or ideas: change what is already sold. Demand is proven, but rivals exist.

Method in steps: a “why this idea” answer

1. Name the change (technology, consumer wants or obsolescence).
2. Say who is affected in the case.
3. State the gap or opportunity that follows.
4. Say whether the idea is original or adapted, and why that suits the business.

1.1.2 Risk and reward

Risks	Rewards
Business failure	Business success
Financial loss	Profit
Lack of security	Independence

Formulae to know:

Item	Standard form
Revenue	price × quantity (Appendix 3)
Profit	revenue − total costs (standard form)
Total cost	total fixed costs + total variable costs (Appendix 3)
Percentage change	change ÷ original × 100

The specification says formulae are not provided in the examinations, so memorise these.

Small worked reminder

A shop sells 140 items at £9 each. Total costs are £1,000.

• Revenue = 9 × 140 = £1,260
• Profit = 1,260 − 1,000 = £260

If sales fall to 100 items and costs stay at £1,000, revenue is £900 and there is a loss of £100.

Must-know distinction

Failure is the business closing. Financial loss is costs exceeding revenue, or money being lost. A business can make a loss for a while without failing, and a loss over time may cause failure.

1.1.3 The role of business enterprise

Purpose of business activity

1. Produce goods or services.
2. Meet customer needs.
3. Add value.

Five ways to add value

Way	Quick test	Mini example
Convenience	Does it save time or effort?	A shop open until late
Branding	Do customers trust the name?	Higher price for a known label
Quality	Is it better made or delivered?	Fabric that lasts longer
Design	Does it look or work better?	A comfortable handle
USP	Do rivals lack this?	The only local firm offering weekend repairs

Simple picture of value added: selling price minus the cost of bought-in inputs. The specification does not list this as a formula, and the result is not all profit because wages and rent still have to be paid.

The role of an entrepreneur

Role	Meaning	Clue in a case study
Organises resources	Brings premises, labour, equipment and money together	Rents a unit, hires staff, buys machinery
Makes business decisions	Chooses what, where, how and for whom	Picks a product range or a price
Takes risks	Puts time and money in without a guarantee	Uses savings, takes out a loan

Quick case recognition

Practise labelling short situations. Each one points to a different part of the topic.

Situation	Label
A tailor starts offering online fitting through video calls	Change in technology; adapting an existing service
Shoppers begin asking for refill stations instead of plastic bottles	Change in what consumers want
Few people still buy pagers, so a repairer retrains	Product becoming obsolete
A student invents a folding desk no one has sold before	Original idea
A gardener leaves a salaried job and has no sick pay	Lack of security
A baker keeps all the money left after paying costs	Profit
A joiner decides which jobs to take and when to work	Independence
A kiosk owner hires two staff and rents a pitch	Entrepreneur organising resources

Building an evaluation on risk and reward

A strong “evaluate” or “justify” answer on this topic often follows five moves.

1. Show the reward with a figure from the case, such as forecast profit.
2. Show the risk with a figure, such as a loss in the weak scenario.
3. Say how likely each outcome looks, using the evidence given.
4. Say what the owner would give up or gain, for example a steady wage or independence.
5. Reach a decision and give the main reason for it.

Do not stop at step 2. A list of pros and cons with no decision is incomplete.

Linking the three parts of the topic

The three items connect, and a good answer shows the links.

• A change (1.1.1) creates a gap in the market.
• An entrepreneur (1.1.3) organises resources and decides how to fill it, accepting risk (1.1.2).
• If customers value the result, the business meets their needs and adds value, and the reward follows.

When a question gives a case, ask three things in turn. What changed? What is the owner risking? How does the business make itself worth more to customers than a rival? Those three questions cover most of what this topic can ask.

Command words for this topic

Command word	What the answer needs (from Appendix 1)
Define	A definition of a term from the content
Give	A recalled answer
Calculate	Maths on the data given, with workings shown
Outline	Two linked points placed in the context given
Explain	One fact plus two developing points; the question gives no context
Analyse	An extended answer placed in context by the question
Justify	Use the data supplied to back one of the two choices
Evaluate	Use your knowledge to reach a supported conclusion about the situation

Quick self-test

1. State the three reasons the specification gives for new business ideas.
2. Give the two ways ideas come about.
3. Define “obsolete”.
4. A florist sells 250 bouquets a month at £12 each. Calculate monthly revenue.
5. The florist’s total costs are £2,400 a month. Calculate monthly profit.
6. Weekly orders fall from 30 to 24. Calculate the percentage fall.
7. Name the three risks and the three rewards.
8. Name the five ways of adding value.
9. State the three purposes of business activity.
10. State the three roles of an entrepreneur.
11. A café stays open until midnight when rivals close at six. Which way of adding value is this?
12. Why does “profit” alone make a weak answer to “explain one reward of starting a business”?

Answers

1. Changes in technology; changes in what consumers want; products and services becoming obsolete.
2. Original ideas; adapting existing products, services or ideas.
3. Out of date, with few people wanting it because something better has replaced it.
4. 12 × 250 = £3,000.
5. 3,000 − 2,400 = £600.
6. (30 − 24) ÷ 30 × 100 = 20% fall.
7. Risks: business failure, financial loss, lack of security. Rewards: business success, profit, independence.
8. Convenience, branding, quality, design, unique selling points.
9. To produce goods or services; to meet customer needs; to add value.
10. Organises resources; makes business decisions; takes risks.
11. Convenience (and possibly a USP, if no rival offers late opening).
12. “Explain” needs a statement plus two expansion points, so say what profit is, then why it matters to the owner, for example funds for growth or personal income.

Where marks are usually lost

• Giving one-word answers such as “technology” without saying what changed and what opportunity it created.
• Confusing obsolete (replaced and out of date) with faulty or unpopular.
• Writing “risk” without naming one of failure, financial loss or lack of security.
• Treating profit as the only reward and ignoring independence and success.
• Mixing up revenue and profit in a calculation, or forgetting to subtract total costs.
• Quoting a percentage change from the wrong base figure. Divide by the starting value.
• Claiming value added equals profit.
• Listing the entrepreneur’s roles without tying any of them to the case.
• Giving a one-sided answer to “evaluate” or “justify” and never stating a decision.

Frequently asked questions

What does obsolete mean in GCSE Business? A product or service is obsolete when it is out of date and few people still want it, usually because something better has replaced it. It does not mean broken; the need it met often remains, which creates room for a new idea.

What are the five ways a business can add value? The Edexcel GCSE Business (1BS0) specification lists convenience, branding, quality, design and a unique selling point (USP). Each makes the output worth more to the customer than the inputs the business bought.

Is value added the same as profit? No. Value added can be pictured as the selling price less the cost of bought-in inputs, but wages, rent and other costs still have to be paid out of it. Profit is revenue minus total costs.

What are the three roles of an entrepreneur? An entrepreneur organises resources, makes business decisions and takes risks. In a context question, tie each role to a detail from the case rather than just listing them.

Official syllabus

Pearson Edexcel Level 1/Level 2 GCSE (9-1) in Business (1BS0), Specification, Issue 2, July 2022, published by Pearson Education Limited. Theme 1: Investigating small business, Topic 1.1 Enterprise and entrepreneurship, items 1.1.1 to 1.1.3.