* Is there likely to be any demand? If so, how much? How many units do you think you will be able to sell over the next few years?

* Is the idea profitable? Will the income (or revenue) cover the costs? If so, will the business make enough profit for it to be worthwhile? Imagine you are in a job paying ??30,000 a year at the moment. You may be willing to leave this and start your own business if you only expect to earn ??15,000. How much would you need to earn for you to be willing to take the risk of starting out on your own?

* Will you be able to provide the product of service? How difficult is the product to produce? Do you have the skills to develop the idea?

* Would people buy the product or service from you rather than from other firms? Can you offer a better price? Or a better service?

Doing research

To answer these questions you will need to find out about the market and about customers needs and wants. What do your potential customers like and what don't they like? How much are they prepared to pay for the product? What are your competitors prices? This information can be discovered through market research.

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* The primary sector comprises firms involved in extractive industries, such as mining, fishing and forestry.

* The secondary sector comprises businesses involved in manufacturing, such as the car industry and firms producing personal computers.

* The tertiary sector consists of organisations in the service sector, such as universities, banks and the travel industry.

In the UK, the tertiary sector has been growing in importance whilst the secondary sector has been declining. The primary sector is very small indeed in the UK.

Classifying firms according to their size

Firms are often classified according to their size. The size of a firm can be measured in terms of:

* The value of its sales revenue

* The share of the market it has (E.G Ford selling 30% of all cars sold in the UK)

* The number of workers employed

* The value of the things it owns (the items owned by a firm care called its assets.

The most appropriate way of measuring the size of a firm depends on the industry you are considering. For taxi firms or haulage firms, it mat make sense to measure the number of vehicles; in the retail sector (shops) you may want to measure the number of outlets a firm has. In some bases, a firm will be big using one measure of size, but small using other measures! If you look at the National Health Service, for example, it has thousands of employees but does not generate sales revenue.

Input outputs and transformation

The process of business involves turning inputs into outputs. Firms take resources and transform these in some way to produce a product. Thus, a brewery uses hops, malt and water, as well as labor services, the brewery buildings and machinery, as inputs. The outputs are beer or lager. To be successful, the value of the outputs needs to be greater than the value of the inputs. In other words, the selling price of the beer must exceed the cost of the inputs. In this way, the organization 'adds value'.

Over time the nature of the goods and services produced and the way we produce them has changed considerably. New technology, new markets, changes in customer tastes and employee needs have all led to revolutions in the various aspects of business activity. You only need to look at the incredible growth of the internet and the thousands of new products launched in our shops each year to help you appreciate how rapid the rate of change is in the business world. The business world is always changing, with new firms developing and others ending. This is what makes it such a fascinating area to watch and study, and why those involved in business have to monitor their markets very closely all the time.

However, despite the incredible amount of change occurring in the business world the basic elements of all businesses remain the same:

* Resources

* A transformation process to add value

* Output

* Managers to plan, organise, coordinate and control the whole process.

The most successful organisations are those which can manage this transformation process most effectively. This means that they use their resources efficiently and do not waste them, and that they produce goods and services which their customers value highly. The 'best' firms offer customers excellent products and, at the same time, add a great deal of value for their owners.

At the moment, organisations such as Microsoft, Coca-cola, Tesco, Wal-Mart and Virgin are thought of as highly successful. However, even they cannot guarantee success in the future. Markets change, new competitors emerge, customers' tastes change, managers and employees leave. These developments can turn organisations from being winners into losers very rapidly. Marks and Spencer was regarded as an excellent British business in the 1980's and early 1990's, however, by the year 2000 it was attacked for poor management and disappointing financial performance. By comparison, some of the biggest businesses in the world, such as Microsoft, are relatively new. As the business world changes, re-shaped and develops organisations must look for the new opportunities this creates and, also, be aware of the possible dangers.

The process of managing a business is, therefore, a tremendously challenging one. It involves ensuring the tight mix if inputs, the development of an efficient transformation process and the production of goods and services those customers want.

Setting up in business

The first thing to do if you are thinking of setting up in business is to identify a business opportunity and decide exactly what product or service you want o offer. You will need to be sure that there is a market for you product or server and that people will be prepared to pay for it.

You must also be confident that people will be willing to buy the product or service from you, rather than from someone else. Ask yourself what makes you product better than other firms':

* Is it cheaper?

* Is it easier to buy?

* Is it better designed?

Yet another matter to consider is the cost of running the business. Will you be able to make any money from you idea? Or is it likely to cost you more than it earns you?

In some way, having the idea for a business is relatively easy. Most of us have had an idea for a new product or service at some point in out lives; what matters is whether it is possible to turn the idea into a reality that people want, and ether it is profitable. So, when considering a business idea you need to think about a number of factors.

* Is there likely to be any demand? If so, how much? How many units do you think you will be able to sell over the next few years?

* Is the idea profitable? Will the income (or revenue) cover the costs? If so, will the business make enough profit for it to be worthwhile? Imagine you are in a job paying ??30,000 a year at the moment. You may be willing to leave this and start your own business if you only expect to earn ??15,000. How much would you need to earn for you to be willing to take the risk of starting out on your own?

* Will you be able to provide the product of service? How difficult is the product to produce? Do you have the skills to develop the idea?

* Would people buy the product or service from you rather than from other firms? Can you offer a better price? Or a better service?

Doing research

To answer these questions you will need to find out about the market and about customers needs and wants. What do your potential customers like and what don't they like? How much are they prepared to pay for the product? What are your competitors prices? This information can be discovered through market research.

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Input outputs and transformation

The process of business involves turning inputs into outputs. Firms take resources and transform these in some way to produce a product. Thus, a brewery uses hops, malt and water, as well as labor services, the brewery buildings and machinery, as inputs. The outputs are beer or lager. To be successful, the value of the outputs needs to be greater than the value of the inputs. In other words, the selling price of the beer must exceed the cost of the inputs. In this way, the organization 'adds value'.

Over time the nature of the goods and services produced and the way we produce them has changed considerably. New technology, new markets, changes in customer tastes and employee needs have all led to revolutions in the various aspects of business activity. You only need to look at the incredible growth of the internet and the thousands of new products launched in our shops each year to help you appreciate how rapid the rate of change is in the business world. The business world is always changing, with new firms developing and others ending. This is what makes it such a fascinating area to watch and study, and why those involved in business have to monitor their markets very closely all the time.

However, despite the incredible amount of change occurring in the business world the basic elements of all businesses remain the same:

* Resources

* A transformation process to add value

* Output

* Managers to plan, organise, coordinate and control the whole process.

The most successful organisations are those which can manage this transformation process most effectively. This means that they use their resources efficiently and do not waste them, and that they produce goods and services which their customers value highly. The 'best' firms offer customers excellent products and, at the same time, add a great deal of value for their owners.

At the moment, organisations such as Microsoft, Coca-cola, Tesco, Wal-Mart and Virgin are thought of as highly successful. However, even they cannot guarantee success in the future. Markets change, new competitors emerge, customers' tastes change, managers and employees leave. These developments can turn organisations from being winners into losers very rapidly. Marks and Spencer was regarded as an excellent British business in the 1980's and early 1990's, however, by the year 2000 it was attacked for poor management and disappointing financial performance. By comparison, some of the biggest businesses in the world, such as Microsoft, are relatively new. As the business world changes, re-shaped and develops organisations must look for the new opportunities this creates and, also, be aware of the possible dangers.

The process of managing a business is, therefore, a tremendously challenging one. It involves ensuring the tight mix if inputs, the development of an efficient transformation process and the production of goods and services those customers want.

Setting up in business

The first thing to do if you are thinking of setting up in business is to identify a business opportunity and decide exactly what product or service you want o offer. You will need to be sure that there is a market for you product or server and that people will be prepared to pay for it.

You must also be confident that people will be willing to buy the product or service from you, rather than from someone else. Ask yourself what makes you product better than other firms':

* Is it cheaper?

* Is it easier to buy?

* Is it better designed?

Yet another matter to consider is the cost of running the business. Will you be able to make any money from you idea? Or is it likely to cost you more than it earns you?

In some way, having the idea for a business is relatively easy. Most of us have had an idea for a new product or service at some point in out lives; what matters is whether it is possible to turn the idea into a reality that people want, and ether it is profitable. So, when considering a business idea you need to think about a number of factors.

* Is there likely to be any demand? If so, how much? How many units do you think you will be able to sell over the next few years?

* Is the idea profitable? Will the income (or revenue) cover the costs? If so, will the business make enough profit for it to be worthwhile? Imagine you are in a job paying ??30,000 a year at the moment. You may be willing to leave this and start your own business if you only expect to earn ??15,000. How much would you need to earn for you to be willing to take the risk of starting out on your own?

* Will you be able to provide the product of service? How difficult is the product to produce? Do you have the skills to develop the idea?

* Would people buy the product or service from you rather than from other firms? Can you offer a better price? Or a better service?

Doing research

To answer these questions you will need to find out about the market and about customers needs and wants. What do your potential customers like and what don't they like? How much are they prepared to pay for the product? What are your competitors prices? This information can be discovered through market research.

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However, despite the incredible amount of change occurring in the business world the basic elements of all businesses remain the same:

* Resources

* A transformation process to add value

* Output

* Managers to plan, organise, coordinate and control the whole process.

The most successful organisations are those which can manage this transformation process most effectively. This means that they use their resources efficiently and do not waste them, and that they produce goods and services which their customers value highly. The 'best' firms offer customers excellent products and, at the same time, add a great deal of value for their owners.

At the moment, organisations such as Microsoft, Coca-cola, Tesco, Wal-Mart and Virgin are thought of as highly successful. However, even they cannot guarantee success in the future. Markets change, new competitors emerge, customers' tastes change, managers and employees leave. These developments can turn organisations from being winners into losers very rapidly. Marks and Spencer was regarded as an excellent British business in the 1980's and early 1990's, however, by the year 2000 it was attacked for poor management and disappointing financial performance. By comparison, some of the biggest businesses in the world, such as Microsoft, are relatively new. As the business world changes, re-shaped and develops organisations must look for the new opportunities this creates and, also, be aware of the possible dangers.

The process of managing a business is, therefore, a tremendously challenging one. It involves ensuring the tight mix if inputs, the development of an efficient transformation process and the production of goods and services those customers want.

Setting up in business

The first thing to do if you are thinking of setting up in business is to identify a business opportunity and decide exactly what product or service you want o offer. You will need to be sure that there is a market for you product or server and that people will be prepared to pay for it.

You must also be confident that people will be willing to buy the product or service from you, rather than from someone else. Ask yourself what makes you product better than other firms':

* Is it cheaper?

* Is it easier to buy?

* Is it better designed?

Yet another matter to consider is the cost of running the business. Will you be able to make any money from you idea? Or is it likely to cost you more than it earns you?

In some way, having the idea for a business is relatively easy. Most of us have had an idea for a new product or service at some point in out lives; what matters is whether it is possible to turn the idea into a reality that people want, and ether it is profitable. So, when considering a business idea you need to think about a number of factors.

* Is there likely to be any demand? If so, how much? How many units do you think you will be able to sell over the next few years?

* Is the idea profitable? Will the income (or revenue) cover the costs? If so, will the business make enough profit for it to be worthwhile? Imagine you are in a job paying ??30,000 a year at the moment. You may be willing to leave this and start your own business if you only expect to earn ??15,000. How much would you need to earn for you to be willing to take the risk of starting out on your own?

* Will you be able to provide the product of service? How difficult is the product to produce? Do you have the skills to develop the idea?

* Would people buy the product or service from you rather than from other firms? Can you offer a better price? Or a better service?

Doing research

To answer these questions you will need to find out about the market and about customers needs and wants. What do your potential customers like and what don't they like? How much are they prepared to pay for the product? What are your competitors prices? This information can be discovered through market research.

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The process of managing a business is, therefore, a tremendously challenging one. It involves ensuring the tight mix if inputs, the development of an efficient transformation process and the production of goods and services those customers want.

Setting up in business

The first thing to do if you are thinking of setting up in business is to identify a business opportunity and decide exactly what product or service you want o offer. You will need to be sure that there is a market for you product or server and that people will be prepared to pay for it.

You must also be confident that people will be willing to buy the product or service from you, rather than from someone else. Ask yourself what makes you product better than other firms':

* Is it cheaper?

* Is it easier to buy?

* Is it better designed?

Yet another matter to consider is the cost of running the business. Will you be able to make any money from you idea? Or is it likely to cost you more than it earns you?

In some way, having the idea for a business is relatively easy. Most of us have had an idea for a new product or service at some point in out lives; what matters is whether it is possible to turn the idea into a reality that people want, and ether it is profitable. So, when considering a business idea you need to think about a number of factors.

* Is there likely to be any demand? If so, how much? How many units do you think you will be able to sell over the next few years?

* Is the idea profitable? Will the income (or revenue) cover the costs? If so, will the business make enough profit for it to be worthwhile? Imagine you are in a job paying ??30,000 a year at the moment. You may be willing to leave this and start your own business if you only expect to earn ??15,000. How much would you need to earn for you to be willing to take the risk of starting out on your own?

* Will you be able to provide the product of service? How difficult is the product to produce? Do you have the skills to develop the idea?

* Would people buy the product or service from you rather than from other firms? Can you offer a better price? Or a better service?

Doing research

To answer these questions you will need to find out about the market and about customers needs and wants. What do your potential customers like and what don't they like? How much are they prepared to pay for the product? What are your competitors prices? This information can be discovered through market research.

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* Is there likely to be any demand? If so, how much? How many units do you think you will be able to sell over the next few years?

* Is the idea profitable? Will the income (or revenue) cover the costs? If so, will the business make enough profit for it to be worthwhile? Imagine you are in a job paying ??30,000 a year at the moment. You may be willing to leave this and start your own business if you only expect to earn ??15,000. How much would you need to earn for you to be willing to take the risk of starting out on your own?

* Will you be able to provide the product of service? How difficult is the product to produce? Do you have the skills to develop the idea?

* Would people buy the product or service from you rather than from other firms? Can you offer a better price? Or a better service?

Doing research

To answer these questions you will need to find out about the market and about customers needs and wants. What do your potential customers like and what don't they like? How much are they prepared to pay for the product? What are your competitors prices? This information can be discovered through market research.

It may seem obvious to say that you need to research the market before actually setting up in business, but many individuals are short of money at this stage. Because of this, they prefer to use the money that they do have to develop the product rather than finding out what customers actually want. However foolish this may seem, people who have had a business idea are often so eager to get on with starting up, that that think market research is a waste of valuable time and money.

Given that the amount of money you have available to spend, research is likely to be limited, you will probably have to carry out most of it yourself rather that use specialist companies to do it for you. The cheapest and quickest way of doing this is to see what information about the market already exists. What data has been collected and published in the past? There is a tremendous amount of information already available on the internet, in libraries and in newspapers, for example.

However, in some cases you mat have to gather information for the first time (this is called primary research). For example, you may want to discover what people in your local area think of your idea, whether they are likely to use your service or what they think of you business name. This sort of information will not exist already, so you will need to undertake new research.

Primary research can be tailored precisely to your own needs but can be quite expensive and time consuming, compared to using information already collected.

What makes an idea successful?

If you want your business to be successful, you must be sure that there will be enough demand for your product service. You must also be sure that your sales will be high enough to cover your costs in the long run. Although It is common for firms to make a loss when they first start out, obviously you cannot afford to carry on making losses for long periods. If you do, your business may be forced to close. So before you start, you have to try and make sure demand is going to be high enough.

Pricing

How much you actually earn from your business will depend, not only on how many items you expect to sell, but also on how much you charge for each one. If you multiply the number of units sold by the average price you charge, this gives the total revenue. Getting the price right is crucial. Charge too much and you may not sell enough. Charge too little and you may sell a lot but not make enough revenue to cover the costs.

The product

The level of demand will also depend on the product or service itself. Is it something people really want? Does it meet a need and what else is available? Are there competitors offering a similar or better product at a better price? If so, you may struggle to survive. A successful product is one offering good value for money. This does not necessarily mean that it is cheap, but that it provides a high level of benefits compared to the price charged.

A product or service is more likely to be successful if it has a unique selling proposition (USP). This is something which makes it different from the competition. For example, you may decide to keep your shop open later than the competition, to deliver to the door or to tailor-make the product to the customers' orders. Burger King's USP is its flamed-grilled burgers, for example.

Protecting the idea

One of the problems of having a good idea is that other people may copy it! To some extent this is inevitable. Other people and companies can see what you have done and replicate it. Not too long ago a book called the little book of Calm was published. This was a small book of advice on how to keep calm, which was displayed next to the tills in book shops and sold hundreds of thousands of copies; within months there was the little book of joy, the little book of happiness and so on. It is possible to gain some protection by taking out a patent of through copyright legislation.

A patent is a means of protecting a new invention. You can take out a patent by registering your product or production process at the patents office. This means that other people or firms cannot copy your invention unless you agree to licence it to them. You can charge them for the licence. However, to really protect your idea you need to take out patents all around the world to prevent it being copied elsewhere. This can be expensive.

Parents are absolutely vital to the success of firms in industries such as pharmaceuticals.

In this informative passage, we have been though the basics of setting up a business, before you actually do it. Many factors are involved within this. Remember, it's not a simple 1-2-3 guide to making your millions, you have to have persistence.

Good Luck, and the very best.