GCSE-readyGCSE and International GCSE Business: common mistakes
The wrong answers students pick most often in our Business questions, and why they are wrong. Read these before a test, then open the lesson for anything that surprises you.
1.1 Enterprise and entrepreneurship
- Why new business ideas happen
- Not “Universal sales price”. USP is not about a universal price; it is what makes a product different.
- Not “Useful sales plan”. The S stands for selling, and the P for point, not plan.
- Not “Unit selling profit”. USP is not a profit measure.
- Entrepreneurs, risk and reward
- Not “Lack of security”. Lack of security is a risk, not a reward.
- Not “Financial loss”. Financial loss is a risk of starting a business.
- Not “Business failure”. Business failure is a risk, not a reward.
1.2 Spotting a business opportunity
- Market research
- Not “Government statistics”. Government statistics already exist, so they are secondary research.
- Not “A newspaper article”. A newspaper article is published data, so it is secondary.
- Not “A published market report”. A published report already exists, so it is secondary.
- Segmentation and market mapping
- Not “Location”. Location segmentation groups customers by where they live.
- Not “Market mapping”. Market mapping shows positioning, not a way of dividing customers.
- Not “Cash flow”. Cash flow is about money, not segmenting a market.
- The competitive environment
- Not “The owner's age”. The owner's age does not matter to customers choosing between firms.
- Not “The weather”. The weather affects all firms equally.
- Not “The colour of the office walls”. Office wall colour is not a factor customers compare.
1.3 Putting a business idea into practice
- Revenue, costs and profit
- Not “Raw materials”. Raw materials rise with output, so they are a variable cost.
- Not “Packaging”. Packaging rises with output, so it is a variable cost.
- Not “Ingredients”. Ingredients rise with output, so they are a variable cost.
- Break-even
- Not “Profit is at its highest”. At break-even profit is zero, not at its highest.
- Not “Fixed costs are zero”. Fixed costs still exist at break-even.
- Not “Variable costs are zero”. Variable costs still exist at break-even.
- Cash flow
- Not “Profit and cash are always identical”. Profit and cash are different, which is why this can happen.
- Not “Profitable businesses have no costs”. All businesses have costs.
- Not “Cash is not needed by businesses”. Businesses need cash to pay bills and wages.