Analyse two barriers to an entrepreneur when starting up a business.

Mark scheme

Marking points from the official mark scheme (Feb/Mar 2024). The mark or mark type is shown in brackets.

1. [1] identifying business opportunities
2. [1] obtaining finance
3. [1] finding a location
4. [1] competition
5. [1] building a customer base
6. [1] could be based own hobbies, previous experience, ability to carry out market research, franchise opportunity
7. [1] may have insufficient savings, not aware of sources of finance available, not trading records to present to a bank, poor business plan
8. [1] working from home could be easiest but premises may be needed for some businesses
9. [1] difficult to enter a market with established competitors
10. [1] need to stand out to attract consumers
11. [2] can be easy to start a business on a small scale using own knowledge but the demand for the product may be limited and therefore it can be difficult to earn enough to survive
12. [2] finance is more difficult to obtain for an entrepreneur than it is for an established business. It is important to have the finance to start the business, perhaps using less traditional sources such as crowd funding or micro finance
13. [2] whether the entrepreneur can work from home depends on the type of business. A service business such as website designer or having no need to communicate with customers face-to-face e.g. e-commerce can easily be carried out at home and can be cheaper, although there is no separation between work and private life or tensions might arise between other members of the household. Other businesses must have premises with the appropriate equipment such as a hairdresser or retail store
14. [2] need a product that is unique to enter a new market as established competitors have cost advantages, loyal customers, greater reputation and more money to spend on promotion.
15. [2] the entrepreneur could provide more personal customer service, knowledgeable pre- and after-sales service, personalised products.
16. [2] objectives
17. [2] public sector
18. [2] environmental objective
19. [2] energy supplier
20. [2] utility e.g. gas, electricity, oil, solar energy, wind power
21. [2] pollution e.g. air, noise, chemical
22. [2] objectives may vary in the public sector. Usually equitable provision of merit goods/services
23. [2] objectives of a public sector business are unlikely to be driven by competition or profit so prices can be kept lower
24. [2] there is opportunity cost of spending money on each area of provision e.g. education, defence, healthcare
25. [2] energy supply is important in all countries and to businesses and consumers, so demand is high
26. [2] a public sector business is funded by the government and is likely to have a national supply network, making it easier to meet the high demand
27. [2] there is the potential for exploitation of the environment e.g. China and coal
28. [2] public sector may have to meet national/international objectives regarding pollution, renewable fuels, sustainability
29. [2] the government has many demands on its funding and therefore the service given by a public sector energy supplier could be less efficient e.g. power cuts
30. [6] A judgment/conclusion is made as to whether the most important objective of a public sector energy supplier is the environmental objective.
31. [6] there are different sources of energy e.g. some countries are fossil fuel dependent whilst others have the ability to develop new methods e.g. wind, water, solar
32. [6] how wealthy is the country to develop these sources using the public sector?
33. [6] does the public sector see energy supply as its most important priority?
34. [6] is the private sector more likely to thrive where customers are influenced by environmental aspects rather than cost of energy?
35. [6] how easy is it for the public sector to provide an energy supply at an affordable price e.g. if price of fuel rises, will the government have to subsidise the cost to the consumer to maintain standard of living?
36. [6] should the most important objective be providing energy to all parts of the country regardless of the opportunity cost?