1.3 Enterprise, Business Growth and Size Flashcards
Define entrepreneur.
An entrepreneur is someone who invests capital, takes a risk and starts up and operates a new business venture.
Entrepreneurship drives business growth and innovation.
Explain the four characteristics of successful entrepreneurs?
Creativity; also known as innovation or vision
It is the ability to generate new ideas or fresh thinking for new products or services to gain competitive advantage.
Resilience; also known as optimism or the ability to bounce back.
All entrepreneurs will face many setbacks and have to overcome these and not give up on their aims.
**Hard Working **
entrepreneurs often have to work long, irregular hours late into the night and on weekends, especially during the start-up phase of the business.
Multi tasking, also known as problem-solving or independence.
Before they can afford to hire experts, entrepreneurs will have to juggle all the tasks of the business and develop skills in many different areas like marketing, finance and operations.
What is a business plan?
A business plan is a document setting out a business’s objectives and how it will achieve them.
It is usually drawn up when starting up a new business or when there will be an important change in how the business is run, like starting a new service or investing in a new outlet.
Explain the finance section of a business plan.
Finance concerns how much capital the business will need and where will it come from.
For example, $10,000 start-up capital required from a bank loan.
It will also look at forecast revenue and costs so the business can estimate how much profit they will make.
It makes sure there is enough capital to start the business.
It can also show banks or potential investors the business has a solid plan to control costs, earn revenue and repay loans.
Explain the marketing section of a business plan.
The Marketing Plan involves researching the market and planning how to sell a product or service.
It ensures there is a sufficient budget in place to pay for marketing campaigns and outlines strategies for building a customer base.
It can also help forecast future volume demand.
Explain the Operations section of a business plan.
The Operations section shows how the product or service will be produced.
It ensures the firm can find suppliers, and produce effectively at the output needed to ensure the customer demand is satisfied.
Explain the Human resources section of a business plan.
Human Resources outlines the employees that will be required, and what skills or training they will need.
It means entrepreneurs can employ the right people for the job and the business can be productive quickly.
For example, a restaurant will have to find skilled chefs and train service staff.
How do governments support business start ups?
Training schemes:
To help entrepreneurs draw up a business plan and forecast their sales and costs for the first year.
Grants: payments for equipment or to help with start-up costs.
Tax breaks, free office space, and subsidies for hiring new employees.
Why do governments support business start ups?
Employment creation:
successful startups employ workers and reduce unemployment.
Economic growth:
entrepreneurs contribute to developing economic activity by creating profits, and paying employees and suppliers.
Innovation and technological change:
often entrepreneurs come up with new ideas which can inspire other startups, and make the economy more competitive and productive.
What is the disadvantage of looking at the number of employees as measuring business size?
Some large businesses may have invested in machinery, and have a high output but a low number of employees.
If we only look at the number of employees as a means of measuring business size, it may give a misleading impression of business size.
Name the ways of measuring business size
- Number of employees.
- Capital employed.
- Value of output
How do you calculate the number of employees.
Give an example.
Simply add up all of the employees in X-Ray Microchips and Yummy Oranges and see which one has more.
What is the limitations for measuring business size by the number of employees?
Some large businesses may have invested in machinery, and have a high output but a low number of employees.
If we only look at the number of employees as a means of measuring business size, it may give a misleading impression of business size.
Explain, with an example, how you calculate capital employed.
Add up the value of all the assets in a business like buildings and machinery.
X-Ray Microchips has much more capital employed than Yummy Oranges, because it is a high technology business and has to invest high levels of capital in its production line.
How is value output calculated?
Value of output is calculated by multiplying market value of the product by the level of output.
Value of output = market value of the product x the level of output