1.5 Flashcards
what is an entrepreneur?
A person who is willing to take a risk in setting up and growing their own business.
What are the functions of an entrepreneur?
Financial management- Raising capital, managing costs
Purchasing- Liaising with suppliers, deliveries, logistics
Administration- Insurance
Managing people- recruitment
Marketing- research and promotion
Production- production of goods and storage
What is an intrapreneurship?
Employees within a business who has the freedom and opportunity to develop their ideas and se their creativity to innovate.
How can entrepreneurs deal with risk and reduce uncertainty?
Carry out detailed research
Producing detailed plans
Analysing external influences
Developing contingency plans
What are barriers to success?
Lack of finance
competition from large established businesses
Aversion to risk
Lack of ideas
Lack of Entrepreneurial skills
Responsibility of becoming an employer
Legal barriers
What are characteristics of an entrepreneur
Self confidence
Self determination
Self starter
initiative
commitment
What are skills of an entruprenur
Organisation
Financial management
Managing and communication
Negotiating
What are the two motives for setting up a business
Financial motives
non-financial motives
What are Financial motives
Profit maximisation- generating as much wealth as possible
Profit satisfying- to generate enough income to live a comfortable lifestyle
What are non-financial motives
Ethical stance- Running a business to support ethical principles
Social enterprise-Running a business for a social/ environmental cause
Independence and home working- The control and flexibility of a business
Why do businesses set objectives
Provide quantifiable steps to achieve aims
clarify direction of the business
measure success against targets
motivate employees to achieve
reward employees
What are some influences on business objectives
Size
Sector
Market
Ownership
Owner
What are some forms of business
Sole trader-self employed
Partnerships- owned by 2 or more individuals
Private limited company- Owned by shareholders separate legal entity
Public limited company- Large publicly owned companies
Social enterprises
Online businesses
Lifestyle businesses
What is Franchising
A limited company that licenses the right for individuals or groups to set up an identical operation in a new region
What are advantages and disadvantages of Franchisors
+effective way to grow the business
+Setup fee and royalty payments
-Risk of Franchisee damaging brand if not ran properly
What are Ads and dvs of Franchisees
+recieve a business in a box
+Provided with training and support
-Expensive setup fees and little freedom to change the businesses format
-Royalty payments- Share of sales go back to the franchisor
What are ads and dvs of LTDs
+Shareholders have limited liability
+Easier to raise capital through internal shareholders
+Owners may pay less tax if operating as a shareholder
-Harder to set up
-Accounts published and publicly available
What are ads and dvs of PLCs
+huge amounts of money can be made through stock market flotation
+Finance easier to raise through issuing shares
-accounts openly available to the public
-External pressures
What is a stock market flotation
The companies shares are offered on sale to the general public
What are the steps for going public
Issue a prospectus
Reviewed by lawyers
A minimum of £50,000 share capital has to be provided upfront
If successful, a certificate of shares will be issued
The initial public offering goes live and the business can start trading on the stock market
What happens when share prices rise
Managers may receive a bonus
the company finds it easier to raise capital
consumers with shares feel more confident to spend
What happens when share prices fall
Vulnerable to takeover
Indication of poor performance
Finds it hard to raise capital
Feel less confident to spend
What is opportunity cost
The benefit lost from the next best alternative
What are trade offs
Often involve the loss or compromise of another option or factor
What options do businesses weigh up?
Investment appraisal
Risk vs reward
Comparing ads and dvs
Balance short term gains with long term benefits
Gauging support
The probability of success
The demands of becoming a leader
There will be increasing pressure for them to change their approach
and become an effective leader
What are the difficulties of becoming a leader
Must accept responsibility
Need key qualities such as confidence
Sharing ownership an control of the business
Managing with stress
How leaders overcome difficulties
Stress management
Education
Mentor
Delegate and trust
