1.5 Flashcards
define entrepreneur
a person who set sup a business, taking on financial risks in the hope for profit
define intrapreneur
has all the same characteristics of an entrepreneur but works within a large organisation
define risk
the possibility that the business will have a lower than expected profit or loss
define uncertainty
when businesses are unable to predict external shocks/future events
define entrepreneurial characteristic
The skill, quality or trait of the person starting a business
define entrepreneurial motive
the factor that drives a person to start a business
define business objecitve
goal or aim business aims to achieve
Specific
Measurable
Agreed
Realistic
Time - Related
define opportunity cost
the cost of foregoing the next best alternative
define leader
the action of leading a group of people or an organisation or the ability to do this
what are the barriers to entrepreneurship
lack of personal finance
financial crisis
risk too great
family commitments
societies barriers (only 29% of entrepreneurs are women)
small businesses pay proportioanlly higher tax than larger firms
3 things involved in creating and setting up a business
-Generating a business idea (observation, brainstorming, thinking ahead )
- Spotting an opportunity (changes in society, changes in the economy, market mapping)
- Small budget research (checking out competition)
why is entrepreneurialism important to the uk
creates jobs
innovation
expands consumer choice
THREE
uncertainties within business
exchange rates
natural disasters
interest rates
RRICHS
entrepreneurial characteristics (6)
-risk taking
- resilience
- initiative
- creativity
- hardworking
- self confidence
RRICHS
financial motives for starting a business
- PROFIT MAXIMISATION, generating the highest amount of profit possible
-PROFIT SATISFICING- generating enough money to live a comfortable lifestyle
MOFN 4 types
entrepreneurial skills
MANAGING and communicating with people
ORGANISATION
FINANCIAL MANAGEMENT
NEGOTIATING (deals and contracts with suppliers)
PESFI
non financial motives for starting a business
independence
flexibility
social reasons
ethical reasons (eg. environmental)
personal challenge
business objective examples
Survival/ Profit maximising
Market share (competitive market)
Employee welfare
Social objectives
Customer Satisfaction (common in service industry)
Business form definition
The legal structure it takes on in the UK
4 types
Define limited and unlimited liability
Limited: The business owner is not personally liable for the business debts
Unlimited:The business owner is personally liable for the business debts
Sole trader
1 owner - UL
+ easy to set up , all profits kept, own boss
- unlimited liability, less experience
Partnership
2 -20 owners UL
+ more experience and knowledge
+ less pressure
+ no publishing accounts
- UL
- Share profits
- disagreements with partners
Private Limited Company (LTD)
Owned by shareholders LL
+LL
+Wider access to capital
+ Choose who to sell shares too
- have to incorporate (costly)
- publish accounts
Franchising
Limited companies that licence the right for people to set up identical operation in a new region
+ effective method of growth
+ royalty for franchisor
+ franchisee gets training and support
- franchisee could damage brand
