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1.5 Entrepreneurs and Leaders Flashcards

1
Q

Name 2 businesses with unlimited liability

A

sole traders
partnerships

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2
Q

What is unlimited liability

A

owners of business are personally responsible for the debts caused by business

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3
Q

What is limited liability

A

owners/ shareholders not responsible for companies debts

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4
Q

What is a sole trader

A

A single person who starts and runs a business

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5
Q

Benefits of a sole trader

A

-owner has full control over decisions

-owner keeps all profits made

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6
Q

2 Negatives of a sole trader

A

-owner has unlimited liability

-hard to raise finance

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7
Q

What is a partnership

A

A business owned by 2 or more people

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8
Q

2 benefits of partnership businesses

A

-more owners can allow more finance to be raised

-partners may bring varied skills and experience

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9
Q

2 negatives of partnership businesses

A

-partners have unlimited liability

-potential disagreement among partners

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10
Q

Give 2 examples of businesses with limited liability

A

private limited company

public limited company

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11
Q

What is a private limited company

A

type of privately held small business

shares are not sold publicly- only privately

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12
Q

2 benefits of private limited companies

A

-limited liability

-easy to raise finance

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13
Q

2 disadvantages of private limited companies

A

-limited number of members

-greater administration costs

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14
Q

What is a public limited company

A

only type of business that can sell shares via stock market to general public

in order to become PLC- business must have £50,000 share capital

shares traded publicly on London Stock Exchange

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15
Q

Advantages of a public limited company

A

-shareholders have limited liability

the business has ability to raise additional finance through share capital

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16
Q

Disadvantages of a public limited company

A

expensive to set up- requires minimum of £50,000

shareholders will expect to receive a percentage of the profits as dividends

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17
Q

What is market capitalisation

A

total value of all the issued shares in a public limited company

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18
Q

Formula for market capitalisation

A

share price x number of shares issued

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19
Q

What is an unincorporated business

A

owner is the business
-has unlimited liability

(most operate as sole traders)

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20
Q

What is an incorporated business

A

-legal difference between company and owners

-company has separate legal identity

-owners have limited liability

-(most operate as private limited companies)

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21
Q

What is a franchise

A

license to use another businesses name and business model in return for payment

(e.g. McDonalds

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22
Q

What is a franchisee

A

entrepreneur/ company that buys license to do use another businesses name/ model

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23
Q

What is a franchisor

A

business that sells the right to use its name, logo and business model to other businesses and entrepreneurs

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24
Q

3 benefits of franchising

A

-support from franchisor in providing materials, fixtures, fittings

-advice and training on all business functions

-access to tried and tested formula for a business success

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25
2 disadvantages of franchising
-restrictions on actions (e.g. selling) -not cheap- initial fees to buy license, royalties, % revenue for franchisor
26
What is a social enterprise business
a not-for-profit organisation
27
What are lifestyle businesses
when someone starts up a business as it suits their desired lifestyle -e.g. running own businesses allows flexibility in working hours to fit family commitments -or may be based around hobbies
28
Name the general habits of successful entrepeneurs and the way they run their businesses
-they measure performance in an unbiased way -have an eye for detail -love what they are doing
29
What is intrapeneurship
name given to the encouragement of entrepenuerial behaviour within larger businesses
30
Name 3 barriers to entrepreneurship
-funding -> due to financial crash 2008 -> banks less willing to lend to small firms, start ups -gender bias -> 3x more likely to be male -> harder for women -lack of public sector support -> many believe entepeneurs avoid tax, greedy ppl -> negative perception -> #kids being drawn away from entrepenuership
31
Name 6 reasons why ppl set up a business
-profit maximising -> desire for maximum profit -profit satisficing -> desire for profit & good reputation so set up own business -independence -> don't want to be ordered around -> set up own business -home-working -> want to be able to work from home -> be with fam -> set up own business -ethical stance -> want to work in environment they feel comfortable so set up own business -social entrepreneurship -> start business bcs want to make positive contribution to community
32
What is profit maximising
to seek to get the most profit from every business transaction
33
What is profit satisficing
combining desire for profit with other factors; good reputation, building brand
34
What does indepedence mean in terms of business
when entrepreneurs set up on business to avoid being ordered around/ fit into company policy
35
What is a business objective
specific target set by a business
36
What is a business strategy
plan set up by business to achieve objectives
37
Name 4 common business objectives
-survival -> focusing on generating cash -> espec when starting up/ challenging external environments -profit maximisation -> most profit possible -sales maximisation -> growing no. of cust -> espec in rapidly growing markets -> ^ market share -market share -> ^ MS to dominant level -> ensures long-term success -> market leaders
38
What is franchising
the opportunity to start a business using a tried & tested formula
39
What is a social enterprise
business which purpose is to fix social problem above profit motive when making decisions
40
What is a lifestyle business
business set up bcs it suits entrepenuers lifestyle -e.g. gives them flexibility -> ^ fam time -or may be based on hobbies
41
What is an opportunity cost
the cost of missing out on the next best alternative -e.g. the benefits that couldve been gained by taking diff decision
42
What is the opportunity cost of deciding not to work an extra 10 hours a week
-you lose a lot of money in terms of wages
43
What is a trade-off
when having more of one thing results in having less of another -e.g. less market research -> less successful new product launch
44
Name 4 business issues when moving from an entrepeneur to a leader
-matching production to demand -> for growth -> new markets need to be targeted -> new branches opened -> sales forecast req to forecast demand in unfamil market -> over optimistic -> CF problems -> underestimate -> empty shelves -financing growth -> to expand -> output needs ^ -> reqs ^ cash -> for more materials, new facilities -> challenege of how business raises extra finance -overtrading -> product is trendy -> sales outstrip production -> invest in new capacity -> sales ^ but outflows rise faster -> cash flow crisis -change in structure -> ^ in staff -> extra layers req -> but could change way business works -> employee roles may shift
45
Why is matching production to demand difficult for entrepenurs moving to leaders
-matching production to demand -> for growth -> new markets need to be targeted -> new branches opened -> sales forecast req to forecast demand in unfamil market -> over optimistic -> CF problems -> underestimate -> empty shelves
46
Why is financing growth difficult for entrepenurs moving to leaders
-financing growth -> to expand -> output needs ^ -> reqs ^ cash -> for more materials, new facilities -> challenege of how business raises extra finance
47
What is overtrading
when firm expands too rapidly for its capital to cope with
48
Why is overtrading difficult for entrepenurs moving to leaders
-overtrading -> product is trendy -> sales outstrip production -> invest in new capacity -> sales ^ but outflows rise faster -> cash flow crisis
49
Why is change in structure difficult for entrepenurs moving to leaders
-change in structure -> ^ in staff -> extra layers req -> but could change way business works -> employee roles may shift
50
Name 4 personal issues entrepeneurs face when moving from an entrepeneur to a leader
delegating -> if entrepeneur is sued to making decisions -> may find it hard to give this control to others maintaining effective communication -> boss needs to know wa=hat customers are saying -> bottom-up comms -> if boss wants to set direction -> top-down comms is vital -> info may get lost in process tho co-ordinating more ppl -> boss may struggle to form relationships w empliyees -> may make co-ordinating them harder keeping an eye on big issues
51
Name 2 reasons why people set up businesses
-financial motives; profit maximization, profit satisficing -non-financial motives; ethical stance, social entrepreneurship, independence, home working
52
What is an enterprise
the skills and abilities to take risks and create profits
53
What is an entrepeneur
person who organises, operates, assumes the risk for a business venture
54
Name 3 characteristics of a successful entrepeneur
-passionate -driven -focused
55
What is a social enterprise
trade in goods/ services for a social purpose
56
What are the roles of an Entrepeneur
Creating and setting up a business​ Running and expanding/developing a business​ Innovation within a business (intrapreneurship)​ Barriers to entrepreneurship​ Anticipating risk and uncertainty in the business environment
57
What is a start up
a new business enterprise, formed by one or more entrepeneurs
58
Name 3 ways to encourage intrapeneurship in a business
-give employees ownership of projects -train employees in innovation -encourage collaboration
59
What is a risk
probability that things will not go as well as planned
60
How do entrepeneurs deal with risk
-spread risk by diversifying -look for higher returns
61
What is cost efficiency
aims to achieve the most cost-effective way of delivering goods and services to the required level of quality​
62
2 benefits of cost efficiency
-lower unit costs -improved cash flow
63
employee welfare objectives
-staff retention -quality of customer service
64
customer satisfcation objectives
65
social objectives

Buisness (22 decks)

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