1.5 Entrepreneurs and leaders Flashcards by Evie Carroll

How may a business generate a business idea?

Observation

Brain storming

Thinking ahead

Personal/ Business experience

Innovations

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How may a business spot an opportunity:

Changes in technology

Changes in society

Changes in the economy

Changes in the housing market

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How do successful entrepreneurs run their business?

Measure performance in an unbiased way

Eye for detail

Have the ability to step back from day-to-day issues

Love what they are doing

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What are the problems with business expansion?

Over-estimating demand

Failing to raise sufficient finance

Not recruiting enough or the right people

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What is intrapreneurship?

The name given to the encouragement of the entrepreneurial behaviour within larger businesses

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What are the barriers to entrepreneurship?

Funding

Gender bias

Lack of public sector support

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What are the characteristics/skills required to become a successful entrepreneur?

Understanding the market

Determination

Passion

Resilience

Ability to cope with risk

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Why do people set up businesses?

Profit maximising

Profit satisficing

Independence

Home working

Ethical stance

Social entrepreneurship

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What is profit maximising?

To continually seek to get the most profit from every business transaction

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What is profit satisficing?

Blending a desire for profit with other factors e.g building a good reputation

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What is an objective?

A specific target set by the business

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What is a strategy?

The plan devised by the business to achieve it’s objectives

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What are SMART objectives?

Specific

Measurable

Achievable

Realistic

Time-bound

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What are common business objectives?

Survival

Profit maximisation

Sales maximisation

Market share

Cost efficiency

Employee welfare

Customer satisfaction

Social objectives

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What is a sole trader?

A person who starts/runs a business without turning it into a company.

Owner is personally liable for any debts meaning if the business goes bust the owner has to use personal assets to pay off debts (unlimited liability)

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Advantages of a sole trader:

Owner has full control over decisions

Owner keeps all profits made

Minimal paperwork needed to start up

Disadvantages of a sole trader:

Owner has unlimited liability for debts

Hard to raise finance

What is a partnership?

2-20 owners of the business

Unlimited liability

Advantages of a partnership:

More owners can allow more finance to be raised

Partners may bring varied skills and experienced

Shared burden of responsibility among partners

Disadvantages of a partnership:

Partners have unlimited liability

Potential for disagreement among partners

What is a private limited company?

Made up of people who know each other

No minimum share capital

Advantages of a private limited company?

Limited liability

Can raise extra capital by selling shares

Can continue trading if shareholder dies

Disadvantages of private limited company:

Accounts of the company can’t be kept private

More difficult/expensive to set up

Can’t sell shares on stock exchange

What’s a public limited company?

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

Advantages of a public limited company:

Limited liability Easy to raise capital by issuing more shares Banks are more willing to lend Easier to grow/expand Shareholders will appoint specialists to manage/run the company for them

Disadvantages of a public limited company:

Expensive Has to prepare annual accounts which the public/other shareholders can see

What is a franchise?

A licence to use another business' name and business model in return for a payment

What is a franchisee?

An entrepreneur or company that buys a licence to use another business' name and business model

What is a franchisor?

A business that sells the right to use it's name, logo and business model to other businesses or entrepreneurs

Benefits of buying a franchise:

Advice/training on all business functions A guaranteed local monopoly for that brand Easier access to loans as banks recognise the lower risk involved in starting a franchisee Franchisor chooses franchisees carefully

Drawbacks of buying a franchise:

Franchisee may feel frustrated at being unable to make decisions dictated by the franchisor

What is a social enterprise?

A business that trades for a social and/or environmental purpose

What is a lifestyle business?

Aim is to provide a great quality of life for the owner Allows an entrepreneur to live how they want and still run a business

What is an online business?

A business that is available to customers 24/7 and can be managed from anywhere Easy to set up

What is opportunity cost?

The value of the next best option foregone when a business decision is made

How can trade offs be successfully managed?

Experience Understanding of consumer tastes A broad understanding go the business' current position An understanding of the external issues influencing the decision

What are common business issues when moving from an entrepreneur to a leader?

Matching production to demand Financial problems Overtrading Change in structure

What are common personal issues when moving from entrepreneur to a leader?

Delegating Maintaining effective communication Co-ordinating far more people Keeping an eye on the big issues