1.5 Entrepreneurs and Leaders

Question 1

What are the main roles of an entrepreneur?

Answer 1

Spot business opportunities
Generate business ideas
Development and growth of ideas
Anticipate risk and uncertainty

Question 2

What are the main barriers to being an entrepreneur?

Answer 2

Funding
Gender bias
Lack of sufficient skills
Lack of public support

Question 3

What is an entrepreneur?

Answer 3

A person who sets up a business, taking on financial risk in the hope of profit.

Question 4

What are the six characteristics of an entrepreneur?

Answer 4

Motivation
Creativity
Drive
Vision
Risk tolerance
Resilience

Question 5

What are the key things to consider about business objectives?

Answer 5

They may be complex
They will vary according to circumstances and the type of organisation
A charity will have different objectives to a PLC
They may change over time

Question 6

What are the two key objectives of business?

Answer 6

Survival
Profit maximisation

Question 7

What are SMART objectives?

Answer 7

Specific
Measurable
Achievable
Realistic
Time based

Question 8

What types of business are non-corporate?

Answer 8

Sole traders
Partnerships

Question 9

What types of business are corporate?

Answer 9

Private limited companies (LTD)
Public limited companies (PLC)

Question 10

What are the features of a corporate business?

Answer 10

Legal identity separate from that of the owners
Limited liability

Question 11

What are the non-financial motives for setting up a business?

Answer 11

Ethical stance
Social entrepreneurship
Independence

Question 12

How is shareholders liability limited?

Answer 12

By the value of shares that each shareholder has purchased.
To the amount they have agreed to pay in the event of the business being wound up.

Question 13

What are the requirements for a private limited company?

Answer 13

Share capital must not exceed £50,000.
‘Ltd’ must be included after name.
Often family business, much smaller than PLC.

Question 14

What are the requirements for a public limited company?

Answer 14

Must have the term ‘plc’ after name.
Minimum capital of £50,000.
Have to publish more details of financial affairs than LTD

Question 15

What are the features of a non-corporate business?

Answer 15

Owners and business not treated separately.
Owners’ private possessions at risk in event of failure.
Sole traders and partners have unlimited liability.

Question 16

What are the requirements for a sole trader?

Answer 16

Owned by a single person.
Common in retailing and services e.g. plumbing and hairdressing.

Question 17

What are the requirements for a partnership?

Answer 17

Comprise between 2 and 20 people.
Based on a Deed of Partnership.
Some partners may be ‘sleeping partners’.
Common in the professions e.g. dentists and accountants.

Question 18

What is franchising?

Answer 18

A method of growth where an existing business (franchisor) grants another party (franchisee) the right to use its trade name and sell its products and services.

Question 19

What are the benefits of franchising?

Answer 19

Tried and tested formula.
Support setting up from franchisor.
Advice and training from franchisor.
Possibility of national advertising from franchisor.
Easier access to finance.

Question 20

What are the drawbacks of franchising?

Answer 20

Possible high initial fee for franchisee.
Royalties to be paid to franchisor.
Decision making governed by franchisor.
Reputation dependent on franchisee.

Question 21

What is a social enterprise?

Answer 21

An organisation that has business objectives other than making a profit.

Question 22

What are the possible objectives of a social enterprise?

Answer 22

Provide services to local community.
Give people job-related skills.
Fair-trading activites.

Question 23

What is a lifestyle business?

Answer 23

Where an entrepreneur sets up a business that suits their desired lifestyle in terms f work-life balance.

Question 24

What is an opportunity cost?

Answer 24

The loss of other alternatives when one alternative is chosen.

Question 25

What are the main challenges posed when moving from entrepreneur to leader?

Answer 25

Coordination of workforce.
Need for delegation.
Maintaining effective communication.
Keeping focus on the bigger issues.