1.5 Entrepreneurs and Leaders Flashcards
Characteristics of an entrepreneur
Self motivated. enthusiastic, visionary, opportunity seeker
skills of an entrepreneur
communication, numeracy, literacy, problem solving
Roles of an entrepreneur
1) Setting up and running a business
2) Expanding and developing the business
3) Barriers to entrepreneurship
4) Anticipate risks and uncertainties
5) Intrapreneurship
Motives of an entrepreneur
fulfilling a dream, providing a service, be independent/ your own boss, work/ life balance
Definition of an entrepreneur
a person who spots an opportunity and has a willingness to take risks to benefit from the potential rewards.
Difficulties of moving from an entrepreneur to a leader
relinquishing control is not easy as entrepreneurs are attached to the success of the business. ~ loss of power in decision making. ~ learning to listen and accept the opinions of others. ~ to trust others and not feel the need to micro-manage
Financial motives:
Profit maximisation- making as much money as possible.
Profit satisficing- making enough money to keep the business stable and running.
Non-financial motives:
Ethical and social
Social entrepreneurship
Independence
SMART:
Specific, measurable, Achievable, Realistic, Timed
Dividend:
What investors can get back from companies they invest in.
INTRAPRENEURSHIP
entrepreneurial activity done by employees and managers; Rewards (mainly) go to the company; Risks are taken by the company.
ENTREPRENEURSHIP:
Entrepreneurial activity by Entrepreneur; Rewards go to the entrepreneur; Risks are taken by the entrepreneur.
WAYS TO ENCOURAGE INTRAPRENEURSHIP:
~Structured time away from work to allow for development of business ideas.
~Staff competitions and innovation days.
~Lead cross-functional teams to lead innovation projects.
WHY ARE LARGE BUSINESSES OFTEN NOT ENTREPRENEURIAL:
~Complacency/ arrogance
~Bureaucracy/ stifling initiative
~Reward systems don’t provide an incentive to innovate.
WHAT LARGE BUSINESSES NEED FOR SUCCESSFUL INTRAPRENEURSHIP:
~Senior management support/ mentoring
~Communication to show the business encourages new ideas.
~Reward systems- financial or other incentives for innovation.
~Resources- to show the business backs the creation of new ideas.
Other business objectives:
~Benefit the community/ social objectives
~Market share
~ Sales maximisation
~Customer satisfaction
~Cost efficiency
~Employee welfare
Factors that can influence Business Objectives:
~Age of the business ~Size and legal status
~Ownership ~Views of owners and managers
~Market conditions ~Legislation
~State of the economy ~Competition
~Risk and attitude to risk ~Corporate Culture
~Political factors ~Social attitudes.
Business Objective: Survival
To continue to exist as a business
This may be the most important objective in the short term
This may be the primary objective of a start-up business or one experiencing difficult trading conditions
To achieve this a business may set a cash flow objective to ensure sufficient cash is available to meet day to day expenses
Cash flow is the flow of cash into and out of a business over a period of time
Profit maximisation (The most common?)
To produce at the level of output where the surplus of sales revenue over total costs is at its highest, profit = SR – TC
This will help keep investors happy as well as fund growth
Mission statements
a mission statement is a brief written statement of the purpose of a company or organisation. Ideally, a mission statement guides the actions of the organisation, spells out its overall goal, provides a sense of direction and guides decision making for all levels of management.
Advantages vs disadvantages of mission statements
AD: they clarify purpose and determine direction
~can motivate employees and managers
~ send out powerful messages to the public
DISAD: are often seen as marketing material rather than statements of intent
~ are ineffective if not followed by all levels of employees and managers
~ can sometimes be too ambitious and ruin employee morale when not met.
Sole Trader
~One person owning the business- can employ people
~They have Unlimited Liability so are personally responsible for any debts
~Most common type of business
Advantages of a sole trader
-complete control
-more flexibility
-low registration and start up costs
-lower accounting fees
-no sharing of profits
-simplified taxes
-greater company privacy
Partnerships
-2-20 people
-share raising the finance
-partners bring varied skills
-share the burden
-partnerships have Unlimited Liability
