1.5 - Entrepreneurs and Leaders

Question 1

What is an entrepreneur?

Answer 1

It is a person who is willing and able to create a new business idea or invention and takes risks in pursuing success

Question 2

What do entrepreneurs do?

Answer 2

• Organise resources
• Make business decisions
• Take risks

Question 3

What is intrapreneurship?

Answer 3

It refers to the practice of promoting entrepreneurial thinking and behaviour within an existing business

Question 4

What are the barriers to entrepreneurship?

Answer 4

• Entrepreneurial capacity - an individuals ability to take risks and identify and seize opportunities
• Access to finance
• Lack of training / skills
• Fear of failure / lack of confidence

Question 5

What is risk?

Answer 5

Risk is something an entrepreneur can plan for.
The probabilities of outcomes are known or at least understood and considered.

Question 6

What is uncertainty?

Answer 6

Uncertainty is caused by unexpected factors outside of the entrepreneur’s control.

Question 7

What factors may cause uncertainty?

Answer 7

• Environmental factors
• Economic changes
• Entry of new competitors
• Changes in legislation (laws)
• Changes in politics

Question 8

What skills does an entrepreneur require?

Answer 8

• Communication
• Team working
• Problem solving
• Organisation
• Numeracy
• IT

Question 9

What characteristics does an entrepreneur require?

Answer 9

• Creativity
• Hard working
• Resilience
• Innovative
• Self confident
• Risk taker

Question 10

What are financial reasons for setting up a business?

Answer 10

• Profit maximisation
• Profit satisficing

Question 11

What are non-financial reasons for setting up a business?

Answer 11

• Ethical stance
• Social entrepreneurship
• Independence
• Home working

Question 12

What are some business objectives?

Answer 12

• Survival
• Profit maximisation
• Sales maximisation
• Market share
• Cost efficiency
• Employee welfare
• Customer satisfaction
• Social objectives

Question 13

What is survival as a business objective?

Answer 13

To survive the initial entry into the market and to generate enough cash flow to remain in business (survival) is the aim of most startup businesses.

Question 14

What is profit maximisation as a business objective?

Answer 14

Once survival has been achieved, businesses are likely to focus more on maximising their profits.

Question 15

What are the forms of business?

Answer 15

• Sole trader
• Partnership
• Private limited company
• Public limited company
• Franchise
• Social enterprise
• Lifestyle business

Question 16

What is a sole trader?

Answer 16

It is a business that has a single owner.

Question 17

What are the advantages of being a sole trader?

Answer 17

• Easy and inexpensive to set up
• The owner has complete control
• All profits belong to the owner
• Simple tax arrangements

Question 18

What are the disadvantages of being a sole trader?

Answer 18

• Unlimited liability meaning the owner is personally responsible for any debts incurred
• Limited access to finance and capital
• Limited skill sets

Question 19

What is a partnership?

Answer 19

Where two or more people join together to form a business

Question 20

What are the advantages of being a partnership?

Answer 20

*Easy to set up and inexpensive
* Shared responsibility and decision making
* More skills and knowledge are available
* Increased access to finance and capital

Question 21

What are the disadvantages of being a partnership?

Answer 21

• Unlimited liability
• Potential for disputes between partners
• Profits are often shared equally, regardless of the contribution
• Difficult to transfer ownership

Question 22

What is a private limited company?

Answer 22

Where the ownership of the business is broken down into a specified number of shares

Question 23

What are the advantages of being a private limited company?

Answer 23

• Limited liability, meaning the owners are not personally responsible for the company’s debts
• Access to greater finance and capital
• Easier to transfer ownership
• Can have a professional image and reputation

Question 24

What are the disadvantages of being private limited company?

Answer 24

• More expensive and time-consuming to set up
• More complex legal requirements and regulations
• Annual financial reporting and auditing is required
• Shareholders have little control over the company as the founder usually imposes their agenda

Question 25

What is a franchise?

Answer 25

• It is a business model where an individual (franchisee) buys the rights to operate a business model, branding, and support from a larger company (franchisor) in exchange for an initial lump sum plus ongoing fees

Question 26

What is a social enterprise?

Answer 26

• It is a business that has the primary purpose to create social or environmental impact (in addition to generating profits)
• Profits are usually reinvested back into the business or used to create positive social change or address an environmental issue

Question 27

What is a lifestyle business?

Answer 27

• Typically small, owner-operated businesses that prioritise a specific lifestyle or personal interest of the owner over profits or growth
• They often run from home or in a location that allows the owner to maintain a particular lifestyle or work-life balance

Question 28

What is an online business?

Answer 28

• They often have low overhead costs and can operate from anywhere with an Internet connection
• They are still required to have a legal structure such as a sole trader or private limited company

Question 29

What does it mean when a business becomes a PLC?

Answer 29

• When a business is growing rapidly, it may require a significant amount of capital to fund its expansion
• To secure this funding, it may choose to transition from a private limited company to a public limited company
• This is a complex process with many legal requirements and involves undergoing stock market floatation

Question 30

What is stock market floatation?

Answer 30

Sock market floatation is money raised when a. business becomes a PLC by offering shared to the public to buy

Question 31

What is an opportunity cost?

Answer 31

An opportunity cost is the benefit lost from the next best alternative when making a decision

Question 32

What is an example of an opportunity cost?

Answer 32

When a consumer chooses to purchase a new phone, they may be unable to purchase new jeans.
The jeans represent the benefit lost from the next best alternative

Question 33

What is a trade-off?

Answer 33

A trade-off occurs when two things cannot be fully achieved - having more of one thing may mean having less of another

Question 34

What is the difference between an entrepreneur and a leader’s skills and mindset?

Answer 34

Entrepreneur:
* Brilliant tactician
* Single minded in pursuit of a goal
* Unshakeable self confidence
* One to one persuader
* Idea generator
Leader / CEO:
* Brilliant strategist
* Inspiring figurehead
* Gravitas and presence
* Able to reassure large groups
* Idea prioritiser

Question 35

What are the difficulties faced by an entrepreneur in transitioning to a leader?

Answer 35

• The need to delegate
• Trust
• Learning to listen
• Having an open mind
• Being less reactive
• Developing emotional intelligence

Question 36

What is the importance of a trade-off?

Answer 36

They help individuals, businesses, and governments make informed decisions about allocating their resources - understanding a trade-off allows individuals and organisations to make more efficient choices that align with their goal and priorities