1.5 Entrepreneurs And Leaders Flashcards
What are the 3 stages that entrepreneurs go through when starting a business??
- Creating & setting up a business
- Running and developing a business
- Bringing innovation
What are the 3 sources of business ideas??
- Business experience
- Personal experience
- Observations
What are 3 barriers to entrepreneurship??
- Support and finance
- Lack of confidence
- Lack of knowledge
What are 3 ways of overcoming risk??
- Take calculated risks
- Keep generating new ideas
- Spread risk by diversifying
What are 3 uncertainties of owning a business??
- Health scares
- Political factors
- Changes in legislation
What are 4 entrepreneurial characteristics??
- Initiative
- Hard-working
- Risk-taker
- Creative
What are 3 entrepreneurial skills??
- Communication
- Numeracy
- Organisation
What are the 2 financial motives of owning a business??
- Profit maximisation
- Profit satisficing
What’s profit satisficing??
Making enough profit but not pushing to maximise it
Have enough to have an enjoyable lifestyle (called lifestyle business)
What are 4 non-financial motives??
- Independence (freedom to pursue own ideas and not have a boss)
- Flexibility
- Challenge
- Ethics (setting up a business to tackle ethical issues)
What’s a social enterprise??
Trade in goods or services for a social purpose
What’s the triple bottom line??
- Profit
- People
- Planet
What is a business aim??
Broad target or goal for the long-term
What is a business objective??
Target or goal set for the short to medium-term to help achieve aim
What are the 8 business objectives??
- Survival
- Profit maximisation
- Sales maximisation
- Market share
- Cost efficiency
- Employee welfare
- Customer satisfaction
- Social objectives
What does SMART stand for?? (in relevance to what business objectives should be)
Specific
Measurable
Achievable
Relevant
Time bound
What is the hierarchy of business objectives??
Mission (most detailed)
Corporate
Functional
Team
Individual (most strategic)
What are the 4 forms of business??
- Sole trader
- Partnership
- Ltd
- PLC
What are 3 advantages of Sole Traders??
+ Freedom
+ Get all profit
+ Less paperwork
+ No legal costs for ownership
What are 3 disadvantages of Sole Traders??
- Long hours
- Limited skills
- No cover for sick/holiday days
- Unlimited liability
What are 3 advantages of Partnerships??
+ Minimal paperwork
+ Mixed skills & knowledge
+ Specialist skills
+ More potential for capital
What are 3 disadvantages of Partnerships??
- Unlimited liability
- Conflict
- Splitting profits
What’s a Private Limited Company??
The owners have to agree before anyone buys or sells shares
What’s a Public Limited Company??
Anyone can buy shares which are sold publicly on the stock market
What are 3 advantages of Limited Companies??
+ Limited liability
+ Easier to raise finance
+ Stable form of structure (if a shareholder or owner leaves, business doesn’t have to close)
What are 3 disadvantages of Limited Companies??
- Larger admin costs
- Public disclosure of company information
- Potential loss of control
What are 2 reasons a business would decide to become a Private Limited Company?? (and 2 reasons why not)
Pros:
- More stability
- Business looks more professional as an ‘ltd’
Cons:
- Loans are less likely (owner’s personal assets aren’t at risk so bank may not trust it’ll be repayed)
- Less profit for each owner
What are 2 reasons an Ltd would decide to become a PLC?? (and 2 reasons why not)
Pros:
- More capital
- Higher prestige
Cons:
- Low control over share price (controlled by economy)
- Less profit for each owner
- Potential loss of control
What is the private sector??
Operated by private individuals and usually for profit
What are Public sector companies/businesses??
Small number of companies owned or controlled by government
What are Public sector organisations??
Organisations owned and operated by public bodies but funded by government
What are 4 different types of business??
- Franchising
- Online businesses
- Lifestyle businesses
- Social enterprises
What are 3 advantages of franchising??
+ Tested & developed
+ Lower risk
+ Easier to raise finance
What are 3 disadvantages of franchising??
- Royalties & commission
- Restrictions on actions
- Less responsibility
- Franchisor fails = franchise fails
What are 2 pros and 2 cons of online businesses??
+ Cheap and easy to set up
+ Can be run from anywhere
- Owner may not have necessary IT skills
- Technical issues could occur
What are 2 pros an 1 con of lifestyle businesses??
+ Flexibility
+ Low start-up costs
- Limited growth
What’s a trade-off??
Having more of one thing potentially results in having less of another
What’s an opportunity cost??
The benefit that’s given up in order to do something else
