1.5 Entrepreneurs and leaders Flashcards
What is an entrepreneur?
A person who is willing and able to create a new business idea or invention and takes risks in pursuing success.
What are the key activities of entrepreneurs?
- Organise resources
- Make business decisions
- Take risks
What does it mean to organise resources in entrepreneurship?
Gathering and coordinating the necessary resources to start and operate a business.
Provide an example of organising resources.
When Michael Dell started his computer company from his garage, he organised space, computers, software tools, and employees.
What is the importance of decision-making for entrepreneurs?
Decisions determine the success or failure of the business.
Fill in the blank: Entrepreneurship involves taking _______.
[risks]
Give an example of risk-taking in entrepreneurship.
Investing life savings into a new venture or quitting a secure job to start a business.
What is intrapreneurship?
The practice of promoting entrepreneurial thinking and behaviour within an existing business.
How does intrapreneurship benefit a business?
It allows businesses to tap into the creative potential of employees and generate new products, services, or processes.
What is the ‘20% time’ policy at Google?
A policy that allows employees to spend 20% of their work time on personal projects.
What was developed under Google’s ‘20% time’ policy?
Gmail, a free email service.
What barriers can prevent individuals from starting a successful business?
- Lack of entrepreneurial capacity
- Lack of access to finance
- Lack of training/know-how
- Fear of failure/lack of confidence
Define entrepreneurial capacity.
An individual’s ability to think creatively, take risks, and identify and seize business opportunities.
True or False: Uncertainty is caused by factors within the entrepreneur’s control.
False
What is the difference between risk and uncertainty?
Risk is something an entrepreneur can plan for, while uncertainty is caused by factors outside of their control.
What are 5 skills required by entrepreneurs
Communication
Teamwork
problem solving
organisation
Numeracy
What are characteristics required by an entrepreneur
Creativity
Hard working
Resilience
Initiative
Self confidence
Risk taker
What are the two common financial reasons people set up a business
Profit maximisation
Profit satisfaction
Why do people set up businesses for profit maximisation
People want to generate substantial revenue and profit
Why do people set up businesses for profit satisfaction
Is not solely focused on maximising profits but rather a satisfactory level
What are non financial reasons for someone to start a business
Ethical stance
social entrepreneurship - seek to address a social or environmental problem
Independence- be their own boss and have control over their work
Home working
What is the aim of most start up businesses
Survive the initial entry into the market
What are likely business objectives
Profit maximisation
sales maximisation
market share
cost efficiency
employee welfare
customer satisfaction
social objectives
What is a sole trader
A firm that has a single owner who makes all the decisions and gets to keep all of the profits.
owner is legally responsible for all debts of the business
What is meant by limited liability
A legal structure in which the assets of the owners are considered to be separate to those of the business
What are the advantages of sole traders
Easy and inexpensive to set up
Owner has complete control
All profits belong to the owner
simple tax
What are the disadvantages of a sole trader
Responsible for any debts the business incurs
limited access to finance
Limited skill set of the single business owner
What is a partnership
Two or more people join together to form a business
What are the advantages of a partnership
Easy and inexpensive to set up
shared responsibility and decision making
more skills and knowledge available
increased access to finance and capital
Disadvantages of a partnership?
Partners have unlimited liability
potential disputes between partners
profits are often shared equally no matter the contribution
difficult to transfer ownership
What is meant by unlimited liability
The business owner or owners are personally responsible for all of the debts of the business, no matter the value
What is a Private limited company
Ownership is broken down into a specified number of shares
Decision making often rests with the person appointed CEO
(LTD)
What are advantages of a private limited company
Limited liability (owners are not personally responsible for the company’s debt)
Access to greater finance and capital
Easier to transfer ownership
professional image and rep
What are the disadvantages of a private limited company
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. Founder usually imposes their agenda
What is a franchise
An individual buys the rights to operate a business model and branding of a larger company in exchange for large fees
e.g. mcdonalds
What is a social enterprise
A business with the primary purpose to create social or environmental impact
What is a public limited company
a company that is able to offer its shares to the public. Operate on the stock exchange
What are the advantages to becoming a PLC
Significant amounts of capital can be raised
Risk is shared among a larger group of shareholders
Increased liquidity, easier to buy and sell shares
Greater public profile due to operating on the stock exchange
Limited liability
Disadvantages of beinig a PLC
Expensive to set up
more complex accounting and reporting requirements
greater risk of hostile takeover
shareholders expect a dividend
Shareholders may clash
What is an opportunity cost?
The loss of the next best alternative when making a decision
What is a trade off
When two things cannot be fully achieved
Can every entrepreneur be a successful CEO?
Usually not, the skills required for a CEO are different to those required for an entrepreneur
What are difficulties entrepreneurs face when transitioning to becoming a CEO of a growing business
They need to learn how to delegate tasks and responsibilities, use to doing it all themselves
Being able to trust your team
Learning to listen and having an open mind to new ideas
Being less reactive and more strategic
