1.5 Entrepreneurs and Leaders Flashcards
Define an entrepreneur
An entrepreneur is a person who is willing to take the risks involved in starting a business , because they believe the risks will be worth the reward
What are the sources of generating a business idea (4)
Observation (competitor and consumer behaviour)
Thinking ahead (spotting trends)
Innovations (generating a business idea)
Spotting an opportunity (changes in society, technology or the economy)
What does an entrepreneur need when running and expanding a business
Eye for detail : notice small improvements to be made for the firm
Identify problems
Be motivated to make the firm become successful
Define Intrapreneurship
Is when employees in a larger business are given encouragement to think like an entrepreneur , driving innovation and understanding trends
What are barriers to entrepreneurship
Entrepreneurial capacity : does not have the skills and characteristics to be successful
Lack of finance
Lack if training
Fear of failure
Define risk
Is the possibility that a business will have a lower than normal profit or loss , can be predicted or prepared for
Define Uncertainty
When a business is unable to predict external shocks or future events, cannot be predicted or prepared for
Requires flexibility , resilience and good management
What are the main skills of a successful entrepreneur (4)
Financial skills: understanding financial documents and how finance allows a business to function
Persuasive abilities : find ways of persuading people to do things the business needs
Problem solving : ability to identify and solve a problem
Networking skills : wide range of business contacts who can help the business when in need
What are the main characteristics required to become a successful entrepreneur (5)
Understanding the market Determination Passion Resilience Ability to cope with risk
What are the possible reasons why people set up a business (6)
Profit maximisation : get the most profit out of every business transaction
Profit satisficing : blend of desire for profit as well as building a good reputation and work - life balance
Independence : avoid the need to take orders from others
Home-working : work in your own environment
Ethical stance : strongly oppose a businesses operations
Social entrepreneurship: provide a service which benefits people
Define an objective
Is a specific target set by a business
What is a strategy
The plan devised by the business to achieve its objectives
What should objectives be
Acronym
Specific Measurable Achievable Realistic Time bound
What are the common business objectives (7)
Survival : (focusing on generating enough cash to sustain the business)
Profit maximisation : (earning the most profit in a given time period )
Sales maximisation: (growing the number of customers without a focus on costs)
Market share : (increasing the power in the market)
Cost efficiency : (focus to minimise the cost of production )
Employee welfare : (looking after staff and trying to help them develop)
Customer satisfaction: focusing on providing a positive interaction with customers
Social objectives : (focus to benefit society and have environmental and ethical considerations)
Define a business form
Is the legal structure a business takes . It can be a soletrader , partnership , private limited company (Ltd) or a public limited company (plc)
Define a soletrader
What are the advantages and disadvantages
Is a person who starts and runs a business with unlimited liability
A:
Owner has full control over decisions
Owner keeps all profits
Easy and quick to set up
D:
Unlimited Liability
Hard to raise finance
No one to run business if owner is ill or on holiday
Define a partnership
What are the advantages and disadvantages
Is where two or more owners own a business with unlimited liability
A:
Allows more finance to be raised
Bring different skills and ideas
Burden of responsibility is shared
D:
Unlimited Liability
Potential disagreements among partners
What is a deed of partnership
Is a legal agreement draw up to assign roles and responsibilities as well as the % of profits shared among partners
Define a Private Limited Company (Ltd)
What are the advantages and disadvantages
Is a business owned by shareholders, invited to buy shares by majority shareholder, with limited liability
A:
Limited Liability
More professional status
Easier access to finance
D:
Complicated to set up
Accounts are made public
Define a public limited company (plc)
What are the advantages and disadvantages
Is a company which sells its shares to the public, with limited liability
A:
Easy to raise capital and expand
Limited liability
Recognised in the public eye
D:
No control over who can buy shares
More vulnerable to takeovers
Accounts and activity must be made public
Stock market flotation is expensive
Divorce of ownership of control is more likely
Define Unlimited Liability
Occurs for a soletrader or partnership where the owners personal assets are at risk if the business fails to pay its debts
Define Limited Liability
Occurs for a Ltd or a plc where only what the owner has invested into the business is at risk if the business fails to pay its debts
Define a Franchisor
What are the advantages and disadvantages
Is a business that sells its naming rights, logo and business model to another business/entrepreneur
A:
Allows quick growth
Receive Royalties and franchise fees
Franchisees are motivated
D:
Not total control over franchisees
Have to pay for training and support
One franchise can ruin the reputation of the firm
Define a Franchisee
What are the advantages and disadvantages
Is a business or entrepreneur that buys a license to use another businesses name and business model
A:
Access to a successful, operating business
Advice and training provided by franchisor
No marketing costs
Easier access to finance (loans)
D:
Do not have total control over operations
Have to follow strict guidelines
Have to pay royalties
