1.5-entrepreneurs/leaders Flashcards
What is an entrepreneur?
Is a person who sets up a business and takes risks in hope for a profit or reward
What are the steps of setting up a business?
1- market research and finding out what consumers want
2-start a small stall/ something similar
3-draw up a business plan
4- grown the business
What is the running of a business?
The day to day tasks to keep the business going
This may include completing finances, buying stock, contacting customers and changing payments
How can you expand a business?
-open another location
-offer the business as a franchise
-targets other markets
- merge with another business
What is an intrapreneur?
An employee within the business who thinks like an entrepreneur
-takes risks
-creative/innovative
-solve problems
-understand trends
-self confident
What are the barriers to entrepreneurship?
1a entrepreneurial capacity
2-access to finance
3-lack of training
4-fear of failure
5- lack of confidence
What is entrepreneurial capacity?
-growing awareness that entrepreneurial skills knowledge and attitudes can be learned and lead to an entrepreneurial mindset.
Lack of this capacity can be a barrier
What is access to finance?
Many entrepreneurs cannot start a business due to a lack of funding
- may not have savings or family to help
-many banks don’t lend to start ups due to a lack of data- makes them a risky investment
What is a lack of training?
- many people don’t know how to start up a business
Don’t have the skills/ training to start yp
what is fear of failure?
Many entrepreneurs don’t start up as they fear failing
-may be failing itself of the cost of failing that put users off
-especially if they give up their regular job
what is lack of confidence?
Many people lack the confidence to start up a business
Can be overcome with training, information and marketing, and when they are sure they have a product that will sell increases their confidence
What is a risk?
The possibility that the business won’t make a profit or make a loss
What is a financial risk?
The owner may put their own cash or assets into starting a business
if they are a sole trader, they have unlimited liability meaning their could lose their personal assets to pay business debts
What is a lack of security?
If an entrepreneur decided to leave their regular job to start a business, this is a risk
What is uncertainty?
When a business is unable to predict external shocks or future events
What is an entrepreneurial characteristics?
The skill, quality or trait of the person starting the business
1-creative-help design new products
2-hard work-need to put in effort to get the business established
3-resilient-you may get knock backs before your business is a success
4-initiative
5-self confident-you need to be confident about your business or you are likely to give up
6-risk taking-financial risk of losing money if the business fails
what is a motive?
the factor that drives a person to start a business
what are the 6 entrepreneurial skills?
1-communicate
2-problem solving
3-team work
4-organised
5-it
6-numeracy
financial motives?
1- profit maximisation- aim to make the most profit and keep costs down
2-profit satisficing- make enough profit to keep owner satisfied, as well as another objective
non financial motives
1-independence
2-flexiblity
3-social reasons
4-ethical reasons
5-personal challenge
profit maximisation
shrinkflation-owner makes the product smaller but keeps the price the same
sales maximisation
aim to get as many sales as possible
profit figures are annual but sales are weekly-easy to compare
-salaries are linked to sales
employee welfare
employers seek good relationship with employees
does this by providing incentives
can be internal-uniform, canteen, breaks
or external-holidays, insurance , education
this improves employee satisfaction- more likely to remail loyal and be productive
also gives business a good image
customer satisfaction
you understand customer wants and needs and fill it
-less complaints
customer centred approach means
repeat sales- brand loyalty
good word of mouth
good brand image
market share
important factor in a competitive environment
good for investors to judge against other businesses in the market
a loss of market share can lead to long term financial issues
cost efficiency
-try get costs to a minimum
can be done through;
-paying employees minimum wage
-subcontracting work out
-reducing quality of a product
social objectives
corporate social responsibility
-can create a USP or improve brand image
can be through:.
being environmentally friendly
paying fair wages
helping society
limited liability
this is where the owner and the business have separate legal identities so the owner is not responsible to pay back any debts
unlimited liability
the owner is responsible and their personal assets may be used to repay debts if anything goes wrong
sole trader
one owner, but can have employees
+ve
keep all the profits
make all decisions
easy and quick to set up
own boss
-ve
harder to raise finance
unlimited liability
no one to share risk/ideas with
partnership
2 or more people who run a business
have a deed of partnership
can have ‘sleeping partners’-invest but arent involved in the running of the business
+ve
more people so more ideas and capital
easier to raise finance
share risks
-ve
may have disagreements
profit is shared
unlimited liability
private limited company
can sell shares to friends and family
+ve
-can raise capital
-limited liability
-ve
limits capital as you cant sell on the stock market
-time consuming as you need to do paperwork
franchising
where an entrepreneur sets up a business with an established business name
franchisee; person buying the rights
franchisor: person selling the rights
+ve
franchisor chooses franchisee carefully
also choose investment amount
provide support, training and management advice
-ve
franchisee never owns the business outright
no freedom of running own business
pay in royalties
public limited company
when a LTD needs further investing, it will transition into a PLC.
PLCs benefit from stock market flotation as they can sell shares for anyone to buy
however, they need to generate higher profits to pay dividends
share price is influenced by global/national economy and supply an demand
business needs to issue a prospectus to attract potential investors
however going public is expensive:
-time consuming
-alot of paperwork needed
-need over £50,000 in share capital
social enterprise
a business that is set up for a social/ environmental purpose
uses its profits to benefit society in some way
-not a charity that relies on donations, however can get government grants/funding
online business
a business that operates over the internet
-can be managed from anywhere- good work life balance
-easy to set up and manage
-available 24/7
can be technology issues
lifestyle business
uses profit satisficing and gives the owner a good life
owner hopes to sustain a certain level of income
allows them to live how they want whilst doing something they enjoy
opportunity cost
land labour capital are all limited resources- causes scarcity
the sacrifice a business makes when choosing one thing over another
trade off
less of one thing is exchanged for more of another - compromise
entrepreneur to leader
1- learn to delegate so owner can focus on more strategical areas of the business
2-listen to others and take their opinions into account
3-trust others to do tasks to a high quality
