1.5.1 and 1.5.2 Role of an Entreprenuer and Characteristic

Question 1

Entrepreneur

Answer 1

• An entrepreneur is a person who sets up a business and takes risks in the hope of a profit or reward

Question 2

Setting up a business

Answer 2

• A small business just needs a good idea and an entrepreneur who wants to make it work. Here are the simplified steps:
• Step 1: market research, find out what customers want
• Step 2: start small at a market stall or similar context if possible
• Step 3: draw up a business plan
• Step 4: grow the business

Question 3

Setting up an online only business

Answer 3

• A business can be set up online only and be very successful – Amazon
• Sites like eBay and Etsy mean that entrepreneurs don’t even need to have their own website they can sell through a third party
• Sites like Alibaba can provide suppliers of materials, so the whole business from start to finish can be online

Question 4

Setting up a business with Etsy

Answer 4

• In an Etsy Economy, creative entrepreneurs can find meaningful work selling their goods in both global and local markets, where thoughtful consumers can discover those goods and build relationships with the people who make and sell them.

Question 5

Setting a business online with eBay

Answer 5

• A seller lists an item on eBay, from antiques to cars, books to sporting goods. The seller chooses to accept only bids for the item (an auction-type listing) or to offer the Buy It Now option, which allows buyers to purchase the item straight away at a fixed price.
• In an online auction, the bidding opens at a price the seller specifies and remains on eBay for a certain number of days. Buyers then place bids on the item. When the listing ends, the buyer with the highest bid wins.

Question 6

Setting up a business with ASOS

Answer 6

• ASOS marketplace is a selling platform for 750 boutiques, which include people who are selling vintage clothes to independent labels starting out

Question 7

Starting a business as a sole trader

Answer 7

• To become a sole trader, online or otherwise an entrepreneur will need to register as self-employed for tax
• If the entrepreneur’s business is B2B then the customers may ask to see evidence that they have registered with the UTR (unique tax reference) code

Question 8

Running a business: day –to -day

Answer 8

• Once a business is started the entrepreneur will need to turn their attention to the daily running of the business
• This may include completing the finances, buying stock, listing stock for sale, contacting customers and chasing payment

Question 9

Expanding a business

Answer 9

• Lots of ways an entrepreneur can expand a business:
• Open another location.
• Offer the business as a franchise
or business opportunity
• License the product
• Diversify (what do you think this means?)
• Target other markets
• Merge with or acquire another business

Question 10

Intrapreneurship

Answer 10

• Fairly new concept
• An employee within a larger business
who thinks like an entrepreneur
• Takes risks
• Creative or innovative
• Solves problems
• Focusses on processes to improve productivity
• Drives innovation
• Understands trends
• Self-confident
• Proactive in adding value

Question 11

Barriers to entrepreneurship

Answer 11

1. Entrepreneurial capacity
2. Access to finance
3. Lack of training / knowhow
4. Fear of failure
5. lack of confidence

Question 12

Risk

Answer 12

• This is the possibility that the business will have a lower than expected profit or a loss

Question 13

Financial risks

Answer 13

• Starting a business can be a financial risk for the owner
• The owner may put their own cash and other assets (e.g. a van) into a business
• If the business is sole trader or partnership then they have “unlimited liability” which means they could lose their personal assets to pay the business debts

Question 14

Lack of security

Answer 14

• If an entrepreneur has a regular job, and they decide to leave that job to open their own business this is a huge risk;
• They may have a mortgage, a car and other bills to pay
• Also there may be insecurity of sales with falling consumer incomes

Question 15

Uncertainty

Answer 15

• Uncertainty is when businesses are unable to predict external shocks or future events
• Uncertainty (unlike risk) is not objective and does not assume knowledge of alternatives

Question 16

Uncertainty and changes in exchange rates

Answer 16

• Key factors that influence exchange rates:
• Economic uncertainty
• Political stability and performance • Inflation
• Interest rates

Question 17

Uncertainty and changes in interest rates

Answer 17

• The UK Interest rate is the cost of borrowing to consumers
• If interest rates go up then consumers are less likely to borrow for cars, houses, furniture, holidays etc.
• If consumers stop spending and start to save then the economy may start to enter recession

Question 18

What is entrepreneurial capacity

Answer 18

• There is a growing awareness that entrepreneurial skills, knowledge and attitudes can be learned and in turn lead to the widespread development of entrepreneurial mind-sets and culture, which benefit individuals and society as a whole
• Lack of this capacity or ability can be a barrier to entrepreneurship

Question 19

Access to finance

Answer 19

• Many entrepreneurs cannot start their business because off a lack of funding
• They may not have savings themselves or family that they can ask to help
• Many banks are not keen to lend to start-ups because of a lack of historical data of sales – making them a very risky investment, despite many government initiatives to make loans cheaper

Question 20

Lack of training / knowhow

Answer 20

• Many entrepreneurs lack training or know-how of just how to start a business
• This can put off people who would like to start their own business, but are just not sure how to get started
• Many of the sites e.g. eBay and Etsy contain lots of information on how to start a business
• HMRC and Gov.uk contains information to help entrepreneurs to get started

Question 21

Fear of failure

Answer 21

• Many potential entrepreneurs do not start a business for fear of failing
• It can be the failure itself or the cost of failure which may put potential business users off
• Especially if they are giving up a regular salaried job to start out on their own

Question 22

Lack of confidence

Answer 22

• Many potential entrepreneurs lack the confidence to embark on a new adventure with their start up business
• This can be a huge barrier to them becoming an entrepreneur
• This can be overcome with training, information and marketing – when they are sure they have a product which will sell they may gain confidence

Question 23

Intrapreneurs

Answer 23

Employees who use entrepreneurial skills, without having to risk their own money, to find and develop initiatives that will have financial benefits for their employer.