1.5.1 Entrepreneurs

Question 1

What is an entrepreneur

Answer 1

• A person who spots an opportunity and shows initiative and a willingness to take risks in order to benefit from the potential rewards
• Entrepreneurs make use of the resources available to them to set up or develop a business

Question 2

Creating and setting up a business starts with an idea, these can be the result of

Answer 2

• Brainstorming
• Personal experience
• Business experience
• Market research

Question 3

Creating and setting up a business will involve a number is steps including

Answer 3

• Generating an idea
• Asking if the idea can add value
• Conducting market research
• Drawing up a business plan
• Deciding on legal structure
• Raising finance

Question 4

What is a business plan used for

Answer 4

• A business plan is an important part of setting up a business
• A business plan will be used both internally by the entrepreneur and externally by banks, external investors or those willing to provide grants

Question 5

The contents of a business plan includes

Answer 5

• The executive summary - a synopsis of the entire plan looking at the most important points
• The business and products or services
• The market e.g. size, share, competitors
• The marketing strategy

Question 6

What’s the purpose of a business plan

Answer 6

• To secure external funding
• banks, potential partners, venture capitalists, business angels
• To ensure that the firm develops a healthy financial structure
• To help identify problem areas that the business might face
• As a focus to set targets and check on the firms development

Question 7

• The entrepreneur is often also the hands on person making daily decisions, at least in the early years
• This involves:

Answer 7

• Managing resources including stocks, personnel and finances
• Making marketing decisions about aspects of the marketing mix such as what price to charge and how to promote the business
• Dealing with customers

Question 8

As the business grows the entrepreneur may need to change roles

Answer 8

• Employ staff
• Use the services of experts e.g. an accountant
• Delegate responsibility to others
• And make other key decisions:
• Move to bigger premises
• Change suppliers
• Expand product range

Question 9

What are the characteristics of an entrepreneur

Answer 9

Creative and innovative
Enthusiastic and motivated
Good communication skills

Question 10

What is intrapreneurship

Answer 10

is when employees in a larger organisation act in the same way as entrepreneurs

Question 11

Why is everyone not an entrepreneur

Answer 11

• Not everyone wants to be an entrepreneur – comfortable working for others
• Lack of access to finance
• Knowledge and know how
• Risk-averse
• Lack confidence
• Limited skills
• Or is it just not having an idea?

Question 12

What are risks

Answer 12

•It is possible to add a probability to quantify the degree of risk i.e. t is measurable

• Can be anticipated by entrepreneurs:
• Market research
• Understanding of the industry
• Assessing own personal potential losses
• Business plans

Question 13

What are uncertainties

Answer 13

•It is not possible to add a quantifiable probability as the outcome is too unpredictable i.e. it is not measurable

• Are harder to anticipate as outside of the entrepreneur’s control:
• Keep up to date with current business climate e.g. economic and political changes
• Make plans for unexpected events (contingency plans)
• Spread risk e.g. a number of products or suppliers

Question 14

Risks vs rewards

Answer 14

Risks

•Financial
Money Invested
Salary foregone
•Esteem
Fear of failure
Proving self
•Commitment
Time and effort
Loss of personal/social time

Rewards 
-profit motive 
Future security 
Return in investment 
-being own boss
Taking decisions 
Not taking orders 
-self actualisation 
Self satisfaction 
Achievement