1.5.2 Entrepreneurial Characteristics and Motives

Question 1

Main Characteristics of an entrepreneur?

Answer 1

Determination, Passion, Understanding of the market, Ability to cope with risk.

Question 2

How does a good entrepreneur view risk?

Answer 2

They will accept risk, but will not take on any risks that they consider too great.

Question 3

Skills Required by Entrepreneurs?

Answer 3

Financial management - understand key financial documents and ensure the business has enough money.
Organization/managing people - need to be able to plan the future for the business, and know how to recruit, manage and motivate workers.
Communication - will need to interact with all types of stakeholders.
Decision making - will be needed when solving problems.
Networking - having a wider range of business contacts will be beneficial.

Question 4

Reasons for setting up a business.

Answer 4

Financial motives: Profit maximizing and profit satisficing.

Non-financial motives: Ethical stance, social enterprise, independence, home working.

Question 5

Profit maximizing

Answer 5

Seek to make as much profit as possible in a given time period.
> Key focus is financial return, and will try to earn a lot of money.
> Entrepreneurs that aim to maximize profit care less about other stakeholders, e.g. employees on minimum wage and customers receiving substandard products due to cheap materials.

Question 6

Profit Satisficing

Answer 6

Making enough profit to satisfy the needs of the business owners.
>Allows entrepreneurs a better work-life balance.
> Lower profits, but this can be beneficial in the long-run because it can help build a strong brand or reputation.

Question 7

Ethical Stance

Answer 7

Set up a business to promote their moral beliefs.

May find it difficult to expand their consumer base / popularity.

Question 8

Social Enterprise

Answer 8

Some entrepreneurs will start a business with the aim of improving human and environmental well-being.
They often have a clear social/environmental goal.
Some may pretend to be social entrepreneurs when profit is their real goal.

Question 9

Independence

Answer 9

People like to be their own boss and the idea of having more freedom.
However their free time will still be limited because lots of work is needed to run a company.

Question 10

Home Working

Answer 10

> Time and expense travelling to and from work is limited.
More flexibility which is perfect for those with family commitments. However, being surrounded by family could be distracting.