1.5.2 Entrepreneurial Motives and Characteristics Flashcards
What are the characteristics of an entrepreneur?
- Opportunity Spotter
- Someone with Initiative
- Hard-Working
- Creative
- Self-Confident
- Self-Motivated
- Risk-taker
- Decision Maker
- Visionary
- Determined and Persistent
What are the skills required to be an entrepreneur?
- Communication
- Literacy
- Numeracy
- IT (Information Technology)
- Organisation
- Problem Solving
- Team Working
What are the reasons why people set up businesses?
- Fulfilling a dream
- Want to make money
- Be their own boss
- Work-Life balance
- In charge of own destiny/future
- Prove they can do it
- Support a community
- Provide a service
What are the financial motive reasons why people set up a business?
The main financial motive for many entrepreneurs is to earn enough money to support themselves, although many are also motivated by knowing they could earn more than they could do in employment.
How much profit the entrepreneur wants to generate depends on whether they decide to follow a profit maximisation or a profit satisficing approach.
What is Profit Maximisation?
Making as much profit as possible
What is Profit Satisficing?
Making enough profit, but not pushing to maximise it.
What is profit satisficing without shareholders?
Otherwise known as a Lifestyle Business
Making enough profit so that the entrepreneur can have an enjoyable lifestyle and no more
What is profit satisficing with shareholders?
Making enough profit to keep the shareholders satisfied, but no more.
What is profit?
Profit means that the business is making more money than it costs to run.
Profit is the difference between total revenue and total costs
Profit Equation
Profit = Sales Revenue – Total Costs
Gross Profit Equation
Gross Profit = Revenue – Cost of Sales
What are the non-financial motive reasons why people set up a business?
- Social Entrepreneurship
- Motivated by supporting a cause rather than making a profit
- Any surplus revenue earned is used to further support the cause
- Work from home
- Work-life balance
- Match family commitments to work commitments
- Ethical Stance
- To behave in a manner deemed to be morally correct
- Provide a good or service that meets ethical beliefs
- Independence
- Be own boss and make own decisions
What is a Calculated Risk?
A risk that has been given thoughtful consideration and for which the potential costs and potential benefits have been weighted and considered.
