business choices

Question 1

what is likely to happen as the business becomes successful and expands?

Answer 1

role of an entrepreneur is likely to change

Question 2

when does an entrepreneur become a leader?

Answer 2

• if business idea is successful and grows
• small start up will stop being small business and become larger company with organisational structure and number of employees
• at this point entrepreneur has become leader of people

Question 3

what does the change of role stem from

Answer 3

need to deal with growth

Question 4

where is there likely to be growth?

Answer 4

-number of employees
-number and size of financial transactions
-number and size of customers
-amount of regulation
-quantity of resources used
-level and range of communication used

Question 5

demands of becoming a leader

Answer 5

-as entrepreneur’s business grows there will be pressure to change approach and become effective leader of the organisation
-growth and move towards leadership may need certain characteristics and approaches

Question 6

what is the transition from entrepreneur to leader likely to require?

Answer 6

number of changes in the way the business is run , entrepreneurs have to adapt and perform different functions

Question 7

what changes in the way business is run stem from transition from entrepreneur to leader?

Answer 7

-need for formality
-need for shared ownership
-greater responsibility to others
-need for motivation and inspiration
-need for strategy and vision

Question 8

need for shared ownership

Answer 8

-as grow, need capital to fund expansion
-to obtain funding sometimes necessary to invite new owners to contribute capital
-large corps usually means selling shares or operating as plc
-begin as sole traders but end up having to share ownership
-ownership shares with financial institutions and army of small investors

Question 9

greater responsibility to others

Answer 9

-responsibility over thousands of employees as business grows into corporation
-livelihoods of these people will rest on decisions made by leader- enormous responsibility
-responsibility to stakeholders like shareholders and larger numbers of suppliers and customers

Question 10

need for motivation and inspiration

Answer 10

-as business grows there is need to focus more on workforce
-more people to manage
-greater need for motivational skills
-most need encouragement and well defined goals leaders gave to provide
-workers likely to look to leader for support and inspiration
-need to develop talents of others

Question 11

what are the difficulties in developing from an entrepreneur to a leader ?

Answer 11

-adapting the mindset
-stress
-sharing ownership and control
-trust
-lack of leadership qualities

Question 12

need for strategy + vision

Answer 12

-leader less involved in production and other functions like marketing, as expands specialists undertake these task
-leader becomes more concerned with designing business strategies and vision for fur direction of company

Question 13

adapting the mindset

Answer 13

• entrepreneurs have desire for greater control over their life and autonomy, but leaders have to relinquish some control and learn to delegate and focus on different things.
• have to believe can’t do everything themselves and specialists will do better job in certain fields
• may have doubts, fears and lack of trust which creates barrier to development

Question 14

delegation + trust

Answer 14

• successful leader must be comfortable with delegation
• delegatuon of tasks to specialists and experts will improve performance of the business

Question 15

how may entrepreneurs overcome difficulties of becoming a leader?

Answer 15

-delegation and trust
-earn respect
-maturity and experience
-education
-reduce stress

Question 16

lack of leadership qualities

Answer 16

• management, communication, problem solving, decision making and organisational skills
• entrepreneurs need these skills to be successful
• once business grows these skills need to be applied on different scale - problems likely to be larger, decisions more important, communications more complex
• these demands may cause issues as develop into leaders

Question 17

trust

Answer 17

-as entrepreneurs develop as leaders may have trouble trusting people
-need to delegate and employ specialists
-some find it difficult to delegate and may be suspicious of new senior staff
-if specialists employed know more than them leader may feel threatened and concerned they are kept in dark or manipulated
-if leaders cannot rue new owners, may be problems as employees may question if leader trusts them

Question 18

sharing ownership + control

Answer 18

• some entrepreneurs may struggle with loss of control as it expands
• partners, business angels or shareholders contributing capital = ownership is shared and future profits have to be shared
• some may find hard to share control and resent others influencing shape and direction of their business
• may feel leadership is being undermined= conflict