Commerce (Semester 2) Flashcards
What is an entrepreneur?
someone who starts, operates and assumes the risk of a business venture in the hope of making a profit.
What are some of the skills that an entrepreneur should exhibit?
- Ability to set objectives and adjust according to market
- Have a vision
What are some of the characteristics that an entrepreneur should exhibit?
- Self motivated
- Risk taker
- Sets goals
- Leadership qualities
- Good communicator
- Willing to learn
- Desire to succeed
Why do people want to be self-employed?
You work for yourself, and have flexibility in controlling where and when you work.
What are some of the advantages of being self-employed?
- Independence: being your own boss
- Possibility of making a profit
- Challenge, reward and satisfaction
- Increase personal wealth
- Contribute to society
- Develop own creative ideas
- Overcome unemployment
- Achieve a better lifestyle
- Employ family members
- Possible tax advantages
What are some of the disadvantages to being self-employed?
- Hard work and long hours
- Other ‘bosses’ - customers, suppliers, financiers
- Income may fluctuate and be uncertain
- Risk of failure
- Stress and worry
- High levels of responsibility
- Constantly solving problems
- Difficulty in selling the business
How do you identify a business opportunity?
Market research
What does market research allow an entrepreneur to do?
Make better decisions by understanding customer behaviour
What are the 5 factors to consider when identifying business opportunities?
- Location
- Market research
- Demographics
- Competition
- Target market
Why consider location when identifying business opportunities?
The location that your business is in can determine consumer traffic.
Physical businesses need constant consumer traffic, so should be located in a SHOPPING CENTRE, MALL OR MAIN STREET.
Online businesses need a prominent virtual location such as a high Google rank.
Define market research.
the action or activity of gathering information about consumers’ needs and preferences and analysing it.
Why consider market research when identifying business opportunities?
It allows entrepreneurs to make better decisions for a consumer.
What methods may be used for market research?
- Surveys
- Questionnaires
- Interviews
What questions may market research seek to answer?
Who are our customers?
What are they like?
Why do they buy our product?
Define demographics.
population characteristics that affect customer spending
Why consider demographics when identifying business opportunities?
Examining a region’s demographic patterns can help you tailor your product to your customers.
Why consider competition when identifying business opportunities?
The bigger the market, the more competition.
Goods can be targeted at a mass market or niche market.
Why consider target market when identifying business opportunities?
Focusing marketing activities on a target market can drive more sales.
Outline the three ways you can classify businesses, and provide detail for each.
- Size
- small (including micro)
- medium
- large
- Industry
- Primary
- Secondary
- Tertiary
- Quaternary
- Quinary
- Legal structure
- Unincorporated
- Sole trader
- Partnership
- Incorporated
- Private company
- Public company
- Unincorporated
What are micro businesses? Provide an example of one.
a business that employs less than 5 people including the owner
What are small businesses? Provide detail and an example of one.
businesses that has less than 20 people.
EXAMPLE: corner stores, local mechanic, hairdressing salons
- Generally owned by one / two people, who act as managers (usually)
- Cheap to set up
- Owners contribute most of startup capital
- high rates of failure
What are the common legal structures of small / micro businesses?
Sole trader / partnership
What are medium businesses? Provide detail and an example of one.
businesses that has 20 - 199 employees
EXAMPLES: motel / hotel, manufacturing factory
- generally owned by a few people or private shareholders
- owners responsible for majority of decisions - may be slower to implement due to influence of directors
- Owners / shareholders contribute capital and easier to access loans
What are the common legal structures of medium businesses?
Partnership / private company