Enterprise Flashcards
What is an entrepreneur?
A person who is willing and able to create a new business idea or invention and takes risks in pursuing success.
What are some risks entrepreneurs may take?
- Introducing new products
- Entering new markets
What characteristics are important for successful entrepreneurs?
- Risk taker
- Decision maker
- Organised
- Creative
- Great communicator
- Independent
What is a business plan?
A document produced by the owner at start-up, which provides forecasts of items such as sales, costs, and cash flow.
What are the key elements of a business plan?
- The business idea
- Business aims & objectives
- Target market
- Forecast revenue
- Forecast costs
- Profit forecasts
- Marketing mix
- Cash-flow
- Sources of finance
- Business location
What is the purpose of a business plan?
To reduce the risk associated with starting a new business and help the owners raise finance.
What are some reasons for government support of business start-ups?
- Increase economic growth
- Reduce unemployment
- Improve consumer choice
- Encourage social enterprises
What is an enterprise zone?
Geographic areas providing tax breaks and government support to help businesses grow.
How can business size be measured?
- Size of the workforce
- Value of capital employed
- Value of sales or output
What is the formula for calculating sales revenue?
Sales Revenue = Price x Quantity Sold.
What does the value of business output refer to?
The financial worth of goods produced, even though they may not all be sold.
What factors do stakeholders consider regarding business size?
- Loan repayment likelihood
- Job security
- Purchasing preferences
- Investment opportunities
- Growth objectives
What is a limitation of measuring business size by workforce?
It can be influenced by the method of production, as capital-intensive businesses may have fewer employees.
True or False: Larger businesses are typically perceived as presenting a higher lending risk.
False
What factor makes comparing the value of sales between different businesses unrealistic?
Businesses sell very different products
For instance, comparing a market stall selling sweets with a retailer of luxury handbags would be unrealistic.
What is the relationship between profit and business size?
Profit is not a measure of business size
For example, a multinational like Netflix making a loss does not mean a sole-trader hairdresser earning a profit is a larger organization.
What are some reasons why businesses grow?
- Owner’s desire to run a large business
- Desire for higher levels of market share and profitability
- Desire to reduce costs
- Opportunities for product diversification
What is organic growth?
Organic growth is growth driven by internal expansion using reinvested profits or loans.
What is a merger?
A merger occurs when two or more companies combine to form a new company.
What is a takeover?
A takeover occurs when one company purchases another company, often against its will.
What are the disadvantages of horizontal integration?
- Diseconomies of scale may occur as costs increase
- There can be a culture clash between the two firms that have merged
What problems can arise from business growth?
- Poor communication
- Difficulties of control
- High costs and cash flow problems
- Difficulties of mergers and acquisitions
What is a common cause of business failure?
Poor management
This can lead to decisions related to product range, pricing, or promotional activity being made without adequate experience.
What is overtrading?
Overtrading occurs when a business expands too quickly.
Fill in the blank: A _______ is a business that is unable to generate enough revenue to sustain its operations.
failed business
Why might some entrepreneurs choose for their business to remain small?
To offer a personalized service and focus on building relationships with customers.
What is particularly problematic for start-ups?
Loans
Start-ups often have limited credit history, making financing difficult.
What does overtrading refer to?
A business expanding too quickly
This can lead to cash flow problems and operational inefficiencies.
True or False: Making losses always means business failure.
False
Many businesses invest in growth during early stages, which may lead to initial losses.
What might a business experience when it does not effectively respond to new technology or competitors?
Increased costs and potential loss of market share
Staying competitive requires timely adaptation to changes in the market.
