Enterprise, business growth and size Flashcards
Entrepreneur
A person who organises, operates and takes the risk for a new business venture
Benefits of being an entrepreneur
Independence-able to choose how to use time and money
able to put own ideas into practice
may become famous and successful if the business grows
may be profitable and the income might be higher than working as an employee for another business
able to make personal interests and skills
Disadvantages of being an entrepreneur
risk- many new entrepreneurs’ businesses fail, especially if there is poor planning
capital-entrepreneurs will have to put their own money into the business and, possibly, find other sources of capital
lack of knowledge and experience in starting and operating a business
opportunity cost - lost income from not being an employee of another business
what are the characteristics of a successful entrepreneur
Hard working, Risk taker, Creative, Optimistic, Self confident, innovative, independent, Effective communicator
Why do governments support business start-ups
Reduce unemployment, Increase competition, Increase output, Benefit society, Can grow further.
Business plan
A document containing business objectives and important details about the operations, finance and owners of the new business
Internal growth
when a business expands its existing operations
External growth
when a business takes over or merges with another business. It is often called integration as one firm is integrated into another one
Merger
when the owners of two businesses agree to join their firms together to make one business
Takeover or acquisition
when one business buys one out the owners of another business which then becomes part of the ‘predator’ business
Horizontal Integration
When one firm merges with or takes over another one in the same industry at the same stage of production
Vertical integration
When one firm merges with or takes over another one in the same industry but different stage of production. Vertical integration can be forward or backward
Conglomerate integration
When one firm merges with or takes over a firm in a completely different industry. A.K.A diversification
Factors of why businesses fail
Poor management, Failure to plan for change, Poor financial management, over expansion, Risks of ne business start ups
Problems resulting from expansion
Larger business is difficult to control
Larger business leads to poor communication
Expansion costs so much that business is shorts of finance
Integrating with another business is more difficult than expected
