Entrepreneurial motives and characteristics

Question 1

Define the term entrepreneur.

Answer 1

A person who sets up a business and takes risks in the hope of a profit or reward.

Question 2

List the different characteristics an entrepreneur might need.

Answer 2

Creativity
Hard-work
Resilience
Initiative
Self-confidence
Risk-taking

Question 3

Explain why an entrepreneur needs creativity.

Answer 3

It helps when designing a new product or service that stands apart from competition.

Question 4

Explain why an entrepreneur needs to be hard-working.

Answer 4

They may need to work hundreds of hours to get their business off the ground. A successful entrepreneur will need to work hard to make the business work.

Question 5

Explain why an entrepreneur needs resilience.

Answer 5

An entrepreneur needs to be tough and quick to recover as they may get many knock backs before their business is a success.

Question 6

Explain why an entrepreneur needs to have initiative.

Answer 6

Many entrepreneurs may start a business because they have a good idea and want to take it to the market. This needs initiative.

Question 7

Explain why an entrepreneur needs self-confidence.

Answer 7

A belief in yourself and an ability to talk to anyone in an assured way. Having self-confidence gives potential consumers confidence in you and your business.

Question 8

Explain why an entrepreneur needs to be risk-taking.

Answer 8

They need to be prepared to take a risk in return for a reward. This might be a financial risk.

Question 9

List the different entrepreneurial skills.

Answer 9

Communication
Team working
Problem solving
Organisation
Numeracy
IT

Question 10

Explain why an entrepreneur needs to have the skill of communication.

Answer 10

Entrepreneurs need to be good communicators

They may need to write exciting product descriptions on their websites

They may have to talk to customers or clients fact to face or on the phone

They may need to negotiate deal with suppliers

Question 11

Explain why an entrepreneur needs to have the skill of team working.

Answer 11

An entrepreneur may decide not to work alone but as part of a pair or a team

Working with others has advantages and disadvantages

The advantages are that there are more ideas and more capital in the business

The disadvantages are that there can be conflicts and profit has to be shared

Question 12

Explain why an entrepreneur needs to have the skill of problem solving.

Answer 12

Entrepreneurs will come across many problems when setting up and running their business, they will need to be good at working out cost effective solutions that help to move the business forwards.

Question 13

Explain why an entrepreneur needs to have the skill of organisation.

Answer 13

Entrepreneurs need to be organised

When first staring the business they will have to develop a range of systems for dealing with enquiries, suppliers and orders from customers

They may need to buy stock, sell to customers, make products all in the same day, which takes organisation skills

Question 14

Explain why an entrepreneur needs to have the skill of numeracy.

Answer 14

Entrepreneurs will need to be numerate.

They will need to complete their own tax returns when they first start. They will have to balance sales books, keep records of goods and services purchased to keep the business running. They will have to complete cash flow forecasts if they wish to attract more funding from lenders.

Question 15

Explain why an entrepreneur needs to have the skill of IT.

Answer 15

Entrepreneurs need to be IT literate

If the business is online they will need some web design skills

If the business is not online they may still need to know how to process an order, send and print invoices, keep databases of customers, process accounts on a spreadsheet etc.

Question 16

Name the two different financial motives for setting up a business.

Answer 16

Profit maximisation

Profit satisficing

Question 17

Explain profit maximisation as a financial motive for setting up a business.

Answer 17

An entrepreneur may aim to make the highest amount of profit possible

They will seek to minimise costs and maximise revenue.

The advantages to a sole trader are larger wages can be drawn from the profit
The advantages for a ltd company and a plc is dividends will be larger on shares, this may attract more investors.

Question 18

Explain profit satisficing as a financial motive for setting up a business.

Answer 18

Satisficing behaviour is an alternative business objective to maximising profits.

It means a business is making enough profit to keep shareholders happy or it’s sufficient for investors to maintain confidence in the management they appoint.

An entrepreneur may aim to make just enough profit to keep the business moving plus another aim at the same time, eg:
Reward employees with higher wages
Invest in environmental project
Serve the community in some way

Question 19

List some non-financial motives to starting a business.

Answer 19

Independence 
Flexibility
Ethical reasons
Social purpose
Personal challenge

Question 20

Explain independence as a non-financial motive to starting a business.

Answer 20

For many entrepreneurs the idea that they can work for themselves and no longer have to commute to work for someone else is all the motivation that they need to set up their own business.

Question 21

Explain flexibility as a non-financial motive to starting a business.

Answer 21

Many entrepreneurs seek to start their own business to gain flexibility in their life.

It can be hard to balance the needs of a family with the requirements of work.

This work life balance can better achieved if the entrepreneur can work from home or for themselves

Question 22

Explain ethical reasons as a non-financial motive to starting a business.

Answer 22

Some businesses may decide to trade in a more ethical way. eg prioritising animal rights.

Question 23

Explain social purpose as a non-financial motive to starting a business.

Answer 23

Social enterprises are businesses trading for social and environmental purposes

Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social and/or environmental purpose is absolutely central to what they do; their profits are reinvested to sustain and further their mission for positive change.

Question 24

Explain personal challenge as a non-financial motive to starting a business.

Answer 24

Some entrepreneurs may find working for another business as boring and unchallenging.

They may decide to set up their own business instead

This should give them the daily challenge and excitement that they seek

Some entrepreneurs set up more than one business as they wish to keep challenging themselves

Question 25

Define entrepreneurial motive.

Answer 25

The purpose or what drives a persona to start a business.