Theme 1 section 2 Flashcards
What is an entrepreneur
a person who spots an opportunity and shows initiative and willingness to take risks in order to benefit from potential award
co-ordinates the other three factors of production
entrepreneurs benefit from creating an idea for a business by…
brainstorming
personal experience
business experience
market research
what steps does creating a business require
asking if the idea can add value
conducting market research
drawing a business plan
deciding on legal structure
raising finance
What is a business plan
a business plan is an important part of setting up a business
used both internally by the entrepreneur and externally by banks, external advisors or those willing to provide grants
What does a business plan include
the executive summary- a synopsis of the entire plan looking at most important points
- the business and products or services
- The market e.g size, share, competitors
- The marketing strategy
-The skills of the entrepreneur and other key employees
-operations
- financial forecast
what does being an entrepreneur involve
managing resources inc stocks, personnel and finances
managing marketing decisions about the marketing mix such as price to charge and promotion
dealing with customers
maintaining financial records
as it grows:
employing staff
use the service of experts e.g accountants
delegate responsibility to others
make other key decisions
moving to bigger premises
changing suppliers
expand product range
what is added value
added value is the ability to ensure that the value of the output is higher than the value of the sum of all of the inputs
it is important an entrepreneur can add value in order to make profit and survive
How is value added
value is added by
manufacturing process to combine inputs
marketing to increase actual or perceived value e.g branding or emotional advertising
Having a USP or product differentiation
Enhancing the customer service
What is creative destruction
creative destruction is a term made by Joseph Schumpeter in the 1940s
the process of industrial mutation that incessantly revolutionise the economic structure from within, incessantly destroying the old one, incessantly creating a new one
creative destruction describes a situation when something new kills something old
What are the characteristics of an entrepreneur
opportunity spotters
show initiative
positive thinker
creative
risk taker
hard working
decision maker
enthusiastic
persistent
What are entrepreneurial motives
entrepreneurial motives are:
fulfilling a dream
making money
being your own boss
supporting a community
proving you can
work-life balance
what are financial motives
profit maximising
profit satisficing
