Theme 1.5 - Entrepreneurs & Leaders Flashcards
What is an entrepreneur
A person who is willing and able to create a new business idea, taking risks
What do entrepreneurs do
They organise resources necessary to start businesses - make business decisions which determine success or failure - take risks
Examples of entrepreneurs being hired to run/expand businesses
Marissa Mayer - Yahoo
- Implemented several incentives, helped revitalise the struggling company
What is intrapreneurship and what does it do
Promoting entrepreneurial thinking and behaviour within existing businesses (leading to innovative, risk taking behaviour)
- This helps tap into creative potential - new products - growth and competitive advantage
What are the 4 barriers to entrepreneurship
- Access to finance (securing funding)
- Entrepreneurial Capacity (own individuals ability)
- Lack of training/know-how (range of skills)
- Fear of failure (may hold back - risky)
Differences between risk and uncertainty for entrepreneurs
Risks - can be planned for (probabilities of outcomes are assessed, often the greater risk the greater reward)
Uncertainties - unexpected and cannot be planned for, outside control such as environmental factors (tsunami), economic change, legislation change
What skills are required of entrepreneurs
- Communication
- Team working
- Problem solving
What characteristics are required of entrepreneurs
- creative
- hard working
- risk taking
What’s one of the most important skills for an entrepreneur
Communicating persuasively
- financial bankers
- people to join in creation
- customers of value
All the above create and drive innovative ideas
Why do people set up businesses (Financial x2)
Profit maximisation - max revenue and profit
Profit satisfaction - not max but satisfactory
Why do people set up businesses (non-financialx3)
Ethical stance which business is built around
Independence - working for self
Home working
What objectives do businesses often focus on when starting up
Effective cash flow management, more important than income/seeking profit
What objectives do businesses focus on after achieving effective cash flow
- Profit maximisation
What are 4 other objectives which businesses focus on
Sales maximisation - max possible revenue by selling
Market share - aim to increase
Cost efficiency - lowest possible cost
Employee welfare - healthy safe working environment
8 forms of business
- Sole trader
- Partnership (2 or more owners)
- Private limited company (LTD) - shareholders
- Franchise
- Social enterprise (social/environmental impact main purpose)
- Lifestyle business (small owner operated business, specific lifestyle)
- Online business
- Public limited company (PLC)
What is an opportunity cost
- loss of next best alternative when making decision
What is a trade-off
- where two things cannot fully be achieved, more of one leads to less of another
What difficulties will entrepreneurs face when transitioning to a leader
- learn to delegate rather than controlling each part
- balance between trust + verification
- learn to listen and be open to new ideas rather than be solo
