1.5 entrepeneurs & leaders Flashcards
(123 cards)
1
Q
define entrepreneur
A
a person who is willing to take a risk in setting up and growing their own business, to obtain a reward
2
Q
what do entrepreneurs do?
A
-organise resources
-make business decisions
-take risks
-innovate and invent
3
Q
the role of entrepreneurs: organising resources
A
gather and coordinate the resources necessary to start and operate a business
4
Q
the role of entrepreneurs: making decisions
A
entrepreneurs must be able to make decisions that will determine the success or failure of their business (decisiveness)
5
Q
the role of entrepreneurs: taking risks
A
entrepreneurs are often willing to risk their career and financial security to make their idea work
6
Q
the role of entrepreneurs: innovating & inventing
A
they create new ideas, products and services
7
Q
where do entrepreneurs ideas come from?
A
business experience:
some start a new business using the experience of their current job or profession
personal experience:
a business may be based on a hobby or interest
lifestyle choice:
some people may set up a business in order to be their own boss and work on their own terms
spotting a gap
skills:
some people set up a business based on their interpersonal, artistic or technical abilities
8
Q
what are the stages of setting up a business?
A
1) the idea
2) research
3) planning
4) financing
5) location
6) resources
7) the launch
9
Q
setting up a business: the idea
A
could come from previously stated ways
10
Q
setting up a business: research
A
research into…
the market
customer needs
competition
profitability
11
Q
setting up a business: planning
A
detailed business plan made
➣ forecasts
➣ executive summary
➣ business idea
12
Q
setting up a business: financing
A
entrepreneurs will explore a variety of internal and external sources of finance
13
Q
setting up a business: location
A
for some businesses, location is a key strategic decision
for others, such as online retailers, it may be less critical but still important
14
Q
setting up a business: resources
A
financial resources → capital
human resources → employee skills
physical resources → equipment, premises, raw materials
intellectual resources → patents, trademarks
15
Q
setting up a business: the launch
A
the launch may involve an opening event to create good public relations or marketing activities to create awareness of the new business
16
Q
examples of functions that entrepreneurs must coordinate to run, expand and develop their businesses?
A
-finance
-HR
-production/operations
-marketing
17
Q
what does the financial management function entail?
A
raising capital, managing costs, profitability and cash flow
18
Q
what does the administration function entail?
A
insurance, legal setup, tax and business records
19
Q
what does the marketing function entail?
A
research, promotion and branding
20
Q
what does the production function entail?
A
production of goods, storage, quality management
21
Q
what does the HR function entail?
A
recruitment, training, motivation
22
Q
what does the purchasing function entail?
A
liaising with suppliers, deliveries, logistics management
23
Q
what is intrapreneurship?
A
the practice of promoting entrepreneurial thinking and behaviour within an existing business
(empowering employees to think and act like entrepreneurs)
24
Q
what do intrapreneurial employees do?
A
solve problems, innovate, take risks
25
how do intrapreneurial employees help businesses?
-add value
-give competitive advantage
-create new products/services or processes
26
why is intrapreneurship good for employees?
it creates a culture that generates a sense of ownership and engagement among employees → increases motivation and helps to retain top talent
27
how can businesses promote intrapreneurship amongst employees?
-providing resources to employees
-offer incentives/rewards for successful projects (motivation)
28
define barrier to entrepreneurship:
things that prevent individuals from starting or growing a successful business
29
examples of barriers to entrepreneurship:
-entrepreneurial capacity
-access to finance
-lack of training/knowledge
-fear of failure/lack of confidence
-competition from large, established businesses
-legal barriers
30
define entrepreneurial capacity
an individual's ability to think creatively, take risks, and identify and seize business opportunities
31
what is access to finance? (barriers)
many aspiring entrepreneurs struggle to secure the funding necessary to start or grow their businesses
32
how is lack of training/knowledege a barrier?
starting and growing a successful business requires a range of skills, including marketing, finance, management, and leadership
33
how is fear of failure/lack of confidence a barrier?
entrepreneurship is inherently risky and individuals/businesses may be held back by a fear of failure or a lack of confidence
34
what is risk?
something an entrepreneur can plan for
(probabilities of outcomes are known)
risk taking is a conscious decision
35
what is uncertainty?
caused by **unexpected** factors outside of the entrepreneur’s control
(sometimes predictable)
36
examples of things that cause uncertainty:
-environmental factors
-economic changes
-the entry of new competitors
-changes in local and national legislation
-changes in the political party governing the country
37
what can successful entrepreneurs do concerning uncertainty?
manage risk and quickly respond
38
how can successful entrepreneurs reduce risk and prepare for uncertainty
-carrying out detailed research
-producing detailed plans
-analysing external influences (PESTLE)
-developing contingency plans
39
what do entrepreneurs require?
a unique set of characteristics and skills
40
what skills do entrepreneurs need?
-communication & managing ppl
-team working
-problem solving
-organisation
-numeracy
**-financial management**
-negotiating
41
what characteristics do entrepreneurs need?
-creativity
**-hard working**
-resilience
-initiative
-self confidence
-risk taker
42
what are the two types of incentives for setting up a business?
-financial motive
-non-financial motive
43
financial motives for setting up a business:
profit maximisation
profit satisficing
44
what is profit maximisation?
creating a business so that it is profitable & generates substantial profit for themself
45
what is profit satisfying?
creating a business to generate enough income to live a comfortable lifestyle
46
non-financial motives for starting a business:
-ethical stance
-social enterprise
-independence
-home working
47
what is an ethical stance? (non-financial motives)
running a business to support their ethical principles
48
what is a social enterprise? (non-financial motives)
running a business for a social or environmental cause
49
independence: non-financial motives
-many people want to be their boss and have control over their work
-they may be dissatisfied with traditional employment structures
50
home working: non-financial motives
-due to technology, many people have started businesses from their homes
-this offers them more flexibility and a better work-life balance
51
what are objectives?
medium to long-term plans that are established to coordinate the business and act as targets
52
what are corporate objectives & what do they effect?
set by the owners of the business, they influence the functional objectives set at departmental level
53
why do businesses set objectives?
-provide steps to achieve aims
-clarify direction of the business
-measure success against targets
-motivate employees to achieve
54
acronym for objectives:
S - specific
M - measurable
A - achievable
R - realistic
T - time-related
55
are business objectives fixed?
no, objectives may change over time
56
what is the objective of most start up business?
to survive the initial entry into the market and to generate enough cash flow to remain in business
57
what does a businesses objective usually switch to after they have successfully entered a market?
profit maximisation
58
what are the two categories of business objectives?
-financial
-non-financial
59
examples of financial business objectives:
-survival
-market share
-sales maximisation
-cost efficiency
-profit maximisation
60
what is sales maximisation? (objective)
a focus on maximising revenue by selling the highest level of products/services possible
61
what is market share? (objective)
the proportion (usually percent) of the total market **held** by one particular company
a business may aim to increase its market share by producing and selling better quality products than its competitors
62
what is cost efficiency? (objective)
refers to a company's ability to produce and deliver its products at the lowest possible cost
63
why is cost effectiveness important?
it’s mainly important in highly competitive markets, it allows businesses to lower their costs and therefore lower their prices
64
examples of non-financial objectives:
-customer satisfaction
-employee welfare
-social objectives
65
what is employee welfare? (objectives)
a company's commitment to providing a healthy and safe working environment for its employees
66
how may a business achieve its employee welfare objective?
offering competitive wages, comprehensive benefits packages and promoting a healthy work-life balance
67
what is customer satisfaction & how may a business achieve it?
(objective)
how happy customers are with a company's products, services, or overall customer experience
a business may aim to achieve customer satisfaction by delivering high-quality products, providing excellent customer service and offering attractive pricing
68
what are social objectives?
-a company's commitment to addressing social **or** environmental issues
-important for businesses that aim to operate sustainably and build a positive reputation
69
survival (objective)
keeping the business operating for a certain amount of time
70
influences on business objectives:
-size (objectives may change as a business grows)
-sector (public doesn’t need profit)
-market (competitive?)
-ownership (shareholders?)
-owner
71
importance of profit maximisation:
-profit can be reinvested into new projects
-profit secures the long-term success of a business
-profits can be reinvested to help the business grow
-profit is a motivator as it’s a reward for taking risk & an indicator of success
72
what are the 4 forms of business?
-sole trader
-partnerships
-private limited company
-public limited company
73
common forms of business for start ups:
sole trader
partnership
private limited
74
what is a sole trader business form?
a business that has a single owner (although they may still hire employees)
75
advantages of a sole trader form:
-easy and inexpensive to set up
-the owner has complete control over the business
-all profits belong to the owner
-simple tax arrangements
76
disadvantages of a sole trader form:
-unlimited liability
-limited access to finance and capital
-limited skill sets (entrepreneurship requires a wide range of skills)
-owner is likely to work long hours
77
what is a partnership business form?
-two or more people join together to form a business (2-20)
-a contract of relationship will be set up through a deed of partnership
78
advantages of a partnership business form:
-easy to set up and inexpensive
-shared responsibilities and decision-making
-more skills and knowledge
-increased access to finance
79
disadvantages of a partnership business form:
-unlimited liability
-disputes between partners?
-profits are often shared equally, regardless of the contribution
-dfficult to transfer ownership
80
what is a private limited company?
(ltd)
-ownership of the business is broken down into shares
-these shares can be sold by the owner (not to the public)
-decision-making usually rests with the person appointed to run the company, (managing director or CEO)
81
advantages of a private ltd company:
-limited liability
-access to greater finance and capital (internal shareholders)
-has a higher status than a sole trader
82
disadvantages of a private ltd company:
-more expensive and time-consuming to set up
-more complex legal requirements and regulations than sole traders
-accounts published and publicly available
-cannot raise large amounts through selling shares publicly
83
how does a business become a separate legal identity?
when it goes through a process of incorporation to become a limited company
84
what is a public limited company? (plc)
a company that is able to offer its shares to the public
85
advantages of public limited companies:
-better access to capital (share capital)
-size is measured by market capitalisation
-has a higher status than a sole trader
-huge amounts of money can be made through stock market floatation
86
disadvantages of public limited companies:
-accounts are openly available to the public
-greater external pressures from the media and pressure groups
87
what is incorporation?
involves separation into two legal entities: the shareholders and the company
88
the 4 less classic forms of business:
-franchises
-social enterprises
-lifestyle businesses
-online business
89
what is franchising?
-an individual (franchisee) buys the rights to set up an identical operation in a new region
-the business can expand without **the owners** taking direct responsibility for each branch/store/division
90
advantages & disadvantages of franchising for the franchisor:
adv:
-effective way to grow the business.
-franchisor gets setup fee and royalty payments
dis:
-risk of franchisee damaging brand if not run effectively
91
advantages & disadvantages of franchising for the franchisee
adv:
-franchisees are provided with training and support from franchisor
-franchisees receive a business in a box' plans, products, marketing
dis:
-expensive setup fees and little freedom to change the business format
-royalty payments (a share of sales go back to the franchisor)
92
what is a social enterprise?
a business that has the primary purpose to have social or environmental impact
93
examples of social enterprises:
-cooperatives
-mutual organisations
-charities.
94
what do social enterprises usually do with profit?
reinvest it into the business / use to create positive social change or address an environmental issue
95
a benefit of being a social enterprise
may pay lower tax rates
96
what is a lifestyle business?
usually a small, owner-operated business that is run to sustain a specific lifestyle or personal interest of the owner (rather than for profits)
97
examples of lifestyle businesses:
yoga instruction, personal training, business coaching
98
what is an online business?
providing products and/or services solely through the internet
99
benefits of an online business:
-low overhead costs
-can operate from anywhere with an internet connection
100
why might a company want to become a PLC?
when a business is growing rapidly it may require a significant amount of capital to fund its expansion
101
what is the main thing a business must undergo in order to become a PLC?
undergo a stock market flotation
102
what is a stock market flotation?
the company's shares are offered on sale to the general public
103
disadvantages of the process of being listed on a stock market:
-expensive
-time-consuming
104
the 5 stages of being listed on a stock market:
1) issue a prospectus advertising the company to the public
2) the prospectus and information on the company are reviewed by lawyers
3) a minimum of £50000 share capital has to be provided up front
4) if successful a certificate to sell shares will be issued
5) the initial public offering (IPO) goes live and the business can start trading on the stock market
105
what are share prices affected by?
-the company's performance
-the business environment in which it trades
106
what can happen when share prices rise?
-managers may receive a bonus
-the company finds it easier to raise capital
-consumers with shares feel more confident to spend.
-the business may receive positive publicity
107
what can happen when share prices
fall?
-the company may become vulnerable to a takeover
-price fall gives an indication of poor performance
-the company finds it harder to raise capital
108
what is opportunity cost?
the value of the option not taken when a business makes a decision
109
what is opportunity cost caused by?
because of scarcity, choices have to be made about how to **best** allocate limited resources **amongst competing** wants and needs
110
can opportunity cost be calculated financially?
not always
111
what is a trade off?
(+example)
the loss or compromise of another option or factor when a decision is made
(improving productivity in a factory may lower the quality of the products being made)
112
factors that a business will consider when making decisions:
-pros and cons of each option (based on the available information and any research)
-the probability of success
-risk vs support
113
when must an entrepreneur become a leader?
when start ups become larger, gain an organisational structure and more employees
114
skills that leaders require:
-the need to delegate
-trusting team members
-listening skills
-having an open mind
-being less reactive
-developing emotional intelligence
115
leader skills & entrepreneurs:
the need to delegate
-entrepreneurs need to learn to delegate tasks and responsibilities to others
-this can be difficult for entrepreneurs who are used to having control over every aspect of their business
116
leader skills & entrepreneurs: trusting members
-as a leader, it's important to trust your team members to do their jobs effectively
-it's also important to verify that tasks are being completed correctly and on time
117
leader skills & entrepreneurs: listening skills
-entrepreneurs are often driven by their ideas and visions
-as a leader, it's important to listen to the ideas and perspectives of others
118
leader skills & entrepreneurs: having an open mind
leaders need to be open to new ideas and willing to adapt to changing circumstances
119
leader skills & entrepreneurs: being less reactive
-entrepreneurs are often used to taking quick action and making decisions on the fly
-as a leader, it's important to take a more strategic and measured approach to decision-making
120
leader skills & entrepreneurs: developing emotional intelligence
-leaders need to be able to understand and manage their own emotions, as well as the emotions of their team members
-many entrepreneurs are used to being driven by passion and enthusiasm rather than emotional intelligence and empathy
121
what are two difficulties in developing from an entrepreneur to a leader?
-adapting a new mindset
-lack of leadership qualities
122
entrepreneurs & developing a new mindset:
as the business grows, it requires more control to be passed on to other individuals and to trust others to do the job; a lack of trust could become a barrier to development and further growth
123
entrepreneurs & lack of leadership qualities:
entrepreneurs are ideas people and enjoy turning concepts into reality, but as the business operates and grows the individual might lack the communication, organizational and delegation skills in order to get the most out of the rest of the employees
