1.5 - Entrepreneurs and Leaders Flashcards
(36 cards)
What is an entrepreneur?
It is a person who is willing and able to create a new business idea or invention and takes risks in pursuing success
What do entrepreneurs do?
- Organise resources
- Make business decisions
- Take risks
What is intrapreneurship?
It refers to the practice of promoting entrepreneurial thinking and behaviour within an existing business
What are the barriers to entrepreneurship?
- Entrepreneurial capacity - an individuals ability to take risks and identify and seize opportunities
- Access to finance
- Lack of training / skills
- Fear of failure / lack of confidence
What is risk?
Risk is something an entrepreneur can plan for.
The probabilities of outcomes are known or at least understood and considered.
What is uncertainty?
Uncertainty is caused by unexpected factors outside of the entrepreneur’s control.
What factors may cause uncertainty?
- Environmental factors
- Economic changes
- Entry of new competitors
- Changes in legislation (laws)
- Changes in politics
What skills does an entrepreneur require?
- Communication
- Team working
- Problem solving
- Organisation
- Numeracy
- IT
What characteristics does an entrepreneur require?
- Creativity
- Hard working
- Resilience
- Innovative
- Self confident
- Risk taker
What are financial reasons for setting up a business?
- Profit maximisation
- Profit satisficing
What are non-financial reasons for setting up a business?
- Ethical stance
- Social entrepreneurship
- Independence
- Home working
What are some business objectives?
- Survival
- Profit maximisation
- Sales maximisation
- Market share
- Cost efficiency
- Employee welfare
- Customer satisfaction
- Social objectives
What is survival as a business objective?
To survive the initial entry into the market and to generate enough cash flow to remain in business (survival) is the aim of most startup businesses.
What is profit maximisation as a business objective?
Once survival has been achieved, businesses are likely to focus more on maximising their profits.
What are the forms of business?
- Sole trader
- Partnership
- Private limited company
- Public limited company
- Franchise
- Social enterprise
- Lifestyle business
What is a sole trader?
It is a business that has a single owner.
What are the advantages of being a sole trader?
- Easy and inexpensive to set up
- The owner has complete control
- All profits belong to the owner
- Simple tax arrangements
What are the disadvantages of being a sole trader?
- Unlimited liability meaning the owner is personally responsible for any debts incurred
- Limited access to finance and capital
- Limited skill sets
What is a partnership?
Where two or more people join together to form a business
What are the advantages of being a partnership?
*Easy to set up and inexpensive
* Shared responsibility and decision making
* More skills and knowledge are available
* Increased access to finance and capital
What are the disadvantages of being a partnership?
- Unlimited liability
- Potential for disputes between partners
- Profits are often shared equally, regardless of the contribution
- Difficult to transfer ownership
What is a private limited company?
Where the ownership of the business is broken down into a specified number of shares
What are the advantages of being a private limited company?
- Limited liability, meaning the owners are not personally responsible for the company’s debts
- Access to greater finance and capital
- Easier to transfer ownership
- Can have a professional image and reputation
What are the disadvantages of being private limited company?
- More expensive and time-consuming to set up
- More complex legal requirements and regulations
- Annual financial reporting and auditing is required
- Shareholders have little control over the company as the founder usually imposes their agenda
