1.5 Entrepreneurs and leaders Flashcards
(39 cards)
Define an entrepreneur
A person who is willing to take risk in setting up and growing their own business
What do entrepreneurs do
Take risk- risk financial security and career to make their idea work
Innovate and invent- Create new ideas, products and services
Organise- They pull together resources such as capital, technology and people to set up a business
Make decisions- they are decisive and make decisions
Where do ideas come from for an entrepreneur to set up their own business
Business experience- may use experience of their current job
Personal experience- a business may be based on their hobby or interest
Lifestyle choice- Some people set up their business to be their own boss and work on their own terms
Spotting a gap- May see an opportunity to meet a need of peoples
Skills- Some people may set up based on their ability
What is the process of setting up a business
The idea- may come from inspiration
Research- market, customer needs, competition
Planning- business plan
Financing- explore options of internal/external
Location- could be a strategic decision
Resources- may include suppliers, human resources, legal issues, utilities, manufacturing and marketing
The launch- May involve an opening event to increase public relations, could create awareness
What must an entrepreneur do in order to run, expand and develop a business
Financial management- raising capital, managing costs, profitability and cash flow
Administration- insurance, legal set up, tax and business records
Marketing- research, promotion and branding
Purchasing- communicate with suppliers, deliveries and logistics
Managing people- recruitment, training, motivation and leading people
Production- production of goods, storage, quality management and delivery
Define intrapreneurship
refers to employees within a business who have the freedom and opportunity to develop their ideas and use creativity to innovate
These add value to a business which can give them a competitive advantage
How does risk and uncertainty apply to entrepreneurs
Risk- Entrepreneurs can decide how much risk they take
Uncertainty- Have less control over it such as legal and political change
What are barriers to success for entrepreneurs
Lack of finance
Aversion to risk
Competition from large, established businesses
Lack of ideas
Lack of entrepreneurial skills
Red tape
Define red tape
Official rules and processes that seem unnecessary and cause delays
What are characteristics of entrepreneurs
Self-confidence- believe they can succeed
Self-determination- have drive to keep going
Self-starter- willing to work independently and make decisions
Initiative- proactive and adapt to change
Commitment- put in time to make it work
What are skills of an entrepreneur
Organisation- Lots to coordinate when setting up a business alone
Financial management- cash flow management can be challenging
Managing and communicating with people
Negotiating- deals and contracts with suppliers and customers
What are financial and non financial incentives for setting up your own business
Financial:
- Profit maximisation, generate as much wealth as possible
- Profit satisfying, to generate enough income to live a comfortable lifestyle
Non-financial:
- Ethical stance, to support ethical principles e.g. climate change
- Social enterprise, running a business for social or environmental cause- not for profit
- Independence and home working, entrepreneurs want the control and flexibility of running their own business
Why do businesses set objectives
- Can achieve long term aims
- clarify direction of a business
- motivate employees to achieve
- reward employees
- Measure success against target
Examples of financial and non financial objectives
Financial:
- survival
- Profitability
- growth
- market share
Non-financial:
- Personal satisfaction
- customer satisfaction
- Sustainability
- Brand recognition
What influences business objectives
Size- may change when a business grows
Sector- public sector may focus more on customer needs
Market- more competitive markets may change objectives
Ownership- A plc will focus objectives around shareholders
Owner- may run it for the love of the job
What are the 4 forms of business
Sole trader
Partnerships
Private limited company
Public limited company
Define a sole trader company
- Easy to start up (no registration needed)
- Requires a range of skills and flexibility
- Have unlimited liability
- Owner can be their own boss
Define a partnership company
- Joint ownership of running a business
A business owned by two or more people
Define a private limited company
- Must go through the process of incorporation
- Has limited liability
- Will have wider access to capital
Define a Public limited company
- Can raise capital through selling shares to the public
- Has ability to take over competitors
- Can lose control of the business
Define limited liability
the liability of the owners is detached from the company
Shareholders can lose their investment but their personal belongings are safe
Define a franchise
A limited company that licenses the right for individuals to set up an identical operation
Whats the difference between a franchisor and a franchisee
Franchisor- the established company that licenses its business model
Franchisee- an individual who operates a franchise under the franchisor’s business model
