Entrepreneurship

Question 1

Explain the concept of entrepreneurship

Answer 1

Involves taking a risk, either to create a new business or to greatly change the scope and direction of an existing one

Question 2

What is an entrepreneur

Answer 2

People with vision, drive, and creativity who are willing to take the risk of starting and managing a business to make a profit, or greatly changing the scope and direction of an existing firm

Question 3

What is a small business owner

Answer 3

Managers or people with technical expertise who started a business or bought an existing business and made a conscious decision to stay small

Question 4

What are the 3 types of entrepreneurs, explain

Answer 4

• classic entrepreneurs, are risk-takers who start their own companies based on innovative ideas
• multi-preneurs, entrepreneurs who start a series of companies
• inrapreneurs, entrepreneurs who don’t own their own company but apply their creativity, vision, and risk-taking within a large corporation

Question 5

What are the 4 reasons to why people become entrepreneurs

Answer 5

• desire to control own destiny
• financial independance
• feeling personal satisfaction
• creating lifestyle they want

Question 6

Explain some of the characteristics of a successful entrepreneur

Answer 6

Must be able to develop and manage the company that implements their idea
Also requires : drive, perseverance, passion, spirit of adventure, and also managerial and technical ability

Question 7

Give 5 characteristics of an entrepreneurial personality

Answer 7

Ambitious
Independent
Self-confidant
Visionary
Risk-taker

Question 8

What is a small business

Answer 8

New business
Number of employees
Industry
Business age

Question 9

What are the 3 reasons for developing a business plan

Answer 9

Helps to attract appropriate loan financing
Minimises risk
Can be critical in whether or not business will be successful

Question 10

Look at elements of a business plan in the slides

Answer 10

….

Question 11

What are 4 common causes of business closure

Answer 11

Economic factors
Financial causes
Lack of experience
Personal reasons

Question 12

4 advantages of owning a small business

Answer 12

1. Greater flexibility and an uncomplicated company structure
2. Innovative product ideas can be developed and brought to market more quickly
3. Serve specialised markets
4. Provide higher level of personal service

Question 13

4 Disadvantage of owning a small business

Answer 13

1. Limited managerial skills
2. Difficulties obtaining adequate financing
3. Complying with laws and regulations more expensive to small firms
4. Requires a major commitment by the owner

Question 14

What are the 3 characteristics that make a small business attractive

Answer 14

1. Low initial capital investment
2. Some special skill requirements
3. High growth and profit potential

Question 15

What are the 3 industries that attract small businesses

Answer 15

1. Distribution (retailing, transport etc)
2. Service (medical, financial services etc)
3. Production ( construction, mining etc)

Question 16

What is a franchise

Answer 16

A license to operate an individually owned business as though it were part of a chain of outlets or stores

Question 17

What is franchising

Answer 17

The actual granting of a franchise

Question 18

What is a franchisor

Answer 18

An individual or organization granting a franchise

Question 19

What is a franchisee

Answer 19

A person to organisation purchasing a franchise

Question 20

Name the types of franchises

Answer 20

1. Manufacturer authorizes retailers to sell a certain brand-name item
2. A producer licences distributors to sell a product to retailers.
3. A franchisor supplies brand names, techniques, or services instead of a complete product

Question 21

What are the 5 advantages of franchising to the franchisor

Answer 21

1. Fast and well controlled distribution of its products
2. No need to construct and operate its own outlets
3. More working capital available for expanded production and advertising
4. Franchising agreements maintain product and quality standards
5. Motivated work force of franchisees

Question 22

What are the 5 advantages of franchising to the franchisee

Answer 22

1. Opportunity to start a proven business with limited capital
2. Guaranteed customers
3. Franchisor available for advise and guidance
4. Materials for local promotional campaigns and participation in National campaigns
5. Cost savings when purchasing in cooperation with other franchisees

Question 23

What are the 2 disadvantages of franchising to the franchisor

Answer 23

1. Failure of the franchisee to operate franchise properly
2. Disputes with and lawsuits by franchisees over the terms of the franchise

Question 24

What are the two disadvantages of franchising to the. Franchisee

Answer 24

1. Franchisor retains a large amount of control over the franchisee’s activities
2. Franchisor opening competing franchises within the franchisee’s market