Role Of An Entrepreneur Flashcards
Roles of entrepreneurs
-Entrepreneurs are innovators, because they try to make money from an idea.
-Are responsible for organizing factors of production.
-They have to make key decisions, this decisions will determine how successful the business will be.
-They take risk, because they invest their own money and don’t know how is going to turn go.
Risk and rewards
Rewards:
-Earn a lot of money
-Work for yourself (no instructions)
Risks:
-If business fails debts have to be paid.
-Working in a normal job may be difficult.
How do entrepreneurs find a business idea?
-Business experience. An idea from past job. (Footballer opens fútbol emotion).
-Personal experience. Some might turn a hobby into a business. (Amateur cyclist open cycle shop).
-Skills. Some people consider they have a skill that could help them to open a business. (Someone knows a lot of history and decides to do guided tours)
Stages in setting up a business
-Idea:
-Research: See if opening the business is viable. (Market research and analyzing competition)
-Planning.
-Financing: Entrepreneurs need someone to lend them money.
-Location: Very important. Can reduce costs, increase customers.
-Resources: Materials and equipment are necessary to set up a business.
-Launch: Business starts to trade.
Running and expanding a bussines
(Main functional activities)
-Financial management: The business needs enough money to operate. So cash flows forecasts, arrangement of loans and overdrafts have to be done.
-Administration: record activities done by the business. Ex, record all the transactions so profit and tax liability can be calculated.
-Marketing: Small business, promotion or developing a good website.
Big business, market research or investigate new distribution channels.
Main functional activities 2.0
-Purchasing: Businesses have to buy resources and services at lowest price and higher quality as possible.
-Managing people: Business has to motivate people and invest in recruitment and selection.
-Production: A business has to organize manufacturing processes and make sure quality is good and is done at time.
Intrapreneurship
Are employees, in large businesses, who use their entrepreneurial skills without having to risk their own money, to find and develop initiatives that have financial benefits for the business.
Advantages of intrapreneurs
-They might develop products
-Can innovate, and help to gain competitive edge.
-This motivates employees because they feel important.
-Help develop skills that may be used in the future
Barriers to entrepreneurship
-Lack of finance
-Lack of entrepreneurial capacity (skills)
-Legal barriers (red tape)
-Lack of ideas
-Fear of failure
How entrepreneurs can anticipate risk?
-Before the launching a product nationally, test it in a region.
-before granting trade credit a business can undertake a credit search to check the likelihood a new customer will fail to repay their debt.
-When asking and important decision use decisio; trees.
How to anticipate uncertainty?
There is nothing that businesses can do to prevent uncertain events from happening, but they can prepare.
-set aside funds to deal with unexpected events.
-Use PESTLE analysis
