Business chapter 3

Entrepreneur

Entrepreneur

Person who organizes, operates and takes the risk for a new business venture

Benefits of an entrepreneur

• Independance - able to choose how to use time and money

• Able to put own ideas into practice

• May be profitable and the income might be higher than working as an employee for another business.

• Able to make use of personal interests and skill

Risk

Many new entrepreneurs businesses fail

Capital

Entrepreneurs have to put their own money in the business ad find other sources of capital

Lack of knowledge and expertise

In starting and operating a business

Opportunity cost

Lost in income from not being an employee of another country.

Characteristics of a sucessful entrepreneurs

• Hard working

• Risk taker

• Creative

• Optimistic

• Self confident

• Innovative

• Independant

• Effective communication

What entrepreneurs must consider

• What products or services are intended to provide and target customers

• Main costs and enough products be sold to pay for them?

• Where will the firm be located

• What machinery?

Business plan

Document containing the businesses objective and important details about the operations, firm and owners of new businesses

Content of a business plan?

• Decription - overview and objective

• Products and services

• The target market

What to include

• Total market size

• Predicted market growth

• Target market

• Analysis of competitors

• Forecast sales revenue from the product

  Business location and howw the products will reach customers

• Physical location if applicable/ internet

• How firm delivers\

• Organization structure and manageent

• Financial requirements

future

capital

cost

working capital

• projections and profitibility

Challenges for starting a business

• Lack of finance

• Unestablished customer base

• Cash flow problems

• Marketing

• People management

• Production

• Legalities

• High production cost

Opportunities for starting business

• Growth

• Earnings

• Transference and inheritance

• Challebge

• Autonomy

• Security

• Hobbies

Why do governments support start ups?

• Reduce unemploymet

• Increase competitions

• Increase output

• Benefit society

• Growth

How do they support?

• Training entrepreneurs (advice and support)

• Loans w low interest rates

• Grants → Train → Productive

• Market research facilities

Why is it useful to compare size of businesses

• Investors

• Government

• Competitors

• Workers

• Banks

How to measure?

• Number of people employed

• Value of output

• Value of sales

• Value of capital employed

Why owners want to expand?

• Higher profit

• Market power

• lower avarage cost

Why some remain small?

• Type of industry

• Market size

• Owners objective

Causes of business failure

• Lack of management skills

• Changes in the business enviorment

• Poor finance

• Overexpansion