1.5.1 role of an entrepreneur, 1.5.2 entrepreneurial motives and characteristics

entrepreneur

• person who spots an opportunity and shows initiative and a willingness to take risks in order to benefit from the potential rewards

  • makes use of the resources available to them to set up or develop a business

creating and setting up a business

1. generating an idea

2. conducting market research

3. business plan

   • includes executive summary, the business & products/ services, the market, marketing strategy, skills, operations, financial forecasts

   • purpose: to secure external funding, to ensure firm develops healthy financial structure, help identify problem areas, set targets & check on firms development, provide realistic expectations of what can be achieved

4. raising finance

5. decide on location

6. organise resources

7. launch

• running and expanding/ developing a business

• running a business in loves managing resources & finance, making marketing decisions about aspects of marketing mix, dealing with customers, maintaining financial records, production/ purchasing, marketing/ finance, managing & training people

• expanding a business involves merging with another business, open another location, target other markets, offer business as a franchise

risks

• possibility that the business will have a lower than expected profit or loss

• can be anticipated by entrepreneurs

  • market research, understanding of industry, assessing own personal potential losses, business plans

uncertainties

• businesses are unable to predict external shocks or future events

• are harder to anticipate as out of entrepreneurs control

  • keep up to date with current business climate, make plans for unexpected events, spread risks

intrapreneurship

• when employees are empowered to use their entrepreneurial skills to come up with ideas to financially benefit their employer

• benefits: can drive innovation within organisation, could act as self actualisation as employees are allowed to be creative

barriers to entrepreneurship

• lack of finance for new start ups

• becoming an employer ( limited knowledge & understanding)

• legal barriers

• lack of ideas ( lots of competition)

• aversion to risk

• fear of failure

entrepreneurial characteristics

• creativity - to design new innovative products with usp

• hardwork - putting all time and effort into business

• resilience - many setbacks in a business

• initiative - start a business because of a good idea

• self confidence - easy to give up otherwise

• risk taking

entrepreneurial skills

• team work

  • adv: more ideas and more capital in the business

  • disadv: conflict/ disagreement between staff

• problem solving - need to be good at working out cost effective solutions that help to move the business forwards

• organisation - may need to develop a range of systems for dealing with enquires, suppliers, and orders from customers

• numeracy - tax returns, balance sales books, cash flow forecasts to attract more funding from lenders

• IT - if online = web design skills, if not online = processing orders, send & print invoices, keep databases

• communication

financial motives for setting up a business

• profit maximisation: aim to make highest amount of profit possible by seeking to minimise costs and maximise revenue

  • adv to sole traders: larger wages can be drawn from the profit

  • adv for a LTD or PLC: dividends will be larger on shares which may attract more investors

• profit satisfying: aim to make enough profit to keep the business moving plus another aim at the same time

  • for example: rewarding employees with higher wages, invest in environment project, serve the community

non financial motives for setting up a business

• independence - want to work for themselves

• flexibility - better work life balance

• ethical reasons - business may decide to trade in a more ethical way

• social purpose - social enterprises are businesses trading for social/ environmental purposes, their profits are reinvested to sustain positive change

• personal challenge