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What is an entrepreneur?
A person who spots an opportunity and takes risks to set up a new business
What are the characteristics of an entrepreneur?
Opportunity spotter
Creative
Risk taker
Resilient
What are the skills of an entrepreneur?
Communication
Problem solving
Technological
What are barriers to entrepreneurship?
Access to finance
Lack of entrepreneurial skill
Aversion to risk
What is intrapreneurship?
When employees within an organisation act in the same ways as entrepreneurs
What is risk?
A measurable unknown associated with a decision
What is uncertainty?
A non-measurable unknown associated with a decision
What are financial motives for entrepreneurs?
Financially independent
Financial security
Profit maximising/ Profit satisficing
What are non-financial motives for entrepreneurs?
Ethical stance
Social entrepreneurship
Independence
Homeworking
What is a business objective?
Quantifiable targets or goals to be achieved by a business with a given time frame
What are some business objectives?
Survival
Profit maximising
Sales maximising
Market share
Cost efficiency
Employee welfare
Customer satisfaction
Social objectives
What is a sole trader?
An individual who owns and runs their own business
What are the dis/adv of being a sole trader?
+ Cheap and easy to set up
+ Motivation is high as all profits go to sole trader
- Unlimited liability
- Limited capital for investment
- Difficult to find cover when sick
What is a partnership?
A structure when two or more people join up together to set up a business
What are the dis/adv of being a partnership?
+ Risks, costs and responsibility is shared
+ More scope for specialist skills
+ Financial records remain private
- Arguments with decisions
- Partnership deed needs to be made
What is a private limited company (Ltd)?
An incorporated business that is owned by shareholders who tend to be family or friends of the entrepreneur
What are the dis/adv of being a private limited company (Ltd)?
+ Limited liability
+ Raise money through sales of shares
+ Continuity of business existence even if shareholders change
- Financial records are public
- Greater regulatory requirements
What is a public limited company (plc)?
An incorporated business that is able to sell shares on a stock exchange
What are the dis/adv of being a public limited company (plc)?
+ Greater access to cash for rapid expansion
+ Limited liability
- Public scrutiny
- Risk of hostile takeover
What is a franchise?
The process where a business gives the franchisor the permission to trade using their name and goods/services.
What is a franchisee?
A business that is given permission from another business to trade using its name or goods/services in return for a fee and share of the profits
What are the dis/adv of being a franchisee?
+ Lower risk
+ More resources
+ Established name
- High initial cost
- Loss of independence
What is a franchisor?
A business that sells a license giving permission to another business to trade using its name or goods/services
What are the dis/adv of being a franchisor?
+ Growth
+ Displaced risk
- Shared profit
- Maintaining quality
- Risk to repuation
What is an opportunity cost?
The cost of one course of action in terms of the next best alternative foregone
What is a trade-off?
All of the alternatives foregone when a decision is made by a business
What is a leader?
A person with the ability to influence and direct people in order to meet the goals of a group
Why is it difficult to become a leader?
Reluctance to hand over control
Loss of autonomy in decision
Learning to trust others and not need to oversee everything
Lack of experience
