Studied by 2 peopleEntrepreurship
The activity of setting up a business or businesses, taking up on financial risks in the hope of profit
entrepreneurial skills
risk-taking skills, leadership skills, innovation skills, communication skills, decision-making skills, networking skills
Risk-taking skills description
An entrepreneur who is a risk taker is prepared to risk their money, time, and career to run their business despite the possibility of failure.
Risk-taking importance
An entrepreneur may gain more access to more opportunities that can help their business grow and become competitive
Leadership skills description
An entrepreneur who demonstrates good leadership skills will share the business's vision with their employees to inspire, support and persuade them to share this vision
Leadership skills importance
Providing employees with a clear picture of what the business is hoping to achieve in the future will likely motivate and encourage employees to work towards achieving this vision.
Innovation skills description
An entrepreneur who has good innovation skills is able to develop new ideas and processes, as well as find new approaches to problems that may arise.
innovation skills importance
can allow a business to distinguish itself from its competitors, or to develop new practices that improve the business's operations.
communication skills description
good communication skills can clearly transfer information to employees and other relevant people, both internal and external to the business.
Communication skills importance
provides a clear vision and direction for employees. It also allows the entrepreneur/manager to listen to feedback from employees which may lead to changes that benefit the business and its operations.
Decision making skills description
is able to select a suitable course of action from a range of plausible options.
Decision making skills importance
The process of starting and running a business will constantly require decisions to be made. Therefore, being able to select the best possible option from a range of alternatives is essential to business success.
Networking skills description
is able to develop business contacts that can provide assistance in the future.
Networking skills importance
can allow individuals outside of the business to offer their support and expertise in particular areas, therefore benefiting the business.
Manager
An individual who has the responsibility of overseeing and handling employees whilst, also running day-to-day business tasks to achieve objectives
Characteristics of successful managers
Communication skills, determination, knowledge, strong ethics, flexibility
determination description
Individuals who are hardworking and focused on achieving specific goals.
Determination contribution to business
driven to put in the significant amount of work required to develop a new business, and effectively plan a business's direction or day-to-day activities
Knowledge description
understanding of the environment they operate in and how to perform the relevant business tasks.
Knowledge contribution to business, manager
enable a manager to choose a course of action that is in the business's best interest when change needs to occur
Strong ethnics description
possessing strong moral values and acting in accordance with these values by engaging in morally-conscious behaviour.
Strong ethnics contribution to business
ensure that all employees, customers, suppliers, and the environment are treated well. The ethics of a business is also becoming a growing concern and consideration of potential customers
Flexibility description
Being able to adopt to situations with ease
Flexibility contribution to business
being able to adapt and change the business's strategy when required, in order to achieve the best outcomes for a business. As society rapidly changes and customer demands continue to evolve, being able to quickly adapt plans is essential for a business's survival.
Characteristics of successful entrepreneurs
willingness to take calculated risks, strong networking ability, determination, innovative qualities, resourcefulness,knowledge
Willingness to take calculated risks description
to be able to consider and choose when to take appropriate risks, even when the outcome may be failure.
willingness to take calculated risks contribution
gain access to more opportunities that can help their business grow and become competitive.
Strong networking ability description
involves being sociable and helpful so that you can develop business contacts and support networks.
Strong networking ability contribution
allow for individuals outside of the business to offer their support and expertise, which can benefit a developing business.
resourcefulness description
the ability to overcome problems using what's currently available
resourcefulness contribution
can help their business minimise its costs and be as profitable as possible, especially in the developing stages
Motivation to start a business
desire for independence-financial or personal, to make a profit, to fulfil a market need, to fulfil a social need
Personal independence
a person being in control of their own decisions and actions. Have the desire to have full control over their job and be their own boss.
Financial independence
The ability to fund a desired lifestyle without relying on income from another individual.
To make a profit
Involves a business generating more revenue than expenses it incurred.
To fulfil a market need
When a business fills a gap in the market by addressing customer needs that are currently unmet or underrepresented by competitors in the same industry.
To fulfil a social need
Improving society and the environment through business activities.
A business
an organisation where goods and/or services are exchanged for money
Sole trader
A type of business owned by one person
sole trader advantages
entitled to keep all profits
owner has full control and decision-making power
Cheap and simple setup costs
Sole trader disadvantages
Unlimited liability
No perpetuity
Knowledge and skills limited to one owner
Unlimited liability
The owner is personally and fully responsible for all losses and debts of the business
Sole trader examples
Plumbers, hairdressers, and newsagents
Partnership
A type of business owned by 2-20 people
Partnership advantages
Cheap and simple setup costs
Greater range of expertise and ideas among partners
owners share workload
Partnership Disadvantages
Unlimited liability
Conflicts could arise between partners due to decision making
profit needs to be shared
Partnership examples
Law firms, Medical practices, Ben & Jerry's
Private Limited Company (Ltd)
A type of business with 1-50 shareholders with at least one director shares are offered to people who wish to own a part of the business
Shareholder
A person or institution that has invested money in a corporation in exchange for a "share" of the ownership
Private limited company advantages
Limited liability
greater variety of expertise and ideas
perpetuity
Limited liability
business entity that prevents individuals from being liable for the company's financial losses and debt liabilities
Private limited company disadvantages
expensive and complex to set up
Difficult to change structure once a company has been established
Increased reporting requirements and government regulation
Private limited company examples
7-eleven, cotton on group, meriton
Public listed company
A type of business with a unlimited number of shareholders, and whose shares are freely traded on a stock exchange
Public listed company advantages
Limited liability
Greater access to expertise and ideas as more people are involved
No permission needed to sell shares
Public listed company disadvantages
Expensive and complex to set up
Conflicts could arise through decision-making between directors
Complex reporting requirements such as financial reports that need to be published to the public
Public listed company examples
apple, qantas, myer
Social enterprise
A type of business owned by the founders of the business. The business will produce a good or service in pursuit of profit to fulfil an economic, social, or environmental need
A company
A business that has gone through the process of incoportation, and the owners are shareholders
Social enterprise advantages
Easier to obtain a customer base
Community benefits from the businesses activites
Social enterprises disadvantages
Difficult to obtain high levels of finance from lenders
May be difficult to obtain a bank loan
Social enterprise example
Thank You company,
Government Business Enterprise (GBE)
A type of business owned by the government which aims to provide an essential good or service to the public in pursuit of a profit
GBE advantages
-Perpetuity
Delivers goods and services that help the community -rely on government for initial investment
GBE disadvantages
Time consuming and costly in reporting to government and decision making
Have to follow significant 'red tape'- excessive rules
GBE examples
Auspost, VicRoads
Franchising definition
An agreement where franchisor (one party) grants or licences some rights and authorities to franchisee (another party)
How does Franchising work
Franchisor authorises the franchisee to sell their products, goods, services and gives the right to use their trademark and brand name. In return, the franchisee pays a fee or commission to the franchisor as well as some share of their revenue
Franchisor Advantages
The business can expand without incurring additional costs
More recognition by the general community
Always support from the franchisor
Franchisor Disadvantages
does not possess direct control over the franchisee
Has to give some profit to franchisor
Cannot make all the decisions
Franchising examples
McDonalds, Starbucks, KFC
Business objective
The desired outcome that a business intends to achieve, within a specified period, that will guide the direction and strategies of the business
List of Business Objectives
To make a profit, to increase market share, to fulfil a market need, to fulfil a social need, to meet shareholder expectations, to improve efficiency
revenue
income earned from the sale of goods and services
Expenses
The costs of the business such as materials and wages
To increase market share
A business's portion of the total industry sales for a particular good or service expressed as a percentage compared to it's competitors
To meet shareholder expectations
Ensuring shareholders a return on their investment. Shareholders expect profit in the form of dividends
Dividends
Company's share profits to the shareholders based on the corporation's performance. Dependent on the number of shares they own
Capital gains
when an individual sells a company's shares at a higher price than they initially purchased them for
To improve efficiency
how well the business uses their resources when producing a good or service
To improve effectiveness
The degree to which a business has achieved its objectives
Stakeholders
an individual or group who has a vested interest in the performance and activities of a business
Internal Stakeholders
Owners/shareholders, managers, employees
External Stakeholders
Customers, suppliers, general community
Owners- stakeholder
Individuals who establish, invest, and have a share in a business, with the goal of earning a profit from it's operations
Managers (stakeholders)
Individuals who oversee and coordinate a business's employees and lead its operations to ultimately achieve the business's objectives
Employees (stakeholders)
Individuals who are hired by a business to complete work tasks and support the achievement of it's objectives
Customers (stakeholders)
Individuals or groups who interact with a business by purchasing and utilising its goods and services.
Suppliers (stakeholders)
Individuals or groups that source raw materials, component parts, and processed materials and sell them to a business for use in the production of it's goods and services
General community (stakeholders)
The individuals and groups who are impacted by a business's operations and decisions, often because they are near the business.
Owners interest
Establishing and fostering positive relationships with other stakeholders to enhance business reputation and performance
Receiving a return on their investment
managers interest
Being recognised for the achievement of business objectives
receiving appropriate wages and working conditions to reflect their managerial role
Employees interest
Receiving fair pay and working conditions
Opportunities to engage in personal and professional development (receive promotions)
Customers interest
Receiving high-quality goods and services at affordable prices
Suppliers interest
Earning a profit from the raw materials and resources they supply
General community
Observing business activities that lead to improvements in the community and environment
increasing local employment rate and boosting the local economy
Stakeholder conflict
When different stakeholder groups have different aims and objectives, which can be difficult for a business to satisfy at the same time.
Economic wellbeing
is reflected by the level of income, consumption, and wealth people or households have to support their material living standards
Economy
an area or region that engages in the production, consumption, and distribution of goods and services.
Economic wellbeing contributions
Employment opportunities, taxation revenue, infrastructure, economic growth, international trade, research and development
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