AOS 1- The business idea

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Entrepreurship

1 / 110

Tags and Description

Business

11th

111 Terms

1

Entrepreurship

The activity of setting up a business or businesses, taking up on financial risks in the hope of profit

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entrepreneurial skills

risk-taking skills, leadership skills, innovation skills, communication skills, decision-making skills, networking skills

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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.

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Risk-taking importance

An entrepreneur may gain more access to more opportunities that can help their business grow and become competitive

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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

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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.

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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.

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innovation skills importance

can allow a business to distinguish itself from its competitors, or to develop new practices that improve the business's operations.

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communication skills description

good communication skills can clearly transfer information to employees and other relevant people, both internal and external to the business.

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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.

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Decision making skills description

is able to select a suitable course of action from a range of plausible options.

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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.

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Networking skills description

is able to develop business contacts that can provide assistance in the future.

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Networking skills importance

can allow individuals outside of the business to offer their support and expertise in particular areas, therefore benefiting the business.

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Manager

An individual who has the responsibility of overseeing and handling employees whilst, also running day-to-day business tasks to achieve objectives

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Characteristics of successful managers

Communication skills, determination, knowledge, strong ethics, flexibility

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determination description

Individuals who are hardworking and focused on achieving specific goals.

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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

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Knowledge description

understanding of the environment they operate in and how to perform the relevant business tasks.

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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

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Strong ethnics description

possessing strong moral values and acting in accordance with these values by engaging in morally-conscious behaviour.

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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

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Flexibility description

Being able to adopt to situations with ease

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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.

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Characteristics of successful entrepreneurs

willingness to take calculated risks, strong networking ability, determination, innovative qualities, resourcefulness,knowledge

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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.

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willingness to take calculated risks contribution

gain access to more opportunities that can help their business grow and become competitive.

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Strong networking ability description

involves being sociable and helpful so that you can develop business contacts and support networks.

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Strong networking ability contribution

allow for individuals outside of the business to offer their support and expertise, which can benefit a developing business.

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resourcefulness description

the ability to overcome problems using what's currently available

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resourcefulness contribution

can help their business minimise its costs and be as profitable as possible, especially in the developing stages

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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

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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.

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Financial independence

The ability to fund a desired lifestyle without relying on income from another individual.

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To make a profit

Involves a business generating more revenue than expenses it incurred.

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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.

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To fulfil a social need

Improving society and the environment through business activities.

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A business

an organisation where goods and/or services are exchanged for money

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Sole trader

A type of business owned by one person

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sole trader advantages

  • entitled to keep all profits

  • owner has full control and decision-making power

  • Cheap and simple setup costs

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Sole trader disadvantages

  • Unlimited liability

  • No perpetuity

  • Knowledge and skills limited to one owner

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Unlimited liability

The owner is personally and fully responsible for all losses and debts of the business

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Sole trader examples

Plumbers, hairdressers, and newsagents

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Partnership

A type of business owned by 2-20 people

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Partnership advantages

  • Cheap and simple setup costs

  • Greater range of expertise and ideas among partners

  • owners share workload

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Partnership Disadvantages

  • Unlimited liability

  • Conflicts could arise between partners due to decision making

  • profit needs to be shared

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Partnership examples

Law firms, Medical practices, Ben & Jerry's

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48

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

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Shareholder

A person or institution that has invested money in a corporation in exchange for a "share" of the ownership

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Private limited company advantages

  • Limited liability

  • greater variety of expertise and ideas

  • perpetuity

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Limited liability

business entity that prevents individuals from being liable for the company's financial losses and debt liabilities

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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

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Private limited company examples

7-eleven, cotton on group, meriton

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Public listed company

A type of business with a unlimited number of shareholders, and whose shares are freely traded on a stock exchange

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Public listed company advantages

  • Limited liability

  • Greater access to expertise and ideas as more people are involved

  • No permission needed to sell shares

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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

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Public listed company examples

apple, qantas, myer

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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

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A company

A business that has gone through the process of incoportation, and the owners are shareholders

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Social enterprise advantages

  • Easier to obtain a customer base

  • Community benefits from the businesses activites

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Social enterprises disadvantages

  • Difficult to obtain high levels of finance from lenders

  • May be difficult to obtain a bank loan

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Social enterprise example

Thank You company,

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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

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GBE advantages

-Perpetuity

  • Delivers goods and services that help the community -rely on government for initial investment

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GBE disadvantages

  • Time consuming and costly in reporting to government and decision making

  • Have to follow significant 'red tape'- excessive rules

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GBE examples

Auspost, VicRoads

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Franchising definition

An agreement where franchisor (one party) grants or licences some rights and authorities to franchisee (another party)

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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

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Franchisor Advantages

  • The business can expand without incurring additional costs

  • More recognition by the general community

  • Always support from the franchisor

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Franchisor Disadvantages

  • does not possess direct control over the franchisee

  • Has to give some profit to franchisor

  • Cannot make all the decisions

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Franchising examples

McDonalds, Starbucks, KFC

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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

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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

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revenue

income earned from the sale of goods and services

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Expenses

The costs of the business such as materials and wages

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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

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To meet shareholder expectations

Ensuring shareholders a return on their investment. Shareholders expect profit in the form of dividends

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Dividends

Company's share profits to the shareholders based on the corporation's performance. Dependent on the number of shares they own

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Capital gains

when an individual sells a company's shares at a higher price than they initially purchased them for

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To improve efficiency

how well the business uses their resources when producing a good or service

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To improve effectiveness

The degree to which a business has achieved its objectives

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Stakeholders

an individual or group who has a vested interest in the performance and activities of a business

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Internal Stakeholders

Owners/shareholders, managers, employees

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External Stakeholders

Customers, suppliers, general community

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Owners- stakeholder

Individuals who establish, invest, and have a share in a business, with the goal of earning a profit from it's operations

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Managers (stakeholders)

Individuals who oversee and coordinate a business's employees and lead its operations to ultimately achieve the business's objectives

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Employees (stakeholders)

Individuals who are hired by a business to complete work tasks and support the achievement of it's objectives

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Customers (stakeholders)

Individuals or groups who interact with a business by purchasing and utilising its goods and services.

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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

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General community (stakeholders)

The individuals and groups who are impacted by a business's operations and decisions, often because they are near the business.

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Owners interest

  • Establishing and fostering positive relationships with other stakeholders to enhance business reputation and performance

  • Receiving a return on their investment

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managers interest

  • Being recognised for the achievement of business objectives

  • receiving appropriate wages and working conditions to reflect their managerial role

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Employees interest

  • Receiving fair pay and working conditions

  • Opportunities to engage in personal and professional development (receive promotions)

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Customers interest

Receiving high-quality goods and services at affordable prices

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Suppliers interest

Earning a profit from the raw materials and resources they supply

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General community

  • Observing business activities that lead to improvements in the community and environment

  • increasing local employment rate and boosting the local economy

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Stakeholder conflict

When different stakeholder groups have different aims and objectives, which can be difficult for a business to satisfy at the same time.

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Economic wellbeing

is reflected by the level of income, consumption, and wealth people or households have to support their material living standards

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Economy

an area or region that engages in the production, consumption, and distribution of goods and services.

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Economic wellbeing contributions

Employment opportunities, taxation revenue, infrastructure, economic growth, international trade, research and development

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