Unit 1: Starting a Business

Entrepreneur Definition: An individual who identifies a business opportunity, possesses the vision and drive to organize resources, and accepts the risk of setting up a new venture.
Motivations for Starting a Business: Spotting a "gap in the market", the desire to be one's "own boss", pursuing a personal interest/hobby, or seeking higher earnings than traditional employment.
Key Characteristics: Creativity, decision-making, leadership, planning skills, self-confidence, initiative, and determination to overcome setbacks.

Nature of Risks: Losing invested finance (potential bankruptcy), wasting time on unsuccessful ideas, and enduring personal stress from long working hours.
Nature of Rewards: High profit margins, global fame (e.g., Lord Sugar, Donald Trump, Richard Branson), personal satisfaction, and professional independence.
Government Role: The government encourages enterprise to increase employment, generate tax revenue, and foster market competition/efficiency which benefits consumers.

Land: Natural resources (e.g., oil, gas, water, minerals); the provider is a Landlord, and the reward is Rent.
Labour: Human resources (physical or mental); the provider is an Employee, and the reward is Wages and salaries.
Capital: Wealth used to create further wealth (e.g., machinery, buildings); the provider is a Capitalist, and the reward is Interest/Dividends.
Enterprise: The management and organization of resources; provided by an Entrepreneur, and the reward is Profit.

Stages of Starting: Developing a product model, conducting market research on competitors and price points, creating a "business plan", and securing finance (e.g., bank loans or personal savings).
Size by Staff and Turnover: - Micro: 1 to 9 staff, turnover less than $£1.7m$ . (Represents 95% of United Kingdom businesses). - Small: 10 to 49 staff, turnover less than $£5.6m$ . - Medium: 50 to 249 staff, turnover less than $£22.8m$ . - Large: More than 249 staff, turnover greater than $£22.8m$ .

Sole Trader: Single owner with complete control and all profits, but suffers from Unlimited Liability (personal assets are at risk for business debts).
Partnership: 2 to 20 owners (partners) who share expertise and capital. Governed by a "Deed of Partnership"; partners typically have unlimited liability.
Franchise: A franchisee pays "royalties" to a franchisor for the rights to use an established brand name and business model.
Private Limited Company (Ltd): Owned by a small group (family/friends); shares are not sold to the public. Offers Limited Liability.
Public Limited Company (plc): Large organizations (e.g., Tesco) where shares are traded publicly on the Stock Exchange. Offers limited liability but carries a risk of takeover.

Incorporation Documents: Includes the "Memorandum of Association" (external details) and "Articles of Association" (internal rules). Upon approval, a "Certificate of Incorporation" is issued.
Public Offerings: A plc must issue a Prospectus to investors and obtain a Trading Certificate before commencing business.
Hierarchy of Control: Shareholders own the company (seeking profit), the Board of Directors controls strategy, Managers handle day-to-day operations, and Employees perform the work.