1.5.1 role of an entrepreneur

• entrepreneur

  business people who see opportunities and are willing to take risks in making them happen
• creating and setting up business

  is the initial idea and risk involved in beginning a business

  1. market research, find what customers want
  2. testing sales
  3. draw up a business plan
  4. grow the business
• running a business

  daily:

  • includes completing finances, buying stock, listing stock for sale, contacting customers and chasing payment
  • problems that may arise include over-estimating demand, lack of finance and bad recruiting
• lots of ways an entrepreneur can expand a business

  • open another location
  • offer the business as a franchise or business opportunity
  • license your product
  • diversify
  • target other markets
  • merge with or acquire another business
• licensing

  obligates a firm to provide it technology (copyright, trademark names) in exchange of fee or specific benefits
• franchising

  obligates a firm to provide specialised sales or service strategy, support assistance and possibly an initial investment in the exchange for periodic fees
• problems with expanding a business

  • what works in one place may nor work in another location
  • difficult to raise sufficient finance
  • difficult to recruit people up to the standard expected
• innovation in business (intrapreneurship)

  an employee within a larger business who thinks like an entrepreneur

  • takes risks
  • creative or innovative
  • solves problems
  • focuses on process to improve productivity
• barriers to entrepreneurship include

  1. access to finance: banks may be unwillingly to lend a business with no financial history
  2. lack of training/knowhow: running a business if very different to working for one
  3. fear of failure
• difference between risk and uncertainty

  entrepreneurs have some control over risk

  • they are aware of risks and do what they can to minimise this

  uncertainty is when the businesses are unable to predict external shocks or future events
• financial risks

  • starting a business can be a financial risk for owner
  • owner may out own cash and other assets to business
  • unlimited liability
• lack of security

  • may have no mortgage, car, other bills to pay reliant on them making a successful business
  • may also be insecurity of sales with falling customer incomes
• how to limit risks

  • market research
  • consultant-seeking advice