Theme 1 - 1.5

• Entrepreneur


  Person who sets up business and takes risks in the hope of a profit or reward
• Creating and setting up a business

  1. Market research

  2. Start small with selling

  3. Draw up a business plan

  4. Grow the business
• Setting up a business online


  Easier as there is less costs
• Sole trader


  Need to register as self employed
• Running and expanding a business

  1. Day-to-day activities

  2. Completing finance

  3. Buying stock

  4. Listing for sale

  5. Contacting customers

  6. Chasing payments
• Ways to expand a business

  • Open in another location
  • Offer business as a franchise opportunity
  • License products
  • Target other markets
  • Form a merger
• Intrapreneurship


  Employee within a larger business who thinks like an entrepreneur
• Barriers to entrepreneurship


  • Entrepreneurial capability
  • Access to finance
  • Lack of knowledge and know-how
  • Fear of failure
  • Lack confidence
• Entrepreneurial capability


  • Skills that can be learnt
• Access to finance


  • Many fail due to improper funding, along with banks unwilling to lend
• Lack of knowledge and know-how


  • Many are cautious to start a business due to lack of training, there are places to find information
• Fear of failure


  • Or cost of failure, fear of giving up a regular salaried job
• Lack confidence


  • This can be overcome by training or making the first sale
• Risks in the business environment


  • Financial risks
  • Lack of security
  • Uncertainty
• Financial risks


  Owners may put their own assets and cash into the business, small businesses have unlimited liability
• Lack of security


  Leaving a regular salaried job, people may have mortgages or other bills to pay for, insecurity of sales with falling customer income
• Uncertainty


  Unable to predict external shocks, price of raw materials, exchange rates and interest rates all impact the uncertainty
• Entrepreneurial characteristics


  • Creativity
  • Hard working
  • Resilience
  • Initiative
  • Self confidence
  • Risk taking
• Entrepreneurial skills


  • Communication
  • Team working
  • Problem solving
  • Organisation
  • Numeracy
  • IT skills
• Financial motives for setting up a business


  • Profit maximisation
  • Profit satisfaction
• Non-financial motives for setting up a business


  • Independence
  • Flexibility
  • Ethical reasons
  • Social purpose
  • Personal challenges
• SMART business objectives


  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Timely
• Business objectives


  • Survival
  • Profit maximisation
  • Sales maximisation
  • Market share
  • Cost efficiency
  • Employee welfare
  • Customer satisfaction
  • Social objectives
• Sole trader


  Owned by one person, easy to set up, don't have to make information public, unlimited liability, can't use economies of scale
• Partnership


  Two or more people own a business and share the risks, easier to raise capital, range of skills, unlimited liability, conflict can occur
• Private limited company (Ltd)


  Sole traders may want to expand, limited liability, can raise extra capital by selling shares, accounts have to be made public, can't sell shares on stock exchange market
• Franchise


  'Business in a box', franchisor decides on monthly royalties, franchisee gets free training and management advice from franchisor, franchisees don't have full freedom, franchisee has to pay a % of profit of royalties
• Social enterprise


  Help society but doesn't rely on public donations
• Lifestyle business


  A hobby which has enough interest in it to become profitable
• Online business


  Easy to set up, 24/7 access, easy to manage and reduced cost
• Growth to a plc and stock market floatation

  Ltd will be unable to expand with current investors, to become a plc the business will need to provide a prospectus for future investors, expenses include publications, adverts and admin, lawyers to draw up legal paperwork
• Opportunity cost


  Measured as the cost of foregoing the next best alternative
• Trade-offs


  Less of one is exchanged for more of another
• Difficulties in moving from entrepreneur to leader


  • Learning to delegate
  • Trusting others
  • Listening to others
  • Less reactive
  • Emotional intelligence