| Question | Answer |
| Entrepreneur | A person who spots an opportunity and shows initiative and a willingness to take risks in order to benefit from the potential rewards |
| Creating and setting up a business will involve a number of steps. These are ....... | Generating an idea/Asking if the idea can add value/Conducting market research/Drawing up a business plan/Deciding on legal structure/Raising finance |
| What is the purpose of a business plan? | To secure external funding
To ensure that the firm develops a healthy financial structure
To help identify problem areas that the business might face
To provide realistic expectations of what can be achieved |
| Running and expanding/developing a business is part of a entrepreneurs role. What does this entail? | Managing resources including stocks, personnel and finances
Making marketing decisions about aspects of the marketing mix such as what price to charge and how to promote the business
Dealing with customers
Maintaining financial records |
| As the business grows the entrepreneur may need to change roles. Explain how the role changes? | The entrepreneur will - Employ staff/Use the services of experts e.g. an accountant/ Delegate responsibility to others |
| Intrapreneurship | The name given to the encouragement of entrepreneurial behaviour within a large business |
| What are the barriers to entrepreneurship? | Not everyone wants to be an entrepreneur – comfortable working for others/Lack of access to finance/Knowledge and know how/Risk-averse/Lack confidence/Limited skills |
| How can risks can be anticipated by entrepreneurs? | Market research, Understanding of the industry and Business plans |
| What can entrepreneurs do about uncertainties? | Keep up to date with current business climate e.g. economic and political changes, Make plans for unexpected events (contingency plans) and spread risk e.g. a number of products or suppliers |
| What are the risks of becoming an entrepreneur? | Financial - Money Invested/Salary foregone
Esteem- Fear of failure/Proving self
Commitment - Time and effort/Loss of personal/social time |
| What are the rewards of being an entrepreneur? | Profit motive - Return on Investment/Future security
Being own boss - Taking decisions/Not taking orders!
Self actualisation - Self satisfaction/Achievement |
| What are the characteristics of an entrepreneur? | Show initiative
Risk taker
Positive thinker
Hard working
Self motivated
Decision maker
Visionary
Enthusiastic
Determined and persistent |
| What skill are required to be an entrepreneur? | Communication
Literacy
Numeracy
Information technology
Organisation
Problem solving
Team working |
| Why do people set up Businesses? | Financial Motives (Profit maximisation/Profit Satisficing)
Non Financial Motives (Independence/Homeworking/Ethical Stance) |
| What is Profit Satisficing? | To make enough profit to be satisfied but not be purely motivated by profit
Make profit to satisfy and maintain a work life balance
Making enough profit to keep shareholders happy |
| What is Profit Maximisation | To make as much profit as possible |
| What is Social Entrepreneurship? | Motivated by supporting a cause rather than making a profit
Any surplus revenue earned is used to further support the cause e.g. support the community or fund research |
| Some people open a business for non financial motives such as ethical stance. What is ethical stance? | To behave in a manner deemed to be morally correct
Provide a good or service that meets ethical beliefs e.g. cosmetics not tested on animals or clothes made from fair trade cotton |
| What is a leader? | A leader is a person that can inspire others and motivate them to meet objectives |
| What are the difficulties in developing from an entrepreneur to a leader | 1.Reluctance to hand over control making it difficult to delegate
2. Loss of autonomy in decision making
3. Learning to trust others and not feel a need to constantly oversee everything or micro manage |
| What is a Mission Statement? | |
| What is a corporate objective? | An Corporate objective is the medium to long term quantifiable targets to fulfil the mission statement. |
| What is a corporate aim? | An Corporate aim is the long term targets and plans to fulfil the mission statement. |
| State four aims for a business | Increasing market share and sales
Developing a skilled workforce
Offering charitable and non-profit making services
Survival |
| What is a trade off? | A trade off is the act of choosing one thing over another |
| What is opportunity cost? | Opportunity cost can be defined as the benefit/cost lost of the next best alternative when making a choice |
| What is a sole trader? | A sole trader is a business that is owned by one person
It may have one or more employees
The most common form of ownership in the UK
May have to sell own possessions to pay creditors |
| What is a partnership? | Ownership of business shared between partners
Most partnerships have between two and twenty members (can be up to 100 e.g. accountants)
Unlimited Liability (may have to sell own possessions to pay off debts) |
| What is a Limited Company | Business owned by shareholders
Run by directors (who may also be shareholders)
Liability is limited (important because own possessions will not have to be sold to pay off debts) |
| What are the difference between a Private Limited Company (Ltd) and a Public Limited Company (PLC)? | Shares in a plc can be traded on Stock Exchange and can be bought by members of general public
Shares in a private limited company are not available to general public
Issued share capital must be greater than £50,000 in a plc |
| What is a Public Sector Organisation? | Publicly-owned organisations
Provide goods and services to the public at national and local government local levels
Organisations owned and controlled by the government/local authority
Examples include the NHS and the Armed Forces |
| What is privatisation? | Sale of public sector organisations to private investors
Privatisation occurred because state run (public sector) firms perceived to be inefficient
Public Sector Companies were a financial burden on government (i.e. made losses – e.g. British Rail) |
| What is primary production? | This involves acquiring raw materials. For example, metals and coal have to be mined, oil drilled from the ground, rubber tapped from trees, foodstuffs farmed and fish trawled. This is sometimes known as extractive production. |
| What is secondary production? | This is the manufacturing and assembly process. It involves converting raw materials into components, for example, making plastics from oil. It also involves assembling the product, eg building houses, bridges and roads |
| What is tertiary production? | This refers to the commercial services that support the production and distribution process, e.g. insurance, transport, advertising, warehousing and other services such as teaching and health care. |
| What is a franchise? | A franchise is when one business, the franchisor, gives another business, the franchisee, permission to trade using the franchisors name and selling the franchisors goods or services |
| What is a franchisor? | A franchisor is a business that sells a licence giving permission to another business to trade using its name or goods/services |
| What are the benefits of franchising for the franchisee? | Lower risk
Established product
Experienced firm
Brand awareness
Proven operation
Assistance (training/marketing/finance/advertising) |
| What are the drawbacks of franchising for the franchisee? | Lack of control (You have to follow the rules/You cannot sell without the franchisor’s permission/You must buy supplies from the franchisor)
Higher than expected costs e.g. start-up, royalties, supplies and franchise renewals can be expensive |
| What stock market flotation? | As a business grows it may wish to change business form from an Ltd to a Plc
Shares can be sold to the public via a stock exchange
The process of becoming a Plc is called floatation (The business floats itself on the stock market) |
| What is a lifestyle business? | Life style business are when entrepreneurs run a business to suit and meet the needs of their own life styles e.g. parents working and bringing up a family |
| What is a social enterprise? | A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. |
