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Pearson Edexcel Business Studies Theme 1 summary notes
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1.5 Entrepreneurs & leaders1.5.1 Role of an entrepreneur
Business - organisation exists to provides goods/services on a commercial basis to customers
Enterprise -skills & abilities to take risks & create profits, creation of business to meet customer needs/wants
Entrepreneur - organises, operates & takes risk in starting new business (with view to profit/award)
Start up - new business enterprise, formed by one of more entrepreneurs
Role of an Entrepreneur
Create & set up business – calculated risks, spot business opportunities, (lead &) make decisions
Run & expand/develop business – risks to grow
Innovation within business (intrapreneurship) – catalyst for creation
Anticipating risk & uncertainty in business environment – risk tolerant
Stages of setting up a business
1. Idea/concept
2. Research - market, product/service, competitors, customer needs/desires – primary & secondary
3. Plan - resource, finance, costs, staffing, forecasts, advertisement, licensing
4. Financing - loan/overdraft, crowd funding, investment from 3rd parties, own money/savings
5. Location - physical premises - rent or buy, or online (e-commerce)
6. Resources – raw materials, product, staff, equipment, legal
7. Launch – pr, marketing, awareness
Where ideas from?
Personal experience - day-to-day activities, interests & jobbies, bad experiences
Observations - watching customers closely, look for poor customer service
Skills - recognise/develop your skills and using them in business
Lifestyle choices - change in location/pace/style of living
Business experience - knows what works, more realistic business plan, less need for market research
Successful?
Financial management - cash flow, forecasts, banking, accounts, profit & loss
Administration - record keeping - pay taxes, suppliers, shareholders, staff, auditors, sales, costs - organised
paperwork
Marketing - sales, advertising, customer relationships
Purchasing - test cost for suppliers
Managing people & recruitment
Production
Barriers in entrepreneurship
Lack of finance – capital, lack of cheap labour & investment
Lack of experience/knowledge/skills/idea
Discrimination - gender & race
Legal - employment, insurance, health & safety, patents & intellectual property, red tape
Fear of failure - aversion to risk
Overcrowded market - competition, barriers to entry
Political – unstable, corruption
Expanding
Research & plan
Financial backing
More resources / materials / equipment – invest, employ more
Location?
Marketing & branding
New products / services
Tender for contracts
, Intrapreneurship - within business creating new opportunities - new parts of business or new business Origins
1985 - Steve Jobs - Macintosh team went back to garage inside of business
Encouraging Intrapreneurship
Give workers allocated time not do usual work, instead be creative, come up new ideas
Pay extra / more perks to ppl w good new ideas - let have ownership of project
Hire people thinking set up own business but instead bring into business
Encourage discussion/collaboration
Trust & respect - accept failure & risk taking
Training
Risk - probability that things won’t go as planned, can plan
Chance money invested is lost
Possibility entrepreneur personally liable for debts – liability
May not get another job or face stigma of failure
Dealing with risk Reducing risk
Take calculated risks rather than gamble Detailed research
Spread risk - diversifying (don’t put all eggs in one basket) Detailed plans
Look for higher returns to take account of risks Analysing external influences
Keep going despite adversity - persistence is key Contingency plans
Uncertainty – unable to predict external shocks or future events
Inflation, exchange rates, Interest rates & other external
1.5.2 Entrepreneurial motives & characteristics
Entrepreneur Characteristics - Personality traits needed to be successful entrepreneur
Determination, persistence, passionate & resilient
Leadership Skills – can be learnt
Innovative Organisation
Growth mindset – ambition, initiative Financial management
Energetic Communication
Decisive, self-starter Negotiating
Calculated risk-taker
Focused, committed
Results-orientated
Drawbacks of Entrepreneurship
Occasional loneliness & isolation
Can’t blame others when things go wrong
Financial pressure
Hard work - multi-tasking
Strain on family & social life
Higher stress levels
Difficult to have a sick day
Roller-coaster of emotions
Entrepreneurial motives – reasons/factors for becoming entrepreneur & starting business
Financial Motives
Profit Maximisation Profit Satisficing
Desire/motivation earn substantial rewards Sufficient profit - satisfactory standard of living
Long-term profit maximisation consistent with Take fewer risks
building valuable business Trade-off is lower returns
Initially, may accept losses as business established Associated with 'lifestyle' business
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