In this lecture notes you will find in depth notes for the topic "Entrepreneurial motives and characteristics" Theme 1 of Edexcel A level business which is called marketing and people.The textbook "Edexcel AS/A level BUSINESS, 5th edition, Pearson" is referenced in these lecture notes. They are re...
LESSON 19
.Entrepreneurial motives and characteristics
.Reasons why people set up businesses
Motives fall into two categories:
Financial motives:
people set up a business because they want to make money, profit is the driving force. We
have two approaches to the pursuit of profit:
- Profit maximization: some entrepreneurs try to make as much profit as they possibly
can in a given time period. Entrepreneurs that try to maximize profits are likely to take
bigger risks
- Profit satisficing: they may aim to make enough profit to maintain their interest in the
business. They do not want to take extra responsibility.
Some entrepreneurs run “lifestyle” businesses which means that a business
generates enough profit to provide the flexibility needed to sustain a particular
lifestyle.
Non-financial motives:
Other motives for setting up a business may not involve making money.
- Ethical stance: a minority of people set up a business in support of moral belief they
possess (vegetarian set up a vegetarian restaurants)
- Social enterprise: these are organisations that trade with the aim of improving human
and environmental well-being. These are also referred to as not-for-profit
organisations. They generate most of their income through trade or donations
(fairtrade).
- Independence: a lot of people want to be their own boss, so they are driven by the
desire to be independent.
- Home working: some people set up their own business from home. The two benefits
are that the time and expense spent travelling to and from work is eliminated and
there is more flexibility (can take break and meals whenever they want and a parent
can fit work around the needs of their children.
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