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1.5 Entrepreneurs and Leaders - Coggle Diagram
1.5 Entrepreneurs and Leaders
1.5.3 Business objectives
Survival - To ensure and keep the continuing existence of the business
Profit maximisation - Producing the highest level of output possible for the business to make as much profit as possible
Sales maximisation - Where achieving the highest possible sales revenue figure is the most important
Market share - Where the business aims to catch as many customers as possible with plans to improve profits later
Employee welfare - Where the business prioritises the welfare of it's employees at work
Customer satisfaction - Where the customers' needs and wants are met as much as possible
Social objectives - Where the business tries to implement the best possible impact on the environment
1.5.2 Entrepreneurial motives and characteristics
Entrepreneurial motives
These are the reasons that drive people to set up a business. One type of motive could be profit maximisation
Satisficing - The motive is to make sufficient and sustainable profits to satisfy the entrepreneur
Ethical stance - Starting a business with the intention of helping others
Social entrepreneurship - The motive is to create a sustainable, profit-making business that also helps the community
Independence and home working - The entrepreneur wants more freedom to work when and where they please to fit around their life schedule
Entrepreneurial characteristics
These are personality traits and skills which an entrepreneur needs to have in order to start a business
E.G risk-taking, creativity, resilience, self-confidence and determination
1.5.1 Role of an entrepreneur
Creating and setting up a business
An entrepreneur creates and sets up a business, which involves having an idea come from the observation of a market where they believe there's a gap, or a service is lacking
Business plan - A forecast of business operations including cash flow forecasting or a statement of business objectives
Running and expanding a business
Innovation within a business comes from not only the entrepreneur but also from the stakeholders coming from within and outside the business
Intrapreneur - someone within the business that takes risks in an effort to solve an issue or problem, leading to people discovering new business opportunities
Barriers to entrepreneurship
Financial barriers - If the business cannot be started due to a lack of money and funding. This could be solves by crowdfunding, or business angels
Competition barriers - High and well established businesses make it extremely hard for new rivals to enter a sector
Cultural barriers - Entrepreneurial skills are more and more admired in the modern-era rather than those starting their own businesses
1.5.4 Forms of business
The forms of business
A Sole Trader - This is a business with a single owner, and the entrepreneur makes all the decisions and keeps all the profits. However, they hold unlimited liability so are responsible for any debts and risks/losses
An Ltd (Private limited company) - A business with a separate legal identity to the entrepreneur and has limited liability. They can only sell shares to people within the business and are not accessible to the public
Franchising - An agreement where a particular business (franchisor) sells the rights to other businesses (franchisee) allowing them to sell the products and use the name for a percentage of revenue generated
Social enterprise - A business whose aim is to reinvest profits in the business rather than being driven to maximise profits for stakeholders
Lifestyle businesses - Set up and run by the entrepreneur with the aim of creating an enjoyable and prestigious position, leaving profit as a secondary consideration
Online businesses - Set up to be run through the internet and can adopt any of the approaches above on how to be run. Low start-up costs and have larger access to a physical business
Growth to a PLC
A PLC is a business which enables it's stocks and shares to be bought by anyone on the stock market
They can sell many shares as they like and can grow quickly, but the more shares they sell the more diluted the owner will feel as they will have less control on the business operations
Business choices
Opportunity cost - Measures the cost of any choice in terms of the next best forgone
Trade-offs - These occur when having more of one thing could result in having less of another. Businesses use these to ensure that limited resources are used in the most efficient way
1.5.5 Moving from entrepreneur to leader
Moving from control to delegation - As the business increases in size, entrepreneurs must learn and know how to delegate tasks and authority to other employees and bosses in the business to increase efficiency and reduce stress levels
Moving to a more processed-based method of decision making - The business increasing means the size of risks are increasing too. A leader needs to ensure that senior staff understand why things are happening