Entrepreneur, Role and Characteristics, Challenges, Reasons of failure and Impact on country's economy

ROLE OF ENTREPRENEUR

·         An entrepreneur is one who has;

·         A new and unique idea for a new business

·         Invests some of its own investments and savings

·         Accepts the responsibility of management

·         Accepts the possible risk of failure

CHARACTERISTICS OF A SUCCESSFUL ENTREPRENEUR

·         Innovation

·         Commitment and self-motivation

·         Multi-skilled

·         Leadership skills

·         Self-confidence and ability to bounce back

·         Risk taking

MAJOR CHALLENGE FACED BY ENTREPRENEUR

Identifying successful business opportunity

A new idea can come from;

·         Own skills or hobbies

·         Previous employment skills

·         Franchising conferences and exhibitions

·         Small budget market research

 Sourcing capital (finance)

·         This tops in the difficulty level for entrepreneurs

·         Lack of sufficient own finance

·         Lack of awareness of financial support and grants available

·         Lack of keeping accounts

·         A poorly produced business plan

Determining a location

·         A good location costs more

·         It increases overhead expenses

·         Chances of success increase but break-even level increases too

Operating from home is the most common way but has following drawbacks

·         It is away from main business areas

·         It lacks status

·         It may cause family tension

·         It is difficult to separate personal and professional life

Competition

Unless the business idea is unique they have to face a very fierce full competition

Building a customer base

This can be done by

·         Providing personal customer care

·         Knowledgeable pre and after sales service

·         Providing one off customer requests that larger firms may be reluctant to provide

REASONS FOR FAILURES

Lack of record keeping

Lack of cash and working capital

They should

·         Construct a cash flow

·         Inject sufficient capital

·         Establish good relations with banks

·         Use effective credit control over customers’ account

Poor management skills

This mainly includes

·         Leadership skills

·         Cash handling and cash management skills

·         Planning and coordination skills

·         Decision making skills

·         Communication skills

·         Marketing, promotion and selling skills

Changes in the business environment

This may turn a venture from a successful one to a loss making enterprise

·         New competitors

·         Legal changes

·         Economic changes

·         Technological changes

COMMON TYPE OF ENTREPRENEURIAL BUSINESSES

·         Primary sector

Fishing, gardening etc

·         Secondary sector

Jewellery making, dress making,

·         Services sector

Hairdressing, car repairs, restaurants

IMPACT OF ENTERPRISE ON COUNTRY’S ECONOMY

·         Employment creation

·         Economic growth

·         Firm’ survival and growth

·         Innovation and technological changes

·         Exports

·         Personal development

·         Increased social cohesion

Adding Value, Opportunity Cost

CONCEPT OF ADDING OR CREATING VALUE

·         All business aim to create value

·         From the value created by business other costs have to be paid including wages, overhead expenses etc so value created by a business is not the same as profit

·         If a business can increase in value without increasing the expenses then it tends to make a profit

CREATING VALUE: increasing the difference between the cost of purchasing bough – in material and price of finished goods are sold for

ADDING VALUE: the difference between the cost of purchasing bought – in materials and the price of finished goods are sold for

EXAMPLES OF ADDING VALUE

JEWELERS – well designed shop, attractive shop fittings, well-dressed and knowledgeable staff, beautiful boxes

SWEET MANUFACTURER – extensive advertising of brand, attractive packing

ECONOMIC ACTIVITY AND PROBLEMS OF CHOICE

·         Resources are limited

·         Wants and needs are unlimited

·         So a choice has to be made with limited resources to meet needs and wants

OPPORTUNITY COST: the benefit of the next most desired option which is given up

Business Studies A Levels Unit 1 Chapter 1 Topic Factors of Production

ACTIVITY OF A BUSINESS

A business

·         Identifies needs of a consumer or other firms

·         Purchases resources or factors of production

·         And produces goods or services that satisfy these needs

·         With aim of making a profit

CONSUMER GOODS:      are the tangible goods sold to the general public

CONSUMER SERVICES: are the intangible products sold to the general public

FACTORS OF PRODUCTION OR RESOURCES

·         Land; in addition to land all renewable and non-renewable resources of nature

·         Labor; manual, skilled, highly skilled labor, permanent, temporary

·         Capital; finance and capital goods like machines, computers, offices, vehicles

·         Enterprise; risk taking individuals, decision makers, coordinators

CAPITAL GOODS: are the physical goods used by industry to aid the production of other goods and services