Enterprise and Entrepreneurship
Subject: Business Studies
Topic: 1
Cambridge Code: 0264 / 0450 / 7115
Enterprise
Enterprise - Ability to identify business opportunities and create/develop businesses
Characteristics of Entrepreneurs
- Willing to risk money
- Creative and innovative
- Self-motivated
- Hard-working
- Risk-taking
- Problem-solving
- Vision for business
Business Ownership
Sole Trader
- One owner
- Simplest form
- Owner liable for debts
- All profit to owner
- Easy to set up
Partnership
- Two or more owners
- Shared responsibility
- Shared profits
- Joint liability
- Partnership deed
Private Limited Company (Ltd)
- Limited liability
- Shares not sold publicly
- Share transfer restricted
- More complex
Public Limited Company (PLC)
- Shares traded publicly
- Larger capital available
- Limited liability
- Regulated heavily
- Professional management
Business Objectives
Primary Objectives
Profit Maximization - Highest possible profit
Survival - For new businesses, stay operational
Growth - Increase market share, revenue
Secondary Objectives
- Market share increase
- Stakeholder satisfaction
- Social responsibility
- Environmental protection
Business Identification
Market Gaps
- Unmet customer needs
- New market segments
- Seasonal demand
- Quality improvements
- New technology applications
Identifying Opportunities
- Market research
- Customer feedback
- Trend analysis
- Competitor analysis
- Problem-solving
Business Planning
Business Plan - Document outlining business strategy
Components
- Executive Summary - Brief overview
- Business Description - What business does
- Market Analysis - Industry, competition, customers
- Marketing Strategy - How to attract customers
- Financial Projections - Revenue, costs, profit
- Operations Plan - Daily operations
- Management Structure - Who runs business
Importance
- Bank lending decisions
- Investor confidence
- Internal guidance
- Strategic planning
- Risk identification
Feasibility Study
Feasibility Study - Investigation of viability
Aspects
Technical Feasibility:
- Can technology/methods work?
- Available equipment/skills
Market Feasibility:
- Market demand exists?
- Sufficient customer base
- Sustainable demand
Financial Feasibility:
- Affordable?
- Sufficient funding?
- Profitable?
Legal/Social Feasibility:
- Legal requirements?
- Social acceptance?
- Environmental impact?
Start-Up Costs
Initial Investment Needed:
- Land and buildings
- Equipment and machinery
- Stock/inventory
- Technology systems
- Legal fees and licenses
- Working capital
Business Risks
Market Risk
- Demand decreases
- Competition increases
- Customer preferences change
Financial Risk
- Cash flow problems
- Inability to raise funds
- Cost increases
Operational Risk
- Equipment breakdown
- Supply chain disruption
- Key employee loss
Strategic Risk
- Poor decisions
- Slow market adaptation
- Technology changes
Key Points
- Entrepreneurs identify opportunities
- Different ownership forms (sole trader, partnership, company)
- Clear business objectives needed
- Business plan guides operations
- Feasibility study assesses viability
- Start-up costs require careful planning
Practice Questions
- Compare sole trader and partnership ownership
- Identify business opportunity in your area
- Create simple business plan outline
- List start-up costs for specific business
- Analyze risks for proposed business
- Evaluate entrepreneurial characteristics
Revision Tips
- Know ownership structure pros/cons
- Understand business objectives
- Learn business plan components
- Know feasibility study elements
- Identify potential business ideas
- Analyze business risks