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EnterpriseUnit 1: Investigating Business

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What is the meaning of the terms enterprise and entrepreneur?

What are the main reasons for setting up a business?

What are the key characteristics required to become a successful entrepreneur?

Why do businesses fail?

How can the risk of failure be reduced?

Why is enterprise important to the economy and what are the main sources of government support?

Learning objectives

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Entrepreneurs and enterprise

Entrepreneur is a term we hear often, but what do entrepreneurs do?

Why do people set up their own businesses, rather than work for another firm?

Some people set up a business on their own after being employed by another company, whereas others might start a new business as soon as they leave school or college.

Entrepreneurial activity is called enterprise; being an entrepreneur is about having the desire and skills to set up a business.

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Entrepreneurial skills

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Financial start-up objectives

Entrepreneurs will have a number of financial objectives when starting up a new business.

Business objectives are more effective when they are SMART. What does this mean?

Objectives are targets to achieve. Setting clear business objectives improves the likelihood of a business’s success.

to break evento generate a certain level of profitto achieve a target market share.

These may include:

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Non-financial start-up objectives

A social enterprise is set up to benefit the community using business methods. It aims to make a profit in order to finance the achievement of its social or environmental goals.

People may start up businesses for non-financial reasons.

to pursue a hobby or personal interestto have contact with other peopleto do something challengingto achieve a social or environmental aim.

What social goals might a business have?

These could include:

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Benefits of starting up a business

What other benefits are there of owning a business?

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Disadvantages of starting a business

having to acquire all of the skills necessary to run a business such as book-keeping, knowledge of consumers and employment law

having to take full responsibility for decision-making

Starting up and running a successful business is not easy, some of the most common problems encountered include:

having to work long hours, perhaps over the weekend, and taking few holidays

having to accept a much lower income, or even none at all, until the business begins to make a profit.

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Taking calculated risks

Businesses face risks at all times, but the riskiest stage is usually at start-up. Around one third of all new businesses fail within the first three years.

Why is it impossible to avoid taking risks when running your own business?

Entrepreneurs have to take decisions that not only risk their own money and reputations but also those of others, such as other investors and lenders.

Taking a calculated risk involves weighing up the potential negative consequences of a decision with the rewards that could occur if the decision is a good one.

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True or false?