Golspie High School. Business Management National 4/5. Understanding Business 2 The Entrepreneur & Business Plans Pupil Notes

Transcription

1 Golspie High School Business Management National 4/5 2 The Entrepreneur & Business Plans Pupil Notes

2 The Entrepreneur There are many different business organisations in the UK today. All of them have one thing in common - they were started by a person who had an idea for a business. This person is called an ENTREPRENEUR. An entrepreneur has an idea for a new product or service and develops it once they know that people will buy it. They combine the other factors of production land, labour and capital to produce the good or provide a service usually with a view to earning a profit. This is called ENTERPRISE. An entrepreneur is someone who has a good BUSINESS idea and is prepared to take the risk of investing their money to develop the idea. Most entrepreneurs start as a small business and are responsible for all aspects of managing it. However, as the business grows, the role of the entrepreneur may alter as he/she will then have to employ workers and managers and delegate work for them to carry out. They are risk takers, they can stand to lose everything if the idea doesn t work. Most well known entrepreneurs are people who have started their own businesses from scratch like Sir Tom Farmer and Kwik-Fit, Duncan Bannatynes and Bannatynes Health Clubs, Michelle Mone and MJM International. 2 The Entrepreneur & Business Planning 24 June 2015 Page 2

3 Enterprise Skills An entrepreneur must: have good leadership skills being able to lead and motivate his/her workers to achieve the dream! To give confidence to others have financial skills so that he/she can avoid overspending have decision-making skills deciding which product to produce, best methods of raising finance, what price to charge customers and which staff to hire; have creativity to be able to come up with an idea be able to rise to the challenge doesn t give up easily finds solutions to overcome problems have problem solving skills to make sure the business survives have motivational skills to keep staff on board have communication skills to build good relationships with customers, and enable them to communicate with suppliers and staff have sales/marketing skills to sell product/service successfully have good organisational skills so time is not wasted have management skills so the business survives have planning skills to reduce the risk of failure Qualities of an Entrepreneur Enthusiasm keeps customers and staff happy Charisma people attracted to Risk taker willing to take a chance, risking their own money to invest in the idea Persuasion can get help to support ideas Determination never giving up Confidence inspires others to have confidence in the idea Enterprising coming up with good ideas Drive, persistence, creativity and imagination 2 The Entrepreneur & Business Planning 24 June 2015 Page 3

4 Getting Ideas for Starting Up in Business Developing a hobby instead of baking for family and friends only they sell to local tea shops Listening to people and finding out what they want finding out that elderly people in the area want a meals on wheels service and starting up this service Finding out what firms do badly and improving it a poor bus service is provided, so starting up a new service offering new routes to serve local areas Spotting a gap in the market (eg something which no one else is providing) starting up a home delivery service for fresh locally grown vegetables Solving problems for people providing pet care for people going on holiday Inventing something Mixing 2 ideas together having a coffee shop inside a garden centre Looking out for opportunities selling hot drinks and food at big sports events Reasons for Starting a Business To be their own boss To make money They may have been made redundant they use this money to set up business They have an idea for a new product/service They don t like their present job They are skilled workers who can t find a job so decide to set up on their own They may have a hobby which eventually grows into a business To provide a public service Because they see a demand They see a gap in the market 2 The Entrepreneur & Business Planning 24 June 2015 Page 4

5 Gaps in the Market Spotting a gap in the market means that you have come up with an idea for a product or service which is not being offered by another company and is not already available in the market place. It may be developing a hobby they enjoy or using a special skill or talent they have to come up with a new business product. Spotting a GAP in the market is a classic key success factor in business! If an entrepreneur moves quickly to get a product on the market before anyone else, then the financial rewards can be great as customers have to buy from you as there are no other products available to them. The gap in the market might be providing a product or service in a completely different way. LoveFilm rents DVDs, but they captured the market by sending them through the post rather than following the videoshop model, adding convenience and a huge list to choose from. Moonpig did exactly the same with greeting cards. 2 The Entrepreneur & Business Planning 24 June 2015 Page 5

6 THE BUSINESS PLAN If we fail to plan, we plan to fail! So what is the key to success??? If you are keen to convince others where you are going with your business ideas, you must tell them how you are going to get there! You will need to prepare a Business Plan. This is used: 1 When starting out in business for the first time. 2 To show potential investors (eg banks) 3 When planning for expansion A Business Plan is a document which states the objectives of a business and how it intends to achieve them. It can also be used to compare the aims set against the actual performance and targets achieved. This is normally used to convince an investor or bank to lend the owner money to start the business. Many businesses fail because the: product does not sell owner has borrowed too much money business fails to make anticipated profits To help reduce the risks attached to running a business an owner can: carry out market research to find out what the customers want calculate all costs carefully get advice from experts (eg banks) prepare a Business Plan 2 The Entrepreneur & Business Planning 24 June 2015 Page 6

7 A business plan must contain essential information: BUSINESS DETAILS PERSONNEL PRODUCT INFO MARKETING OPERATIONS FINANCE PERFORMANCE FORECASTS Name and address, objectives and legal structure (eg sole trader, partnership etc) Employees required, their position, skills, experience and salaries What and how much will be produced, the price to be charged and market research details Number of customers and competitors. Pricing, promotion methods to be used and distribution channels How you will produce the goods/provide the service. Size and location of premises rent or buy? Required machinery and equipment and whether they are to be bought or leased Details of who will provide the finance, how much is required, what it is need for and when it might be paid back Estimated sales, cash in and out of the business, costs and break-even point The beginnings of a business plan (proposal) A simple business plan should attract the reader s attention Fit on one/two pages It should contain the vital information, which will include the proposal, the benefits of the proposal and the support needed for the proposal to progress. After drafting the business plan, businesses normally seek professional help and assistance in order to fine tune the details. This means they end up with a more professional and detailed Business Plan. 2 The Entrepreneur & Business Planning 24 June 2015 Page 7