Chapter 1 - Enterprise

Enterprise

‘The ability to handle uncertainty and deal effectively with change.’

Think of your own personality and the experiences you have had in your own life. Think of any jobs you may have had or any positions of responsibility. How have you been enterprising?

My example: I was asked to cover lessons for 2 other teachers and had to step into the unknown. Responding to the demands of the groups of students.

Group Task

In groups of 3 or 4, discuss occasions when you may have been enterprising. Everyone must have at least one example.

To be Enterprising: ‘The ability to handle uncertainty and deal effectively with change.’

Entrepreneur

An Entrepreneur ‘Starts and runs a business and has responsibility for the risks involved.’ So an entrepreneur is someone that takes the risk to start up a business or project.

An entrepreneur must be enterprising! So they must be able to handle uncertainty and deal with change. If an entrepreneur is not enterprising, the idea will not work.

Individual Task

Homework Task: @CambriaBusiness is a new Twitter page which needs suggestions for which entrepreneurs to follow. Tweet @CambriaBusiness with your suggestions! Give us a follow!

How Important are Entrepreneurs?

Every large business started off as a smaller business and will have been setup by entrepreneurs. They are important to the UK economy as they are the beginnings of the large successful businesses of the future.

EU Definition of a small business – “has less than 50 employees”

Companies Act 1985 “Has sales which are less than £2.8m and less than 50 staff. Also the value of the balance sheet is less than £1.4m”

How Important are Entrepreneurs?

However: A business with few employees and low sales could be big if the market is small. “Big fish in a small pond”. It also depends on the industry: A business of 100 accountants would be a large business but a manufacturing warehouse of 100 staff would be viewed as small.

TV Programmes

The Apprentice

Dragon’s Den

Mary Queen of Shops

Levi Roots

https://www.youtube.com/watch?v=kQTzLJCUtjk

Innocent Smoothies

https://www.youtube.com/watch?v=bXmxnwDlfcQ

Group Task

What are the characteristics of a successful entrepreneur? (What qualities do they have?) Think of Levi Roots

In pairs, produce a list of characteristics to share with the group

Milkshake Bar

Simon from Wrexham has decided that he would like to setup his own business. Simon would like to open up a Milkshake Bar which would be located on King Street in Wrexham. To do this, Simon will take out a bank loan.

What risks would be involved for Simon in setting up his own business?

What would be the rewards for Simon if his business is a success?

How likely is it that Simon’s business will survive?

Taking a Risk

Many people are afraid to fail. Businesses fail because:

Lack of finance

Poor infrastructure – Badly organised

Skills shortage

Complexity of regulations

Levi Roots’ business in 2013 was valued at £55 million. Had Levi not taken the risk of increasing production into ‘mass production’, this would not have been possible.

Risk and Reward

Entrepreneurs in Dragons Den risk their own money by investing into business ideas. However, they will only invest in a business which will generate a large enough financial reward.

Levi Roots wanted a £50,000 investment for a 20% stake in his business. However the actual investment was £50,000 for a 40% stake between the two Dragons. This was enough of a potential reward to tempt the Dragons to take the risk of investment.

Quick Question

An entrepreneur thinks that the risk of a new project failing is around 60%. The cost to her of failure would be £15,000. She estimates that the reward for success would be £20,000. Would you advise her to go ahead with the project? Explain your answer.

Discuss this question in pairs

Opportunity Cost

The real cost of taking a particular action or the next best alternative.

For example: On Saturday do you do college work or go to the cinema with your friends?

The ‘real cost’ of going to the cinema may be that you do badly in an exam.

Alternatively, the ‘real cost’ of staying in and revising would be missing a film with your friends.

Why become an Entrepreneur?

In ‘The Wolf of Wall Street’ why did Leonardo Di Caprio decide to set-up his own business?

In groups think of the reasons for becoming an entrepreneur.

Why become an Entrepreneur?

Escape a boring job

Pursue an interest and hobby

Exploit a gap in the market

Create a new product

Work from home

Have a big business

Government Support

In order for the economy to ‘grow’, the Government need to support entrepreneurs by:

Reducing business taxes

Reducing barriers to raising finance

Improving support

Encouraging business start-ups in economically deprived regions of the UK.

The Government supports the National Enterprise Week.

Young Enterprise – National Charity

Government Grants

The Government will pay specific businesses a ‘grant’ which can contribute towards the cost of a project. They usually don’t have to be paid back.

Grants can come from a variety of sources:

The European Union

Local Government & National Government

Charities