1. SETTING UP A BUSINESS AS AN ENTREPRENEUR Lesson objective: To understand the stages involved in setting up a business

2. Setting up a business IdeaResearchPlanningFinancingLocationResourcesLaunch The way an entrepreneur goes about setting up a business is important. It needs to be methodical and carefully planned. The entire success of a business might depend on the quality of work undertaken during the setting up process Conduct some research into each of these stages – what happens at each stage, what will the entrepreneur be doing

3. Potential problems Entrepreneurs should ideally follow all of the stages on the previous slide as this will give them the best chance of success overall However some entrepreneurs may bypass many of the stages and just set up anyway. Such people, driven by entrepreneurial spirit, just cannot wait to try out their idea They run their businesses in an instinctive and responsive way ‘flying by the seat of their pants’ It is possible for them to succeed, but it does make it harder! ‘failing to plan is planning to fail’

4. Running and expanding a business After the launch of their business, entrepreneurs become immersed in the day-to-day running of the business For many entrepreneurs this means working in production or delivering a service – they often take a hands on approach At the start the entrepreneur might take a hands on approach, but as it expands they will need to spend more an more time on the ‘functional’ activities of the business

5. Functional activities of a business These include; Financial management Administration Marketing Purchasing Managing people Production What would the role be of each of these functional areas. What would an entrepreneur be doing within these departments in order to keep the business running. How can these areas help the business to develop and expand?

6. Once a business is set up It is clear that once the hard work of setting up a business has been done, the hard work is not over The pressure on entrepreneurs can be considerable, and because their livelihoods depend on its success, it can be very stressful Remember that almost half of all new businesses fail in the first five years! If the business survives over time an entrepreneurs role is likely to change from that of production to one of a more managerial role. They will move from being an entrepreneur to being a leader

7. Your task You have been given a scenario on Right Formula Ltd Read the case study carefully and answer the two questions at the bottom of the page Once complete – do some independent research into Right Formula Ltd, find out; What is the business – what do they do? How the business was set up and by who? How successful has the business been and why? What entrepreneurial traits did Robin Fenwick show? Thinking back to last weeks lesson what risks/rewards do you think Robin Fenwick took when setting up his business?

8. Intrapreneurship Entrepreneurs are business owners and risk their own personal finances when developing business ideas Intrapreneurs are employees, usually in a large businesses who use entrepreneurial skills to find and develop initiatives that will have financial benefits for their companies These might be new products, services or systems Unlike entrepreneurs they carry no financial risks – if their initiatives fail it is the business that shoulders the financial burden Some businesses encourage the spirit of entrepreneurship and embed it in their organisational culture – this includes companies like Google and Apple

9. Intrapreneurship Is a fairly new concept In a nutshell it is an employee within a larger business who thinks like an entrepreneur, so they; Takes risks Solve problems Focus on processes to improve productivity Drive innovation Understands trends Are proactive in adding value Read the article you have been given and make notes on the key points

10. Intrapreneurship Do some research into Google and Apple and find out; How they encourage creativity and entrepreneurship amongst staff? What they do to empower staff? What do staff say its like working for these companies? How do they ensure they are getting the best from their staff? Do they enlist employee feedback? Yes/No, why, how etc.…

11. Advantages of employing intrapreneurial staff Intrapreneurs can drive innovation in a business and uncover new commercial opportunities It’s a way to satisfy the self-actualisation needs of employees A number of awards can be won if they develop unique or ground-breaking products For example the Queen’s Award for Enterprise (has 3 categories, 1 for innovation) Individuals benefit by getting to experiment and be creative without having to worry about the cost of failure – this leads to increased job satisfaction

12. Barriers to entrepreneurship There are a number of barriers to entrepreneurship The main barriers are; Lack of finance Lack of entrepreneurial capacity Becoming and employer Legal barriers (red tape) Lack of ideas Fear of failure Aversion to risk Corrupt and unsupportive environment What do you think these all mean? Why might they be limitations?

13. Barriers to entrepreneurship Financial: Lack of start-up capital Lack of cheap labour Lack of investment Personal: Lack of self esteem Risk averse Fear of failure Lack of technical skills Economic: Taxation Market entry regulations Political: Unstable political landscape

14. Anticipating risk and uncertainty We have already looked at risk and uncertainty in our first topic We know that the main difference is that people have some element of control over risk – entrepreneurs make a conscious decision to engage in a risk taking activity In contrast uncertainty cannot be predicted, it is just something that happens that you can’t predict or prepare for The impact on businesses of ‘uncertainty’ are often more catastrophic than those of risk. Dealing with uncertainty is more challenging that dealing with risk due to this

15. Anticipating risk Entrepreneurs understand the nature of risk right from the point when they first set up a business Many would have taken risks by giving up full time jobs, risking their savings etc.… They know that if the business fails finding another job is going to prove tricky To counteract these risks entrepreneurs can; Launch a product to a smaller market before going national They can use quantitative techniques such as decision trees, to weigh up which is the best decision for them to take They may take a risk, knowing the rewards will be worth it if it pays off (aim big and hope for the best) Carry out market research to assess feasibility before starting etc.…

16. Uncertainty Some things in your future you can predict: You will go to school You will sleep late on Saturday You will eat lunch every day this week Some things you cannot predict: If you will win the lottery If you will win a school prize If you will be late to school because of a traffic jam Who you will marry

17. Anticipating uncertainty Dealing with uncertainty is a problem for entrepreneurs as they have no control over the nature or timing of some events They can be affected by political decisions (such as changes in Government/Legislation) They can prepare by; Carrying out PESTLE analysis Carrying out SWOT analysis Carrying out risk assessments Creating contingency plans

18. To deal with uncertainty Businesses often have contingency plans which allow them to cope with uncertainty A contingency plan looks at ‘what if’ and plans for them