Business Studies- Topic 1.2

Entrepreneur- a person who owns and runs their own business and takes risks.                                                                                                                

Enterprises- another word for businesses.                                               

Enterprise- a willingness by an individual or a business to take risks, show initiative and undertake new ventures. 

Risk- a chance of damage or loss occurring as a result of making a decision.

To make it as an Entrepreneur you need to show enterprise skills. These involve, taking risks, showing initiative and having a willingness to undertake new ventures.

• Taking risks- there are so many things that can go wrong when setting up your own business.
• Showing initiative- initiative means making the first move and making things happen.
• A willingness to undertake new ventures- this involves having a history of undertaking new ventures and to always be on the look out for new business opportunities.

The word 'enterprise' can be used as another name for a business. But 'enterprise' has another meaning. It describes the willingness of an individual or organisation to take risks , show initiative and undertake new ventures. So enterprise should be a characteristic of all enterpreneurs.

·         Thinking Creatively (or creative thinking)- coming up with new and unique ideas.

·         Competitive advantage- an advantage a business has that enables it to preform better than its rivals in the market and which is both distinctive and defensible.

·         Deliberate creatively- the intentional creation of new ideas through recognised and accepted techniques.

·         Example- Gaining a competitive advantage does not mean that a business has to be better at everything compared to other businesses. Being better at one thing is enough for success. For some businesses. simply being the only firm in a local area is enough to give it a competitive advantage. Take a small local corner grocery shop. It can survive if it offers a service to people living around the shop despite the fact that Tesco or Asda offers a much bigger range and has lower prices.

Thinking creatively means coming up with an idea that is unique and did not exist before. Developing a unique idea can give a new business a competitive advantage.Having a competitive advantage means that it is not easy for a competitor to copy an idea, or imitate a product or a method of working. Having a competitive advantage means that a business is better in at least one way than businesses with which it is in direct competition. There are many examples of competitive advantage. For example, a business may:

• have a better product than the other businesses;
• have a better way of producing what it makes which results in lower costs or better quality;
• give its customers better services;
• be better than its rivals at selling its products to customers;
• come up with an idea or product that is unique;
• use some technology or technique that makes its product or service unique.

·         People think creatively all the time. They come up with new ways of doing things. They respond to new situations. However, most of this type of creative thinking happens accidentally. There is often no method behind how the ideas are generated. The ideas that come out are often not followed up or used in a organised way.

·         Deliberate creativity uses a range of techniques to stimulate thinking and the production of new ideas. Deliberate creativity involves the use of different methods of thinking. By going through different thought processes, new ideas emerge.

·         Lateral Thinking- This is about producing ideas that people would not come up with during their normal day-to-day lives. It is about creating new ideas. Sometimes it is described as 'thinking out of the box'. There is a variety of techniques that promote lateral thinking including blue skies thinking and Six Thinking Hats.

Blue skies thinking-  involves a group of people looking at an opportunity with fresh eyes. As many ideas as possible are generated in an ideas generation session where no ideas are rejected as silly.

Six Thinking Hats- It is used to look at decisions from a number of important perspectives. This forces you to move outside your habitual thinking style, and helps you to get a more rounded view of a situation.

• White thinking hat- Data, facts, information known or needed.
• Black thinking hat- Difficulties, potential problems. Why something may not work.
• Red thinking hat- Feelings, hunches, gut instinct, and intuition.
• Green thinking hat- Creativity - possibilities, alternatives, solutions, new ideas.
• Yellow thinking hat- Values and benefits. Why something may work.
• Blue thinking hat- Manage the thinking process, focus, next steps, action plans.

It is vitally important for future entrepreneurs like Rachel to ask themselves questions. Questions allow them to sort out issues and explore alternatives. It helps them to get at what is best for the business. It also helps them to see what should stay the same and what should be changed. Questions like ... 'Why?', 'Why not?' and 'What if?' are very important.

The most frequently asked questions were

Why?,Why not?,What?,How?, Where?,When?,What if?

With some questions, there is a single definite answer. However, with many questions, there is a range of possible answers, all of which could turn out to be correct in the future. In the thinking, you need to show you understand this. Often it is correct to say 'This could happen' and incorrect to say 'This will happen'. Even better is to say how likely something is to happen. 'This is very likely to be the outcome' or 'This could be an outcome but it is most unlikely'.

The final decision... (example)Rachel realised her new business venture was high risk. So having asked herself lots of questions and done lots of research, she decided that she would be best to stay in her present job for the time being but start her business in her spare time. After 12 months, she would review the whole operation by asking a large number of searching questions. Then she would be in the position to know whether to develop the business further or to close it.

Invention- is about making new items, or finding new ways of making items. Innovation-  involves bringing this new idea to the market, that is, turning an invention into a product.                                                                                     Risk- Invention and innovation are very risky. Many inventions never get to the point where an actual product is sold. Innovation also often leads to failure.

WATCH OUT!

-It is very easy to confuse invention with innovation. Invention is the process of discovering new ideas. Innovation is transforming an idea into a real product which can be sold to customers.

-Copyright is a very complex area. Developments in technology such as the Internet have made copyright protection more difficult to enforce. Illegal copying of DVDs computer programs is a multi-billion pound industry world wide.  

Taking a calculated risk- is about putting a numerical value or probability on the risk. But taking a calculated risks involves a lot of upsides and downsides, in a business plan you need to carefully weigh them up.

Downsides- the disadvantages of a course of action, including what can go wrong.

Upsides- the advantages of a course of action, including what can go right.

Estimating risk is often very difficult particularly for a small start-up business. More established businesses have some understanding of how frequently problems occur. A small start-up business has no history by which to judge these things. This is one of the reasons why businesses that are started by people who have already worked in the industry have a better chance of survival than businesses started by people with no knowledge.

Making Mistakes- it is often thought in the UK that someone who has failed in business is likely to fail again if they start a new business. In the USA, failure in one business is more likely to be seen as a learning experience. If the entrepreneur starts another business, they are more likely to succeed. People do learn from their mistakes.

We all learn from our mistakes, so surely when making a mistake in the business world; it makes is stronger and more aware of what to do and not to do next time...

There are so many skills that an entrepreneur needs to be successful. Four of them are seeing opportunities, being an effective planner, thinking ahead and having drive and determination.

Seeing opportunities- this involves been able to spot and recognise a business opportuniy.

Effective planning- this involves been able to take the business opportunity and planning how to move it forwards.

Thinking ahead- this involves thinking what you are going to do in the future.

Drive and determination- this involves being very motivated, been able to have very clear goals and knowing what you want out of this business.

Making Connections- one technique that is often very useful when planning, thinking ahead and seeing opportunities is to use mindmaps. A mindmap is a diagram that records words and ideas. At the centre of the map, or page, is the main word or idea. Flowing out from this main word or idea is a number of key words and ideas linked to the main word..

WATCH OUT!

You do not need to be good at everything to be a successful entrepreneur. However, knowing your strengths and weaknesses is very helpful. Where you have weaknesses, you can overcome these by buying in help. So if you are not very good with numbers, you can hire an accountant. If you are not very good at dealing with customers, you can hire a salesperson.