The Nature of Enterprise (OCR GCSE Business)

What is Enterprise

• Business enterprise refers to the spotting and pursuit of a business opportunity that has the potential to make a profit

  • It involves forming an organisation, known as a business or enterprise, that provides customers with the opportunity to buy products or services

• Enterprises can range from small businesses run by a single person to large corporations with thousands of employees

• Some examples of enterprises include:

  • A local bakery or restaurant

  • A firm of lawyers

  • A clothing store or retail chain

  • A manufacturing company that produces cars or electronics

  • A software development company

• Enterprises carefully plan their operations, manage resources such as money, materials, and people, and make decisions to ensure they stay competitive and profitable

  • They also need to comply with relevant laws and regulations to ensure that they are allowed to continue to operate

Characteristics of Entrepreneurs

• An entrepreneur is a person who is willing and able to create a new business idea or invention and take risks in pursuing success

  • These risks can be financial, personal or creative

  • Successful entrepreneurs can identify and pursue opportunities, create value for customers and build thriving businesses

What Entrepreneurs do

• Entrepreneurs often posses a valuable set of characteristics and skills

Diagram: Skills and Characteristics of Entrepreneurs  

The skills and characteristics commonly possessed by entrepreneurs

• Perhaps one of the most important skills of an entrepreneur is the ability to communicate persuasively

  • Persuade potential financial backers of the merits of their idea

  • Encourage people to join them in creating the product/service

  • Convince customers of the value of their product/service

• They should also be able to solve problems, be well-organised and possess key skills such as numeracy and competency in the use of IT

• Entrepreneurs should be prepared to work with others and build teams to improve the chances of business success

• A range of personal characteristics are particularly important for entrepreneurs

  • Being prepared to work hard, often for long hours, with little financial reward

  • Resilience and self-confidence are needed to recover quickly and move on from setbacks

  • Creativity and a willingness to embrace innovation

  • Being prepared to take the initiative in making decisions, pursuing opportunities and taking risks

• All of the skills work together to create and drive an innovative idea towards success

Risk & Reward

• Entrepreneurs must manage the risks associated with failure, financial loss, and lack of security while striving to achieve the rewards of success, profit, and independence

Diagram: Risks and Rewards of Business Activity

Entrepreneurs balance risks, such as business failure, financial loss and lack of security, with rewards, such as business success, profit and independence

The Risks of Business Activity

• There are many ways in which entrepreneurs can reduce the risks associated with starting up and running a business, including:

  • Careful management of cash flows into and out of the business

  • Conducting thorough market research before and during trading

  • Setting clear aims and objectives

• If risks are minimised and an enterprise survives and thrives, entrepreneurs can be well-rewarded

The Rewards of Business Activity