Podcast
Questions and Answers
What is the primary goal of an entrepreneur aiming for profit maximisation?
What is the primary goal of an entrepreneur aiming for profit maximisation?
All entrepreneurs aim to achieve high profits above all else.
All entrepreneurs aim to achieve high profits above all else.
False
What is one reason an entrepreneur might choose to profit satisfice?
What is one reason an entrepreneur might choose to profit satisfice?
To reward employees with higher wages or invest in social/environmental projects.
Many entrepreneurs seek _____ in their work lives to better balance family and job requirements.
Many entrepreneurs seek _____ in their work lives to better balance family and job requirements.
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Match the following non-financial motives with their descriptions:
Match the following non-financial motives with their descriptions:
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Which of the following is NOT listed as a common non-financial motive for setting up a business?
Which of the following is NOT listed as a common non-financial motive for setting up a business?
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Social enterprises are always focused solely on profit generation.
Social enterprises are always focused solely on profit generation.
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Name one advantage of being a sole trader with respect to profit.
Name one advantage of being a sole trader with respect to profit.
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Entrepreneurs may decide to implement _____ trading, focusing on environmental sustainability.
Entrepreneurs may decide to implement _____ trading, focusing on environmental sustainability.
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Which entrepreneur is mentioned as seeking flexibility in their work life?
Which entrepreneur is mentioned as seeking flexibility in their work life?
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Study Notes
Financial Motives for Setting Up a Business
- Entrepreneurs aim to maximize profit, the difference between revenue and costs.
- Profit maximization involves minimizing costs and maximizing revenue.
- Sole traders may earn higher wages from profits.
- Limited companies (Ltd) and Public limited companies (PLC) have the potential for larger dividends, attracting more investors.
Profit Satisficing
- Entrepreneurs may aim for sufficient profit while pursuing other goals.
- Examples include rewarding employees with higher wages, investing in environmental projects, or serving the community.
Non-Financial Motives for Setting Up a Business
- Entrepreneurs may start businesses for reasons other than profit.
- Key non-financial motives explored are independence, flexibility, ethical reasons, social purpose, and personal challenge.
Independence
- Independence is a key motivator for entrepreneurs.
- They seek to work for themselves rather than for an employer.
- Eliminating the daily commute is often cited as a motivation.
Flexibility
- Entrepreneurs desire flexibility in their work-life balance.
- Balancing family needs with work requirements is a challenge.
- Working from home is a way to achieve better work-life balance.
- Examples include single mothers who want to pursue their own business idea.
Ethical Reasons
- Some businesses prioritize ethical trading practices.
- Environmental trading, animal rights, fair wages for workers (especially in developing countries), and avoidance of genetically modified crops are relevant examples.
- Companies like Divine Chocolate exemplify ethical business practices.
Social Purpose
- Social enterprises are businesses driven by social and environmental goals.
- Profits are often reinvested to support their mission.
- Examples of such enterprises are those aiming for positive social and environmental impact.
Personal Challenge
- Some entrepreneurs find employment in other companies unfulfilling.
- Setting up their own business is viewed as a stimulating challenge.
- Entrepreneurs often seek the excitement and daily challenges inherent in running a business; sometimes multiple ventures are pursued.
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Description
Explore the various motives behind setting up a business, focusing on both financial and non-financial aspects. Understand how profit maximization, independence, and ethical considerations influence entrepreneurs' decisions. Dive into the concepts of profit satisficing and the appeal of social purpose in entrepreneurship.
