AS Economics and Business What motivates entrepreneurs?

1. AS Economics and BusinessWhat motivates entrepreneurs? Unit 1 By Mrs Hilton for revisionstation

2. Lesson objectives • To be able to discuss the reasons why people set up their own business or what motivates entrepreneurs • To be able to discuss motivational characteristics • To be able to answer past papers on entrepreneurial characteristics and entrepreneurial motivations

3. From the spec:

4. Starter • What do we already know... What reasons might people have for starting their own business?:

5. How did we do? • Want to be their own boss • Want to earn their own money / profit • Want to start a business for a social reason • Want to start a business to have something to hand over to their children • Wanting to work in a more ethical way • Wanting flexibility in hours or location

6. Want to be their own boss • Advantages: • Can work on own – no one to answer to • Can have own idea and run with it – do not have to follow an old idea • Autonomy • Being the boss, sense of pride and achievement • http://www.entrepreneur.com/article/228224 • Task investigate articles on this website

7. Watch the video – what were his reasons?

8. To be more flexible on location or hours • This owner chose her location as it was close to the drop off bus stop for her children after school

9. Trade in a more ethical way • Daisy green the ethical magazine for women

10. Body shop – what motivated Anita Roddick? • Task – why did Anita Roddick start the Body Shop? • Was it ethics or personal reasons? • Anita Roddick website

11. Social enterprise reasons (it’s not just about £££) • What is social enterprise? Over to you In teams find out about: Divine chocolate Jamie Oliver Fifteen Big Issue Cafe Direct Eden project

12. What is social enterprise? • Social enterprises are businesses trading for social and environmental purposes. • (Learn that bit) • Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social and/or environmental purpose is absolutely central to what they do. • their profits are reinvested to sustain and further their mission for positive change.

13. Jamie Oliver 15 video

14. Benefits of not-for-profit social enterprise • Entrepreneurs can earn a living doing something valuable which can be motivating • The more successful the social enterprise the more society benefits • Customers may be more willing to buy from a social enterprise

15. How do I know if I am a social enterprise? • Does your company have social and/or environmental aims? • Are at least 50% of your company profits spent on socially beneficial purposes? • Does your company earn at least 50% of its income from trading? • Can your company demonstrate that social/environmental aims are being achieved? • If your company ceased trading, remaining assets would be distributed for social/environmental purposes?

16. Where is this? Have you ever been there? Why is it a Social Enterprise?

17. Eden Project – social enterprise • The Eden Project in Cornwall has been built in a disused clay mine, transforming it into a rich, global garden where people can learn about nature and get inspiration about the world around them. • Eden is an educational charity and social enterprise and much of their energy goes into: • Running social and environmental projects in Cornwall and around the world • creating unforgettable learning experiences for students • putting on fantastic arts, theatre and music events • creating stunning gardens as well as doing valuable research into plants and conservation • making sure we run our operations in the greenest possible way.

18. What do you think of the Big Issue? Have you ever read it? Did you know it was a social enterprise? Video

19. Why is it a social enterprise and not a charity? • The Big Issue is a business solution to a social problem, demonstrating that an organisation can succeed whilst being simultaneously driven by commercial aims and social objectives. • It has helped thousands of individuals to regain control of their lives and has simultaneously altered public perceptions of homeless people.

20. Big Issue – social enterprise • The Big Issue Foundation is a registered charity which exists to link vendors with the vital support which will help them address the issues which have led to their homelessness. • The organisation currently supports over 2900 homeless and vulnerably housed people across the country. The magazine is read by over 670,000 people every week throughout the UK. • The Big Issue exists to offer homeless and vulnerably housed people the opportunity to earn a legitimate income. • They produce a weekly entertainment and current affairs magazine which vendors buy from them for £1 and sell to the public for £2, keeping £1 for themselves. • They believe in offering ‘a hand up, not a hand out’, but they also recognise that earning an income is the first step on the journey away from homelessness.

21. Divine Chocolate – a social enterprise

22. Definitions from Edexcel Characteristics Motivations entrepreneurial motive is the purpose/what drives a person • an entrepreneurial characteristic is the personal skill or quality or trait

23. Final theory Characteristics Motivations To be own boss For social reasons (to help the community) To make a profit To have more control over working life To turn a hobby into a revenue generator Increase income Become independent Driven by personal passion To sell something new • Resilient • Hard-working • Determined • Creative • Self confident • Lots of self initiative • Risk taker

24. Sample question 1 • Using Evidence A, distinguish between entrepreneurial characteristics and entrepreneurial motives. [6 marks]

25. Sample question 2 • Sue Russell decided that she would leave her job at Denby Potteries (UK) Ltd in order to set up her own business. • Which of the following is the most likely explanation for Sue’s decision to set up her own business? • A To develop a niche market • B To reduce risk-taking • C For non-ethical reasons • D To work independently [4]

26. Sample question 3 In his attempts to persuade the Women’s Business Development Agency to provide a grant to help finance the Leisure Library, Mike Watson argued that the business would be run as a not-for-profit social enterprise. Discuss the extent to which the motivational objectives of Mike Watson might differ from those of a typical private sector entrepreneur. [8]

27. Answer to question 1 Knowledge and understanding: up to 2 marks are available for defining each aspect, e.g. an entrepreneurial characteristic is the personal skill or quality or trait (1); entrepreneurial motive is the purpose/what drives a person (1) Knowledge and understanding: up to 2 marks are available for simply using a specification/textbook example, e.g. creativity, hardworking, resilient, initiative, self-confident OR risk taker (1); his motive was to increase his income, gain independence OR he was driven by a personal passion (1) Application: up to 2 marks are available for relating the above to Case Study 6 marks in total to award

28. Answer to question 2 • Answer is option D – to work independently • Defines niche market or non-ethical (1 mark) • Risk taking is naturally increased because she will be running her own business (1 mark) and no longer have the security of employment (1 mark) • Denby Potteries Ltd is a private sector business (1 mark) and so is unlikely to be too concerned with social and environmental benefits (1 mark) • Denby may already provide products for a niche market (1 mark) but Sue could not be in a position to actually develop the market (1 mark) • This decision might enable Sue to earn more money (1 mark) that she received as a salary when employed (1 mark) • Other reasons for selling in business, e.g. something new, make more money (1 mark)

29. Answer to question 3