Essay on Sructure Risk and Enterprise

Submitted By swalker181
Words: 3245
Pages: 13

Structure, Risk and Enterprise

Enterprise
Entrepreneurship is the formation of a new business venture or creation of a start-up company. An entrepreneur therefore, is an individual who has idea and starts up a business as a result (Enterprise).
An example of a successful entrepreneur is Sir Richard Branson “His entrepreneurial projects started in the music industry and expanded into other sectors making Branson a billionaire. His Virgin Group holds more than 200 companies, including the recent Virgin Galactic, a space-tourism company” Richard Branson Biography, [online], http://www.biography.com/people/richard-branson-9224520#synopsis&awesm=~oDSE0pEQa6zFNs, [Accessed 10/05/2014]

When an entrepreneur starts their own business, many have to use their own financial resources to enable the start-up process. Entrepreneurs will research the best method of acquiring financial aid and should consider the options available to them such as:

The government provides funding and programmes to encourage private sector investment in small businesses e.g. The Start-Up Loan scheme, The Business Finance Partnership, Business Angel Co-Investment Fund.

Own financial funding: If the entrepreneur can afford to use their own money this will present less risks. If the business fails, the entrepreneur will lose their own money rather than obtaining debts and charges from banks.

An entrepreneur will usually aim to start up a business to achieve a profit, although, this can be jeopardised by unforeseen circumstances. A good entrepreneur will recognise starting up a business can carry with it an element of risk, such as losing all of the invested money and should therefore evaluate certain aspects involved in the start-up of a new business and entering into a market. The ability to control and deal with potential environments is crucial, some of these include:
Competitors
Competitors are highly important to new businesses and entrepreneurs must be able to identify who their competitors are, what they are offering to their customers and why customers are attracted to their business. The entrepreneur should identify a niche and incorporate that into their business to attract the customers away from their competitors. This could be offering a superior service, a undercutting price or a differentiation from the competitors’ products.
Entrepreneurs should recognise where competitors may contribute to the failure of their new business. Lack of understanding of the competitors can be detrimental as this information is valuable to understanding the market.
Competitors may also contribute to the failure of a business if the entrepreneur has generated a product or service which is new to the market and is successful. Competitors will most likely generate a copy of the product and seek to achieve a higher profit, feasibly selling at a lower price. This in turn will affect the progression of the business and could undermine the entrepreneur’s efforts.
Nature of demand
Some new businesses may face the problem of their customers changing their desire to purchase certain products. If a business only supplies one product and customers favour an alternative brand, the business can fail. This can be resolved and controlled by placing different products onto separate markets to survive changes in demand. An example of products entering the same market is Sony’s PlayStation 4 and Microsoft’s Xbox gaming systems. Both products were launched at the same time and customers favoured Sony’s PlayStation 4, with PS4s selling 7 million consoles and Xbox selling 5million consoles as it stands today, both consoles provide the same experience however PS4 has a higher demand. Reis, M, Console Sales and News: PS4, Xbox, [online], http://www.latinpost.com/articles/11985/20140507/nintendo-wii-u-console-sales-and-news-ps4-xbox-one-dominating-nintendos-next-gen-console.htm [Accessed 10/05/2014]
Unexpected Expenditure/lower expected sales
It is common…