This report will focus on the role of the entrepreneur and the challenges they face. In addition, this report will also discuss the success of Henry Ford. He is a famous American entrepreneur.
Henry ford was born in Michigan US on 30 July 1863. He came from a farming family which was far removed from his later interest in engineering and transportation. Henry Ford’s first engineering job was as a worker in the Flowers Brothers machine shop that he only received a salary for $2.50 per week. In 1888 at 24 years old Henry ford married Clara Jane Bryant on her birthday day at Clara parents’ house which was located at the Greenfield township, Michigan. After they married, Ford was given land on the farm by his father in 1891. However, the couple decided to move from the farm that was given by his father to Detroit.
Henry Ford found a new job at Detroit as an engineer for Edison illuminating company. In 1896 Ford invented the Quadric cycle made with four wheels, self- propelled vehicle with gasoline engine. In his spare time, over the next few years, Henry Ford used his spare time to perfect his invention and then decided to form Detroit automobile company. After several years Ford found an investor who was impressed by Ford’s invention and so backed up the financial strength of the Detroit company.
Ford continues to update and create new models of his invention, on October 10, 1901 Ford enters one of his production cars to join race in Gross Pointe. Ford’s car won and a lot of people started to talk about the winning car around automotive area.
After winning the race Ford got obsessive and created more powerful racing cars, which he broke American speed record of five miles in five minutes 28 second.
After that amazing race, Ford and his partner become Detroit largest coal dealer, and make incorporate ford motor company with an investment of around $50 000. After Ford and his partner incorporated the business, they continued to sell the Quadric cycle in order to raise finance to create another product.
Both Ford and his business partner where ambitious and wanted to make new cars. However, they found it difficult to agree on everything and work together. Henry Ford left the Detroit Automobile Company and started the Ford Motor Company. A few months after the Ford Motor Company (FMC) had been established the company made their first Ford car. It was a two cylinder, eight horsepower model A which was assembled at a plant on Mack Avenue in Detroit. Henry Ford became dedicated to the production of an efficient and reliable automobile that was affordable for everyone. The result was the Model T which was released on October 1908. The Model T was hugely successful for Ford company and orders for model T were high and rising.
As a result Henry Ford developed a technique of mass production on a moving production line which would revolutionize American industry as well as the rest of the world.
Understand and analyse the challenges faced by entrepreneurs
Analyse the characteristics and behaviours of successful entrepreneurs, including ‘entrepreneurial spirit’
The successful entrepreneur may have many characteristics, too many to discuss, however, there are several key one explained here.
Self-confidence is the key for entrepreneurs to success, it means the entrepreneurs believe about his own ability rather to create something or starting a new business. For example Henry ford came from farming family not from engineering family we will never expect Henry Ford will become one of the greatest entrepreneurs and founders of FMC. Henry ford start trusting his own ability when he left his family to move to Detroit to work as Flower Brother Machine, several years later Henry ford discovered quadric cycle car , because of quadric cycle he draw attention of many investor that really interest to the quadric cycle product. His confidence in business continued to grow and eventually led to him starting the Ford Motor Company and the rest is history.
Self – determination means the believe that you in control and responsible for your own success or failure. This what every entrepreneur need to have in their mind because if we still think that luck control our own succeed or failure it means that you are not entrepreneur. Same like Henry ford have very strong self determination to invent new products. Henry Ford was determined to build a successful motor car that normal people could afford. Nobody in the world had achieved this and so this required great levels of determination to succeed.
Being self starter is really important to by a successful entrepreneur, often the only person an entrepreneur can really rely on when starting out is themselves. Being a self starter means that you are able to motivate yourself and not be put off by negative comments or set backs.
Judgement is about how sensible the entrepreneur make a decision or choice regarding his company in every situation. Good judgement is balancing the risk against the reward. When Henry Ford left Detroit automobile company and formed his new company called FMC( ford mobile company). Henry ford had the vision, to successfully update and create a new model from quadric cycle to the famous Model T. This showed great judgement ant timing, Henry Ford believed that the world was ready for his cars.
Commitment means willing give your time and energy to do something that you believe in. Henry ford have a strong commitment that’s why he became the first inventor and entrepreneur successful, because he willingness to give Henry ford time and energy to create engineering product such as quadric cycle and later the Model T eventually pays off. If you do not show commitment as an entrepreneur then you will not succeed.
Perseverance is the important aspect for entrepreneurship it means that if first you don’t succeed and your not give up trying and keep trying, like Henry ford did the same too,. He came from farming family however because of his willingness to succeed he left his hometown to another city which is Detroit where in that city where the Henry Ford story really begins.
Initiative is a characteristic that every great entrepreneur has. It is the ability to make good decisions and spot opportunities without needing and support, direction or encouragement from anyone else. Perhaps the best example of this was when Henry Ford invented the worlds first moving production line. This was the first real example of a large scale engineering factory using flow production and so mass production was created. This initiative shown by him allowed FMC to build more cars with better quality at a lower cost than any other car maker in the world.
Assess the value of micro, small and medium-sized businesses to the economy
Micro business is a company which has a turnover less than 2miliion pounds sales per year and it will also have no more than 10 employees. Although micro business is small company the company can developed become large company beyond their original foundation or company stay the same and doesn’t developed become large company. For example one of the successful micro business company is amazon because the company itself start as micro business then the business start developing and became one of the successful companies in the world.
Small business is very important part of business or economy its not because they provide success but also small companies provide what local needs such as ( hairdresser, financial consultant, emergency plumber). You don’t have to make a big enterprise to become vital part of economy you just need to developing right skill, attitudes, initiative. A small business is on that has between 10 to 50 employees and a turnover of less than 10 million pounds. For example Simon Woodroffe one of the founder of YO – SUSHI because he got inspired by restaurant in japan that he see at japan. He started as one restaurant in London with around 20 employees but the business became successful and grew into an international chain of restaurant that serve Japanese food and drink.
Medium sized business is a company that determined by a turnover between 10 million and fifty million pounds and having between 50 to 250 employees. Based on research one example of a successful medium sized company is called PHARMACY 2U is one of the largest online pharmacy shop, the stats has been shown that over 12 month Pharmacy 2u customer grown 212% and keep growing . For the moment the company secure 40 million pound from investment to help continue to innovate such as new technology.
Explain why MSMS businesses are good for the UK economy
MSMS business are good for the united kingdom because MSMS business have many benefits for the UK economy and the business itself. That has been proven by Oliver Dowden MP, MSMS business have saved thousand jobs of people in united kingdom, although they may have been failure in MSMS company however there still MSMS business have become vital part of economy. MSMS business one of advantage is not also they’re have become vital part of the economic they also provided what local needs, also we cant deny the fact that most of UK business are MSMS nearly 16 million work at MSMS business no wonder that MSMS business has become the important part for UK economy not just the business brings many income they also provided many work for the society in united kingdom, and also provided best service to every civilian in United Kingdom.
Like Henry Ford does when he started work at Flowers Brothers machine shop this grew into FMC( ford mobile company) come from small business in Detroit, no one never believe in FMC will become a big company and still developing and become one of successful automobile company in year 1891, so this mean MSMS business really effective because any small companies can developed become a big company.
Identify the challenges faced by entrepreneurs
When a starting a business an entrepreneur faces many challenges, explain the following and how your chosen entrepreneur solved these challenges
Start up capital is when some entrepreneur want to start new business, like where the entrepreneur need money to form a new business whether is from bank given loan to the entrepreneur or from an investor. Start up capital is the hardest finance to raise as the business has no ‘track record’ of success and so it is risky for any potential investor or bank to put money in. Henry Ford struggled when he first start up capital to build Quadric cycle in 1896. Henry Ford had to build one and then sell it to raise the money to build the next one, he wasn’t able to up scale his production due to lack of funds. Henry Ford had to sell the designs of the Quadric Cycle, to get the start up money for the Detroit Motor Company and this investment enabled him to attract other investors which allowed the business to grow.
Cash flow is the money that moving or flowing in and out in every business. Cash flow in business has become the most vital part in every business whether small or big company if it wants to survive. Statistics show that many entrepreneurs fail they because they don’t know how to manage their own cash flow. When Ford first started the Detroit Automobile Company he had little spare cash. Setting himself up in business was expensive and Ford was not from a rich family. So he saved his money and started a small workshop where he made the quadric cycle. Because he had little cash he made one machine and then sold so that he could make another in order to maintain a positive cash flow. It was only when he attracted further investment into the business did his cash flow situation improve and he was able to move towards a system of mass production for which he became famous.
Hiring Employee is person who hired worker or employer to do specific job for that business. Why hiring the right employee is important because they are an added cost to the business, so they must add value to the business. In other words the value of their production must be greater than their wages. To recruit good, hardworking and loyal workers at Ford’s River Rouge plant in Detroit, Henry Ford then offered the high wage of $5 a day to factory workers. This enabled Ford to have his pick of the better workers in the region.
Marketing strategies is an action or promoting Business to the market such as selling products and services. It is not just about selling the product it is about having a plan based upon market research. A good marketing strategy will also how to promote and advertise the product to their potential customers. It also considers thing such as the price of the product and the place where it should be sold. The product needs to be attractive to potential customers and needs successful promotion and advertising to make people aware of the product. For Ford, this included the now iconic Ford logo which helped potential customers recognise a Ford motor car.
Business growth is important because as the business grows it can identify more business opportunities for becoming successful not only for short term but for long term. The increased revenue and profits from a bigger business allow for further investment and the ability to develop new products. As Ford grew, the business where able to release new models, which eventually led to the Model T, the revolutionary and ground breaking car that was hugely successful and was the car that allowed Ford to become the biggest car producer in the world.
Self doubt means lack of confidence in your own ability, like Henry ford did he got self doubt because he cant create new model for Detroit Automobile company besides Quadric cycle. So he overcame his self doubt and made the brave decision to leave the Detroit Automobile company and decided to form FMC ( ford automobile company). He had to be strong and believe in himself and in FMC. This let Henry ford become successful entrepreneur and the FMC has become one of the most successful companies with a billion dollar valuation. So to be successful every entrepreneur needs to manage their own self doubt in their own ability , this is true not just for Henry ford but for every entrepreneur.
UNDERSTAND AND ANALYSE HOW TO RAISE FINANCE FOR A NEW BUSSINESS VENTURE IDENTIFY SOURCES FOR A SMALL BUSINESS
Why business needs to raise finance or start up capital? Because in every business their need funding to get off the ground, And many of them use their own funds to start a new business however. However there are several sources of finance such share capital, bank loans , and borrowing money from friends and family. The advantage of raising finance is that it allows the new business to grow quickly and so it may benefit from a ‘first mover’ advantage over potential competitors.
Personal savings, every entrepreneur can use their personal saving to start their new business, as long as they have some savings. The advantage of using personal savings is that the money is instantly available and the entrepreneur will not have to make any repayments or any interest payments. The disadvantage is that if the business fails then the entrepreneur has lost all their money.
Family and Friends are another way to raise finance to start up new business because you already know them well and they may trust you and want to help you. They will be flexible on offering loans and you may not need to repay them in a short period and they will give you a long repayment period. Friends family already know your character so they won’t necessarily need to see a very detailed business plan to loan you a money to start a new business. However, this decision it might be risky because by raising money from friends and family will be very upset and angry if you can’t repay the loan because your business failed. Another problem is that they might also want to get involved in your new business because your friends and family are the investors and they may have different ideas about what the business should be doing, so this choice it might be risky.
A bank loan maybe the easy way to raise finance you need to propose to bank about your new business and show them a business plan. The bank will ask how you are going to repay the debt and they may give you the loan that you asking for to start a new business. Of course there advantage for loan at the bank offers flexibility for the business because you don’t need to pay the total full amount of the loan you just need to weekly or monthly payments to the bank. However there an disadvantages to a bank loan, the bank may have strict rules for loaning money because you need to put your personal assets as security to loan money from bank. If you do not have assets it will be hard to get loan from the bank, but if you still want to loan from the bank they will give you but with higher interest rates which is not good. i the future.
Share capital is money from shareholder that have been invested in the company for a long term finance in return they become a part owner of the business and get a share of the profits. Businesses that have shareholders will also have Limited Liability which is a big advantage if the business gets into financial trouble with debt. However, share capital has got some disadvantages, the more shares that are sold in the business then the less control the entrepreneur has of the business (it would be best for the entrepreneur to keep at least 51% of the shares). Also the entrepreneur will have to share any profits with the shareholders.
Henry Ford start raised finance by personal saving first because he have to create a Quadric cycle for selling to market and as the product became famous it drew the attention of an investor so Henry Ford then raised finance by share capital, selling shares in the Quadric cycle. Henry Ford used share capital because it is an efficient way to start up business and raise money, but Henry Ford had to use personal saving for the beginning because he needed to create the product, test the market and sell the product before he could attract investors to buy shares in the business..
Explain the importance of a business plan and the factors to be taken into account when presenting investor
Business plan is plan for development of a business, by giving detail such as how the product made and sold and forecast such as cost and cash flow, This is very important part in every business because without business plan business cant run without the plan. Every entrepreneur does this when they want to start their own business , this already shown that business plan is the vital part of business whether is small business or a big business such as Ford Company , Apple, Amazon, Nike and many other brand that had become successfully because of their own business plan regarding about their business
You must be wondering what is business plans contain, well at business plan it might contain an executive summary is an overview of the business start up, describe about the business opportunity what to be and marketing and sales strategy , operation then lastly finance , secondly business and objective it describe about the name of business and its address , and legal structure about their company finally about their aims and objective about the business that they want to start, business opportunities it a description how many the product will be made and quantity will be sold and the estimated price, and there is the market who had research about their potential customer , nature of the competition, and many things, and finally business plan contain about their financial forecast does really important job by count their overflow and income by how many they gained their profit and the business loss forecast , and financial forecast is really good by doing analyse the profit and loss.
How good business plan can help a business raise finance from investor? Yes its really helpful if you have a good business plan can get business raise finance from investor, because business shows how good your achievement and target or goal that you will achieve if you have raise finance from investor, and lastly business plan shows you how the business raise the fund and shows the investor how the business will give back their profit, by starting to sold product and get profit
Understand and analyse the identification and management of business risk
Explain the principles of risk analysis, Identification and mitigation and management
What is business risk is the possibility that every business have lower profit or experience loss rather than taking profit, Business risk is influenced by many reason such as input cost, per unit price , numerous factors , competition, overall economic climate, and government regulation . Every business always had the business risk experience from different factors either big company or small company, every business tried fulfil the factors to avoid business risk such as bankrupt or have a low profit because the business not fulfilled the terms, and for every entrepreneur cant underestimate about the terms that they dealing to avoid business risk, for example many business has failed because they cant keep the business to fulfilled the term that every business must know since they want to start business.
How can business risk be identified? There two type how to identified by Swot analysis or Pestle analysis so to identified business we need to know how these two types identified business lets start what is swot analysis is useful technic for understanding your business strength and weakness and also swot analysis can identified both the chance they got at business meanwhile pestle analysis more general because they analyse the key factors such as political, economical, sociological, legal and envoirment. So to identified business risk first of all you need to use swot analysis because swot can identified your understanding about your own business strength and weakness when you already know about your business strength and weakness then use pestle to know about the regulation because pestle analyse the key factors such as political , economical, sociological, legal and envoirment. These two different analysis can prevent and identified your own business.
Explain how an entrepreneur may mitigate or reduce their risk, this may include:
Good business planning is very important to entrepreneur to start their own business because good planning help the Entrepreneur to achieve their goals and made the business become more successful not just for short term but its for long term objective. Every entrepreneur does this to create their own business such as Henry Ford he a successful entrepreneur because he have a good business plan when he start the first business called Detroit Automobile Company and then Henry Ford created FMC ( Ford Automobile Company) and FMC has become successful company until the millennial era. These facts already shown how much important of good business plan to every entrepreneur and to create the successful business.
Strong market research is really helpful for business because market research does the vital part by identify what happening at the market and seek opportunities for their business, basically market research does the analysing and find information what happen on market, and find out about product that they might offer for sale in the market or find out about their potential customer for their business such as your business location is it strategies, do research about the competitor the business face or customer interests. So strong market research can reduce the risk of their business by doing own market research.
Cost management is a step that every entrepreneur do when they want to produce the product or advertisement your product at the market, Basically cost management help the business to controlling the budget although cost management only controlling budget for company but it very important part of business planning because if your business use cost management to controlling budget it will help the business to reduce the risk and avoid going over budget.
Strong control and monitoring of cash flow
Strong computer/it security Every business need to have it security or you can called it Cyber security why? Because it security can protect your data such as customer information, office mail, and many other things because there many accident cause by hackers tried to steal customer information from the business site and got stolen because the company doesn’t have Cyber security or Strong computer, and every entrepreneur/business want to mitigate this accident by have Strong It so the business doesn’t get hacked or got stolen by anonymous. This is really important at business although many business doesn’t think that have a strong it is really important but however Have a strong it has become the important part
...(download the rest of the essay above)