Entrepreneurship, Startup, and Role of Government

  • The person who chooses to take a risk to start a new business venture is called an entrepreneur. Apart from risking his/her capital and finances from investors, there is also the opportunity cost of foregoing salaried employment for self-employment.
  • The key qualities of an entrepreneur are that (s)he is:
  1. Hardworking.
  2. Creative – Ability to come up with new ideas.
  3. Innovative – Ability to put new ideas into practice.
  4. Self-confident.
  5. Amenable to taking risks.
  6. Optimistic.
  7. Effective communicator.
  8. Independent.
  • A government supports a business start-up because it can:
  1. Create employment.
  2. Increase competition in the market, which enhances market competitiveness.
  3. Increase total economic output of the market.
  4. Support social objectives such as helping disadvantaged groups.
  5. Grow into a large business.
  • Government support can take the form of:
  1. Provision of low-interest loans to start-ups.
  2. Creation of enterprise zones where start-ups are provided with low-rent business premises.
  3. Organizing sessions where entrepreneurs can engage with business experts and receive business advice.
  4. Grants to start-ups that employ a set number of people from an economically-distressed area plagued with high unemployment.
  5. Provision of research facilities and funding to support market research, and allow entrepreneurs to access this research.
  • The size of the start-up business is determined by the:
  1. Capital Employed: This is the amount of capital raised that is actually injected into the business.
  2. Number of Employees: This is principally influenced by the production method used by the business to create the product that it sells. For instance, a factory with an automated production line can achieve high product output using a few workers.
  3. Sales Value: This is number of items sold by a business. It is useful for determining the size of a retail business, as well as comparing 2 retail businesses that sell the same products.
  4. Output Value: This is influenced by the number of products produced by the business and the cost per unit of product. For instance, a low output of high-value products can create a larger output value than a high output of low-cost items.
  • A business that requires a high amount of capital in order to become operational, e.g a highly-automated factory, is called a capital-intensive business.
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