QCF Syllabus

Understanding Entrepreneurship
Unit Title Understanding Entrepreneurship
Unit Reference Number L/504/4408
Guided Learning Hours 100
Level 4
Number of Credits 12

Unit purpose and aim(s):

This unit aims to give learners a sound understanding of:
 the concepts of enterprise and entrepreneurship, how entrepreneurs contribute to the economy
 the characteristics and skills of entrepreneurs
 barriers faced by entrepreneurs
 entrepreneurial motivations and influences
 innovation and creativity
 political and economic issues including business support processes

Learning Outcome 1

The learner will: Understand the concepts of entrepreneurship and enterprise, and the characteristics that differentiate the
various types of entrepreneurs and business owners, and the importance of entrepreneurs and SMEs to the
economy.

Assessment Criteria Indicative Content

The learner can:
1.1 Define and explain the terms:
entrepreneurship,
entrepreneurs, enterprise and
owner-managers.
1.2 Explain and discuss the
importance of entrepreneurship
and small businesses to the
economy.
1.3 Identify and explain the key
differences between small
businesses and large
corporations.
1.1.1 Define and explain the meanings of entrepreneurship and enterprise and the
various forms these can take.
1.1.2 Identify the differences between entrepreneurs, serial entrepreneurs,
intrapreneurs, and owner managers – growth objectives, ability to identify
opportunities, attitude to innovation and risk, strategic vision.
1.2.1 Explain the role and characteristics of micro, small and medium sized businesses in
the economy in terms of relative size, turnover, numbers of employees, value of
turnover, role in national economies, etc., using the EU (or alternative) definitions of
these businesses.
1.2.2 Explain the importance of business start-ups and small firms to the economy –
sources of innovative products and services, generating new employment
opportunities, wealth creation and revenue from taxation of profits.
1.3.1 Explain the differences and relevance of those differences between small and large
firms in terms of:
 structure & management
 organisational culture
 financial complexity and access to funding
 skills requirements
 attitude to staff training and development
 the ability to manage red-tape and legal compliance
 the ability of small firms to be flexible and respond rapidly to market demand.
Learning Outcome 2
The learner will: Understand characteristics and motivations that influence the way entrepreneurs operate, and the specific skills
they use to succeed.
Assessment Criteria
The learner can:
2.1 Identify the range of skills
typically exhibited by successful
entrepreneurs.
2.2 Explain and discuss key
arguments and interpretations
relating to entrepreneurial
personality and characteristics.
2.3 Explain and discuss the concept
of the need for family support to
ensure survival of a new
business.
Indicative Content
2.1.1 Describe the combination of entrepreneurship skills that typify entrepreneurs or
differentiate them from other business managers – opportunity spotting,
developing networks, strategic vision, product commercialisation, ability to harness
resources, tenacity, etc.
2.1.2 Describe several examples of successful international entrepreneurs to illustrate
how the skills are employed, for example: Richard Branson (Virgin), Bill Gates
(Microsoft), James Dyson (Dyson), Anita Roddick (Bodyshop), Michael Dell (Dell),
Alan Sugar (Amstrad), Duncan Bannatyne (Dragons’ Den), Mo Ibrahim (Celtel), Wale
Tinubu (Oando PLC).
2.2.1 The key arguments:
 Are entrepreneurial skills inborn in certain people? (The Made or Born
Argument)
 Can entrepreneurship be taught or learned? Is it a transferable management
skill?
 Does growing up in an entrepreneurial environment influence the potential to be
entrepreneurial?
2.2.2 Characteristic traits of owner-managers:
 the need for achievement
 the need for independence
 the locus of control (believe you can exercise control over your environment)
 ability to live with uncertainty and take measured risks.
2.2.3 Characteristic traits of entrepreneurs:
 opportunistic
 innovative
 self-confident
 proactive and self-motivated
 visionary with flair
 willingness to take far greater risks and live with greater uncertainty.
2.2.4 Entrepreneurial motives:
 Push (necessity-based) motives vs. pull (opportunity-based) motives.
 Personal / life style motives – desire to prove personal ability or achievement /
make a mark / create personal wealth / gain social recognition or prestige /
create a legacy for family future / competitive instincts.
 Desire to develop and grow a strong and profitable business or business empire.
 Desire to minimise unbalanced risk / dislike of imposed authority / desire to
prove oneself.
2.3.1 Explain Family Support argument
 The pros and cons of the argument that the strategic objectives of the business
and the objectives of the family (or families) associated with the business must
be aligned if the business is to succeed.
Learning Outcome 3
The learner will: Understand the various barriers faced by entrepreneurs when starting a new business or when growing an
existing small business.
Assessment Criteria
The learner can:
3.1 Identify and explain the barriers
to business start-up.
3.2 Identify and explain the barriers
to growing an existing small
business.
3.3 Identify and explain the
importance of creating an
innovative or enterprising culture
to support small business
growth.
Indicative Content
3.1.1 Describe and explain the various barriers that entrepreneurs may experience when
starting a new business, including:
 Barriers relating to the entrepreneur’s own skills, knowledge and abilities,
competence and confidence to successfully establish a new business.
 Sales and marketing problems including issues of researching and understanding
markets.
 Financial problems including identifying and accessing appropriate forms of
finance for start-up, and the need for possible security against borrowing.
 Resource implications for the business, including both staff and physical
resources.
 Identifying essential issues of statutory and legal compliance, or registrations
needed to operate the business.
3.1.2 Describe and explain the options an entrepreneur might have to overcome these
barriers.
3.2.1 Describe and explain the various barriers that entrepreneurs may experience when
expanding a small business, including:
 Barriers relating to the entrepreneur’s own financial position, renewed exposure
to financial risk, or the need to give up some personal control in order to
delegate to and trust new functional managers.
 Barriers to market entry including the size of the market, problems of market
penetration, numbers and relative strength of competitors, and costs of
achieving market share.
 Financial problems including identifying and accessing appropriate forms of
finance to fund each stage of the growth, especially for innovative / high-tech
businesses.
 Resource implications for the business, including expansion of both staff and
physical resources.
 Organisational issues relating to the impact that growth strategies may have on
the existing staff and the culture within the business.
3.3.1 Explain the meaning and the key features of enterprise cultures and how an
organisation can benefit from creating such a culture.
3.3.2 Describe the ways in which an entrepreneur might seek to create an enterprising
culture within a business, including:
 Encouraging suggestions from staff for new ideas or innovations.
 Allowing time and resources for staff to work on new ideas.
 Creating a positive, supportive and blame-free environment in which staff feel
valued.
 Accepting failure as an acceptable risk, as a normal part of the process and
without any blame.
 Building innovation targets into the staff appraisal process.
 Acknowledging or rewarding successful ideas.
Learning Outcome 4
The learner will: Understand the entrepreneurial motivations and influences that will affect the ways in which a small business
might develop and grow.
Assessment Criteria
The learner can:
4.1 Define the traditional concept of
the business life-cycle and its
inherent weaknesses in
explaining how businesses
develop.
4.2 Explain and discuss how the
entrepreneur’s own objectives
and motivations will change at
each stage of business
development.
4.3 Explain and discuss the
importance of succession
planning in small firms.
4.4 Explain and discuss the
importance of exit strategies for
entrepreneurs.
Indicative Content
4.1.1 Explain the five-stage linear business life-cycle model and why it is unsatisfactory in
the context of options for growth and development of small businesses.
4.1.2 Describe and explain the various growth and development options that a small firm
might follow, including:
 Failure to survive the start-up stage, and voluntary or involuntary closure.
 Achievement of break-even and profitable trading levels and continuation as a
lifestyle business without subsequent growth.
 Continuation as a family business via succession planning.
 Achievement of break-even and profitable trading levels and continuation to
grow to maturity & decline.
 Achievement of break-even and profitable trading levels and continuation to
grow further.
 Trade sale / merger / acquisition by another company, or a pre-defined exit
strategy.
 Stock market flotation.
 Continued expansion and success.
4.2.1 Explain how the personal objectives, business priorities and decision-making
processes of entrepreneurs change as they progress from start-up, to relative
stability, and subsequent growth.
4.2.2 Explain the importance of strategic thinking to the development of growth
strategies in small firms – as a factor that differentiates growth-firms from lifestyle
businesses.
4.3.1 Explain the purpose and process of succession planning in business, and in particular
in family firms.
4.3.2 Explain and describe the problems that can occur relating to succession planning in
small firms.
4.4.1 Explain what is meant by exit strategies and why it may be important for an
entrepreneur to identify exit options in the early stages of planning a new business.
4.4.2 Describe some of the exit strategy options available to entrepreneurs (or investors
in small firms), including:
 trade sale to another company
 sale of the company equity to an external investor to facilitate future growth
 sale to a management buy-out
 closure of the business and sale of assets.
Learning Outcome 5
The learner will: Understand the concepts of innovation and creativity, their importance to the economy, and the roles that both
play in entrepreneurship and business development.
Assessment Criteria
The learner can:
5.1 Define and explain the terms
innovation and creativity.
5.2 Explain and discuss the
importance of encouraging
technological innovation and
high-growth potential
enterprises.
5.3 Explain the importance of
protecting intellectual property
for innovations.
Learning Outcome 6
The learner will: Understand the political and economic issues facing entrepreneurs and government support agencies, and
identify the range of business support processes that governments may offer to encourage and support
entrepreneurial development.
Assessment Criteria
The learner can:
6.1 Define and explain the political
and economic factors that can
influence the success of small
enterprises.
Indicative Content
5.1.1 Define the meaning of innovation and creativity and explain how they interrelate.
5.1.2 Describe the different aspects of innovation that comprise the innovation spectrum
and explain the importance of breakthrough innovations in creating competitive
advantage for businesses.
5.2.1 Explain the importance of high-tech and high-growth firms as contributors to
economic wealth and the creation of new employment opportunities.
5.2.2. Explain the different requirements that high-growth and high-tech enterprises have
compared with conventional lifestyle businesses – specialist management teams,
support for research and development, staged funding for growth.
5.2.3 Explain why high-tech businesses often need to access several stages of funding in
order to grow – e.g.
 research & development funds
 proof-of-concept funding
 pre-market product development and patenting
 market launch
 seed funding for growth
 venture capital for expansion etc.
5.2.4 Explain how business incubation and support programmes can improve the
potential for high-growth and high-tech start-ups to succeed and grow.
5.3.1 Describe the main types of property rights protection:
 patents
 patent licensing
 copyrights
 trade marks
 brand names
 industrial & commercial secrets.
5.3.2 Explain some of the limitations of IPR protection and why some entrepreneurs
adopt a straight to market strategy:
 Concern that competitors may copy a patent application.
 Expensive, time consuming and requires specialist legal expertise.
 Even 20 years protection may be insufficient to generate a satisfactory return on
research and development costs.
 Patents (and copyrights etc.) are only meaningful if they can be successfully
defended.
Indicative Content
6.1.1 Describe and explain some of the political and economic issues that impact on the
operations of small businesses:
 The conflicting need for regulatory controls and the disproportionate impact this
has on the resources of small firms.
 The tendency of governments to regard small enterprises as the solution to
economic downturns, whilst simultaneously cutting back on support services for

6.2 Explain and discuss ways in which
new and early stage enterprises
can be encouraged and
supported.
6.3 Define and explain the issues
relating to individuals and small
enterprises that operate in the
grey economy.
those businesses when it is most needed.
 The lack of continuity of business support caused by changes in national and
regional government.
 The lack of coherent funding support e.g. for start-up grants, market research,
and skills training.
 The lack of affordable finance and loans for small firms due to the reluctance of
commercial banks to lend to them.
6.2.1 Identify and explain ways in which governments can create the right environment
and fiscal conditions to encourage the development and growth of new enterprises.
 Availability of business support expertise.
 Access to loans and investment funding.
 Enterprise friendly taxation policies.
 Tax incentives to encourage risk-investment.
 Start-up loans and grants for innovation development.
 Encouraging collaboration with academic research.
 Encouraging development partnerships with larger businesses.
 Supporting international market access and export trade development.
6.2.2 Identify and explain the main types of business support agencies used by small
firms, e.g.:
 Chambers of Commerce.
 Local Enterprise agencies and partnerships.
 Economic development agencies (public or private sector).
 Inward Investment Agencies.
 International Trade Agencies and overseas embassies.
 Export Documentation and Export Credit services.
 Private commercial banks.
6.3.1 Describe the potential attractions and pitfalls of operating illegal part-time or full-
time business activities without being registered as a business – avoidance of paying
taxes or complying with legal regulations etc.
6.3.2 Describe and explain the problems faced by governments with illegal or
unregistered individuals and small firms operating in the grey economy – lack of
regulation and control, risk of unsafe or dangerous practices, loss of taxation to the
economy, no recompense for unsatisfied customers, etc.

Assessment:

 Assessment method: written examination (unless otherwise stated).

 Written examinations are of three hours’ duration.
 All learning outcomes will be assessed.

Recommended Reading:

 Burns, P., Entrepreneurship and Small Business, 3rd ed. (2011), Palgrave Macmillan, Basingstoke (Core Text)
 Butler, D., Enterprise Planning and Development, (2006), Elsevier, Oxford
 ABE Study Manual, Business Start-up and Entrepreneurship, (2013)