Explain four characteristics needed for an entrepreneur to be successful.

Mark scheme

Marking points from the official mark scheme (May/June 2023). The mark or mark type is shown in brackets.

1. [8] (a) Award 1 mark for each relevant characteristic (max 4). Award a maximum of one additional mark for each explanation of a characteristic of being a successful entrepreneur. There are no application marks available. Relevant characteristics might include: Self-confident – strong belief in their own ability and ideas; Creative – find new and different ways to attract customers; Independent – willing to go with own ideas; Hard worker/dedicated – prepared to work long hours; Risk-taker - willing to risk losing own capital/as a sole trader or partnership willing to risk losing personal assets; Effective communicator – able to persuade others; Optimistic - think positively about new ventures and continue if there are setbacks; Innovative - able to develop new products to retain customers; Good at networking – prepared to learn from others; Self-motivated/Determined/Passionate/Driven; Results driven; Strong leadership qualities; Resilience; Experience/Knowledge/Multi-skilled. For example: Self-confident (1) as the entrepreneur has a strong belief in their own ability and ideas to convince others such as banks to lend to them (1)
2. [12] (b) Level 3 (9-12 marks): Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of both options. Well-justified recommendation. Candidates discussing both options in detail, in context and with a well-justified conclusion including why the alternative option was rejected should be rewarded with the top marks in the band. Level 2 (5-8 marks): Sound application of knowledge and understanding of relevant business concepts using appropriate terminology. Detailed discussion of at least one option. Judgement with some justification / some evaluation of choices made. Candidates discussing at least one option in detail and applying it to the case should be rewarded with the top marks in the band. Level 1 (1-4 marks): Limited application of knowledge and understanding of relevant business concepts. Limited ability to discuss the options with little/no explanation. Simple judgement with limited justification / limited evaluation of choice made. Candidates outlining both options in context should be rewarded with the top marks in the band. Level 0 (0 marks): No creditable response. Relevant points might include: Unincorporated business - Advantages: Partners are in complete control of the business; Do not have to share profits with shareholders – may lead to higher profits each if shared between fewer owners; Easy to set up the theatre and will have few legal requirements to operate the business – reducing effort and cost to set up. Unincorporated business - Disadvantages: Unlimited liability – could lose all personal possessions; Limited sources of capital - if only 2 partners invest in the business as limited to their own capital; Partners are responsible for all decisions taken by either partner if mistakes are made may lead to personal financial losses and may be equally liable. Limited company - Advantages: Limited liability – owners personal possessions will not be used to pay business debts; Owners and business are separate legal identities - provides continuity on the death of owners; Can sell shares to raise capital to set-up the theatre – to family and friends – large amounts of capital may be raised. Limited company - Disadvantages: Accounts are not private – competing theatres may access the accounts; Not easy to transfer shares as a private limited company – may make it difficult to sell shares to family and friends; Legal formalities to set up – may take more time and cost than a partnership; Legal formalities to operate the company – needs to have accounts audited and registered with the government takes time and increases costs. Recommendation Justification may include: ET should be an unincorporated business because it is easy to set up the partnership. Zane and Zaara will have complete control of the theatre and keep all the profits. There are not the legal formalities with a partnership that will increase costs that there are if ET was a private limited company. ET should be a limited company to gain the benefits of limited liability. If anything goes wrong with the theatre, then any liability will only be for an amount invested in the business, all Zane and Zaara's personal belongings will be safe.