- People set up businesses for a variety of financial and non-financial reasons
Financial & Non-financial reasons for Setting up a Business
Financial Reasons
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Explanation
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Example
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Profit maximisation
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- People want to create a profitable business that generates substantial revenue and profit for themselves and their shareholders
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- Amancio Ortega, the founder of Zara, built a fast-fashion empire that has become one of the most profitable clothing retailers in the world
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Profit satisficing
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- Occurs when the entrepreneur is not solely focused on maximising profits but rather achieving a satisfactory level of profit
- This is common among small businesses, where the owner may prioritise their work-life balance
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- Yvon Chouinard, the founder of Patagonia, created a successful outdoor clothing and gear company that was initially built to help finance his climbing expeditions
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Non-financial Reasons
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Explanation
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Example
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Ethical stance
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- Some entrepreneurs may have a particular ethical stance (e.g. environmental sustainability or social justice) that they want to build their business around
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- Anita Roddick, started The Body Shop, as she wanted to create a company that would promote environmental sustainability, fair trade and human rights
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Social entrepreneurship
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- These entrepreneurs aim to create a business that seeks to address a social or environmental problem while also earning a living
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- Blake Mycoskie, the founder of TOMS Shoes, created a business model that donates a pair of shoes to a child in need for every pair sold
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Independence
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- Many people want to be their boss and have control over their work
- They may be dissatisfied with traditional employment structures or desire the freedom and flexibility that comes with running their own business
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- Travis Kalanick and Garrett Camp, the co-founders of Uber, started their business with a desire for independence and the ability to work from anywhere
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Home working
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- With the advent of technology, many people have started businesses from their homes and this offers them more flexibility and a better work-life balance
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- Sara Sutton, the founder of FlexJobs, had a desire for independence and the ability to work from home and this led her to create a successful online job board that specialised in remote and flexible work opportunities
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