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Contrast the relationship that exists between entrepreneurs and investors in a business enterprise. - Leaving Cert Business - Question A - 2001
Question A
Contrast the relationship that exists between entrepreneurs and investors in a business enterprise.
Worked Solution & Example Answer:Contrast the relationship that exists between entrepreneurs and investors in a business enterprise. - Leaving Cert Business - Question A - 2001
Step 1
Contrast the relationship between entrepreneurs and investors: Definition
Answer
Entrepreneurs are innovators who create and run new businesses, taking on risks to develop their ideas into viable enterprises. Investors, on the other hand, are individuals or entities that provide capital to entrepreneurs in exchange for equity or debt. While entrepreneurs focus on building their business and executing their vision, investors concentrate on evaluating the potential return on their investment.
Step 2
Contrast the relationship between entrepreneurs and investors: Objectives
Answer
The primary objective of entrepreneurs is to turn their innovative ideas into profitable business outcomes. They seek to develop and grow their businesses, often looking for resources and mentorship along the way. In contrast, investors aim to maximize their returns on investment. They assess the viability of the business model and the entrepreneur’s ability to execute the vision, placing their financial bets on the most promising ventures.
Step 3
Contrast the relationship between entrepreneurs and investors: Nature of Engagement
Answer
The relationship between entrepreneurs and investors is typically transactional yet collaborative. Entrepreneurs often seek funding and advice from investors, who provide essential resources that can introduce valuable networks and industry insights. This dynamic fosters a partnership where both parties must communicate effectively and align their interests to ensure the business thrives.
Step 4
Contrast the relationship between entrepreneurs and investors: Risk and Reward
Answer
In this relationship, risk is a prevalent factor. Entrepreneurs bear the brunt of the risk as they invest their time, effort, and resources into their ventures, uncertain of the outcome. Investors, while they also take on risk, do so with capital. Their reward is based on the business's financial success, typically earning a return through dividends, interest, or the appreciation of their equity stake.