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The role of an entrepreneur, intrapreneurship and barriers to entrepreneurship

Edexcel IAL Business · WBS11 Marketing and people

Entrepreneurs create the businesses that the rest of the unit studies. This lesson covers what entrepreneurs do (creating, running and developing businesses), innovation within a business (intrapreneurship), the barriers that stop people starting businesses, and how entrepreneurs anticipate risk and uncertainty.

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What an entrepreneur does

An entrepreneur is someone who has a business idea, organises the resources (land, labour, capital) to turn it into a business, and takes the risk of failure in return for the possibility of profit.

Roles in the specification:

Creating and setting up a business: spotting an opportunity, researching the market, writing a business plan, raising finance, choosing a legal structure and location.
Running and expanding / developing a business: managing day-to-day operations, hiring staff, building customer relationships, then growing through new products, new markets or new premises. The October 2024 WBS11 paper asked about the difficulties of expanding a young delivery business (8 marks): finance, competition and hiring staff were credited, against a growing market and the founder's skills.

Intrapreneurship

Intrapreneurship is entrepreneurial behaviour by employees inside an existing business: developing new products, processes or ventures, using the firm's resources. Firms encourage it through innovation time, internal funding for ideas, rewards and a culture that tolerates failure.

Benefits: new products and growth, motivated staff (Herzberg's motivators, Maslow's self-actualisation), keeps talented people who might otherwise leave to start their own businesses. Costs: time away from core work, failed projects cost money, and the firm takes the risk.

Barriers to entrepreneurship

Lack of finance: banks see start-ups as risky; personal savings may be limited.
Lack of skills, knowledge or experience of running a business.
Fear of failure and the personal financial risk (unlimited liability for sole traders).
Competition from established firms with brands and economies of scale.
Regulation and bureaucracy: licences, tax, employment law.
Lack of a good idea, or of time because of a current job or family.

Anticipating risk and uncertainty

Entrepreneurs face risk (measurable, such as the chance a new product fails based on industry data) and uncertainty (unpredictable, such as a new rival or an economic shock).

They reduce exposure by: market research and test marketing, a business plan with cash flow forecasts, starting small, spreading risk across products, insurance, contingency plans and keeping cash reserves.

Worked example

A software engineer at a large bank develops a new mobile payment feature in her spare time at work, which the bank then launches. Explain whether this is entrepreneurship or intrapreneurship, and one benefit to the bank.

She innovated inside an existing firm using its resources: intrapreneurship.
The bank takes the risk and gains the product.
Benefit: a new service that may attract customers, without the cost of buying a start-up, and a motivated employee who stays.

Answer: Intrapreneurship; the bank gains innovation and keeps a talented employee.

Key idea: Entrepreneurs create, run and develop businesses, taking risk for profit. Intrapreneurs innovate inside existing firms. Barriers: finance, skills, fear of failure, competition, regulation. Reduce risk through research, planning, starting small and reserves.

Check yourself

An employee at a car company leads a small internal team that develops a new electric scooter for the company. This is
- intrapreneurship
- entrepreneurship as a sole trader
- outsourcing
- franchising
Show answer
intrapreneurship. Innovation within an existing business.
Which is a barrier to entrepreneurship?
- A growing market for the product
- Strong personal savings
- Difficulty obtaining finance from banks
- Low competition
Show answer
Difficulty obtaining finance from banks. Lack of finance is a major barrier.
State two roles of an entrepreneur.
Show answer
Creating and setting up a business, for example spotting an opportunity and raising finance, and running and expanding it, such as hiring staff and entering new markets.. Create and set up; run and develop.
Explain one way an entrepreneur can reduce the risk of starting a business.
Show answer
By carrying out market research and test marketing before launching, so they know whether there is enough demand and can adjust the product.. Research, planning, starting small, insurance or reserves.
What is a likely benefit of intrapreneurship for an established business?
- It removes all risk from innovation
- It generates new ideas and helps keep talented staff who might otherwise leave
- It means the firm no longer needs managers
- It guarantees every new product succeeds
Show answer
It generates new ideas and helps keep talented staff who might otherwise leave. Innovation plus retention.
Which is a difficulty an entrepreneur commonly faces when expanding a business?
- Having too few customers to serve
- No longer needing to manage cash flow
- Losing all competitors
- Raising enough finance and recruiting suitable staff
Show answer
Raising enough finance and recruiting suitable staff. The October 2024 scheme credited finance and hiring staff.

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Last updated 8 November 2026. Spotted a mistake? Tell us.