Risks of Social Entrepreneurs
Questions and Answers
1) what are the pros and cons of keeping the level of taxation low on business's
2) and the pros and conds of making cheap loans available
im sorry i dont understand the answer 🙁
Low taxation encourages entrepreneurs to set up businesses because they can keep more of the profits to spend or to reinvest in the business. Having a lower tax rate on business than in another territory gives businesses an incentive to locate in your territory. Even though the rate of tax may be low, if you attract enough firms, the total tax receipts are higher than they might otherwise have been. If the firms then employ local people, the authority might benefit from the income tax they pay and might save money of social benefits for people who might otherwise be unemployed. The same benefits might apply to the answer about cheap loans.
The downside of low taxes on business is that the authorities that receive the taxes have less income to pay for the services they need to provide and less money to deal with the social or environmental impacts of those businesses.
Making cheap loans available to a business helps it to raise the finance to set up the business, to carry it between selling things and getting paid and to expand the business (buying more stock, new machines, bigger premises etc.) That can help to create jobs or to protect existing jobs. If the firm is paying a low interest rate on a loan, it doesn't have to pay so much to the lender so it keeps more of the profit it makes.
One potential problem with cheap loans is that it may encourage more borrowing than is really needed, getting firms into debt unnecessarily. Another problem is cheap loans are less profitable for the lenders so they might not be so willing to lend if they can get higher interest (and hence profit) elsewhere.
The interest rate on a loan should reflect both the rate the lender could get elsewhere without taking any risk PLUS a bit extra to cover the perceived risk of lending to a particular borrower. The more someone borrows (relative to their value without the loan or their ability to repay it on time) the greater the risk so the higher the interest rate that is charged. If you follow that, you might see that the small businesses that most NEED a cheap loan are the ones that pose the greatest risk to the lender so the lender would actually want to charge them a HIGH interest rate.
The Functions of the of entrepreneurs are:
Social: Motivated by a desire to help, improve and transform social, environmental,
educational and economic conditions.
Serial: Continuously comes up with new ideas and starts new businesses. In the media,
the serial entrepreneur is represented as possessing a higher propensity for risk, innovation
Lifestyle: Places passion before profit when launching a business in order to combine
personal interests and talent with the ability to earn a living. Many entrepreneurs may be
primarily motivated by the intention to make their business profitable in order to sell to
shareholders. A lifestyle entrepreneur intentionally chooses a business model intended to
develop and grow their business in order to make a long-term, sustainable and viable living
working in a field where they have a particular interest, passion, talent, knowledge or high
degree of expertise.
Cooperative: Collaborates with other cooperative entrepreneurs to develop projects,
particularly cooperative projects. Each cooperative entrepreneur might bring different skill
sets to the table, but collectively they share in the risk and success of the venture.
It is generally understood that social entrepreneurs are people with creative and innovative solutions for society's problems. They are possessed by their ideas and are committed to changing society for the better. Perform an Internet search to read more about social entrepreneurs at the Skoll Foundation's website. What are the risks for a social entrepreneur? Why? What are the benefits for a social entrepreneur? Why? What are the similarities and differences between business entrepreneurs and social entrepreneurs? Why is this important to consider and discuss? Can social entrepreneurship be successful in our capitalistic society; if so, how? Why? If not, why not? What should be changed in our capitalistic society to assist social entrepreneurs in becoming successful? Why? Would strict capitalists recommend such changes in order to accommodate social entrepreneurs? Why? How?