Domain 1 Lesson 1: Entrepreneurship Basics

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Questions and Answers

Which stage comes directly after the 'Success' stage in the business life cycle?

  • Exit plan
  • Pivot or persist
  • Take off
  • Resource maturity (correct)

During which stage of the business life cycle is a company likely focused on maintaining profitability after initial success?

  • Resource maturity (correct)
  • Survival
  • Exit plan
  • Take off

Which of the following is the correct first step in the design thinking process?

  • Test
  • Prototype
  • Empathize (correct)
  • Define

In which business life cycle stage is a business likely to be when it is trying to gain its first customers?

<p>Existence (A)</p> Signup and view all the answers

What is the primary focus during the 'Empathize' stage of the design thinking process?

<p>Understanding user needs and experiences (B)</p> Signup and view all the answers

Which stage would Michael's profitable tech company be in if it has been approached for acquisition?

<p>Exit plan (B)</p> Signup and view all the answers

What is the typical sequence of stages in the design thinking process?

<p>Empathize, define, ideate, prototype, test (B)</p> Signup and view all the answers

What stage follows the 'Survival' stage in the business life cycle?

<p>Take off (C)</p> Signup and view all the answers

What is the first stage of the design thinking process?

<p>Empathize (A)</p> Signup and view all the answers

During which stage of the design thinking process do teams create solutions to identified problems?

<p>Ideate (D)</p> Signup and view all the answers

What is the purpose of creating prototypes in the design thinking process?

<p>To test multiple solutions (A)</p> Signup and view all the answers

In which stage of the design thinking process is the problem statement formed?

<p>Define (D)</p> Signup and view all the answers

What stage involves understanding the customer's challenges?

<p>Empathize (C)</p> Signup and view all the answers

Which of the following stages comes after ideation in the design thinking process?

<p>Prototype (D)</p> Signup and view all the answers

In the design thinking process, what is the primary goal of the test stage?

<p>To gather user feedback on prototypes (D)</p> Signup and view all the answers

Which order correctly represents the design thinking process stages?

<p>Empathize, Define, Ideate, Prototype, Test (B)</p> Signup and view all the answers

What is a Minimum Viable Product (MVP)?

<p>An inexpensive version of a product used for testing (C)</p> Signup and view all the answers

How do small business owners primarily differ from entrepreneurs?

<p>Small business owners invest in known risks while entrepreneurs may take on unknown risks (C)</p> Signup and view all the answers

What characterizes a franchise in comparison to other small business types?

<p>Operates under established branding and business models (C)</p> Signup and view all the answers

Which statement best describes products compared to services?

<p>Services require training to perform, unlike products (B)</p> Signup and view all the answers

What is a challenge associated with digital products?

<p>It is often difficult to demonstrate their value to customers (B)</p> Signup and view all the answers

Which statement best illustrates the risk profile of entrepreneurs?

<p>They often embrace unknown risks seeking rapid growth (D)</p> Signup and view all the answers

In what way do physical products and services differ in terms of presentation?

<p>Physical products come ready-made while services may require initial training (A)</p> Signup and view all the answers

Why might small businesses prefer e-commerce for selling products?

<p>E-commerce allows for broader market reach without geographical limitations (C)</p> Signup and view all the answers

Flashcards

Business Life Cycle

The stages a business goes through from its inception to its closure.

Existence Stage

The initial stage, involving the development of the idea, securing resources, and establishing the business.

Survival Stage

The stage focused on establishing a customer base, generating revenue, and achieving profitability.

Success Stage

The stage where the business has established itself and is consistently profitable.

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Take Off Stage

The expansion phase with increased revenue, customer acquisition, and market share.

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Resource Maturity Stage

The stage characterized by mature operations, stable revenue streams, and potential for expansion.

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Pivot or Persist Stage

The stage where the business evaluates its future, considering options like scaling, restructuring, or exiting the market.

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Exit Plan Stage

The final stage, involving planning for the eventual exit or closure of the business. This can involve selling the business, going public, or winding down operations.

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Empathize

The first step in the design thinking process where you understand the needs and challenges of your target users.

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Define

The stage where you clearly define the problem you are trying to solve based on the insights gathered from the empathize stage.

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Ideate

The creative stage where you brainstorm and generate ideas to address the defined problem.

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Prototype

The stage where you create tangible prototypes to test and refine your solutions.

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Test

The stage where you gather feedback from users by testing your prototypes and refine your solutions based on what you learn.

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Design thinking

A structured approach to problem-solving that focuses on understanding user needs, generating ideas, prototyping solutions, and testing them.

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Design thinking process

A series of steps that involves understanding user needs, defining the problem, ideating solutions, prototyping them, and testing them.

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Prototype stage

The stage in the design thinking process where you create multiple inexpensive product versions to test and gather feedback.

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Small Business Owner

A small business owner focuses on generating profits and deals with known risks.

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Entrepreneur

Entrepreneurs tend to grow fast and take on new opportunities and unknown risks.

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Franchise

A licensed business with established operations, products or services, and branding.

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Product

A physical item that one holds, such as clothing, toys, and food.

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Service

An intangible service provided by a business, like car detailing, computer repairs, or lawn maintenance.

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Shipping Costs

The costs associated with sending physical products to customers.

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Digital Products

Digital products are instantly available, though it can be challenging to show value.

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Minimum Viable Product (MVP)

The process of creating and launching a basic version of a product to gather user feedback and validate its potential.

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Study Notes

Domain 1 Lesson 1: Entrepreneurship and Small Business V2

  • Small business owner objective: Generate profits

  • Entrepreneurs: Take on new opportunities and unknown risks to grow businesses quickly

  • Tangible items: Products that require pick-up or delivery

  • Business-to-consumer (B2C) transaction: Customer purchases an item from a business

  • S corporations: For-profit corporations with limited liability

  • C corporations: Ideal for international businesses

  • Chief Operating Officer (COO): Oversees daily operational and administrative functions

  • Stockholder: Votes on company management

  • Salary: Fixed payment employees receive each pay period

  • Piecework: Compensation based on the amount of work produced

  • Equity: Offered in addition to salary, a share in the business

  • Survival stage: Business consistently gains new customers and consistent income

  • Exit plan stage: Owner sells ownership in the company

  • Design Thinking Process stages:

  • Empathize: Understanding customer perspective

  • Define: Identifying customer problems

  • Ideate: Generating solutions to problems

  • Prototype: Creating inexpensive product versions

  • Test: Refining the final product

  • Minimum Viable Product (MVP): Inexpensive product versions created by the design team

  • Small business types:

  • Small business owners focus on known risks and profit generation

  • Entrepreneurs tackle new opportunities and unknown risks

  • Franchises: Businesses utilizing existing operations, products, and branding

  • Products vs Services: Products are physical goods (e.g., muffins, toilet paper, jewelry), services are intangible (e.g., AC repairs, web designs, guitar lessons)

  • Legal Structures:

  • S corporations: Lower tax rates for avoiding double taxation for the company

  • C corporations: Suitable for international business, but can be double-taxed

  • Sole proprietorship: Easy to create but comes with unlimited liability (owner personally responsible for business debt)

  • Limited Liability Company (LLC): A good option for single-owner business seeking lower risk

  • Partnership: Shares financial backing

  • Non-profit: Not looking for profit ownership, not taxed by US federal government

  • Roles and Compensation:

  • Founder: Creates the company

  • CEO: Reports to the board of directors, major decisions

  • CFO: Oversees company finances

  • COO: Oversees daily operations and administration

  • Stockholders: Own stock in the company

  • Stakeholders: Have a vested interest in the success of the company, often board members.

  • Compensation Types: Hourly, Commission, Salary, Equity

  • Business Life Cycle Stages:

  • Existence

  • Survival

  • Success

  • Take-off

  • Resource Maturity

  • Pivot/Persist

  • Exit Plan

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