10 Questions
What does the operating leverage measure?
The ratio of fixed costs to variable costs
Which financial objective focuses on the efficient utilization of assets?
Efficiency
In the context of the 4Ps to 4As model, what does 'Accessibility' refer to?
Ease of physical access to the product/service
What do companies rely on to show the financial results of operations over a specific period?
Income statement
How is contribution margin per product/service calculated?
Total revenue minus total variable costs
In financial terms, what does liquidity refer to?
Company's ability to meet short-term obligations
What is the primary focus of the 4Ps (Product, Promotion, Price, Place) in a business plan?
Customer Acceptability
'Front stage' activities in business refer to:
'Visible' and customer-facing aspects of the business
'Stability', as a financial objective, focuses on:
'Overall health' of the company represented by debt-to-equity ratio
'Backstage' activities in business typically involve:
'Internal' production processes
Study Notes
Misconceptions about Entrepreneurs
- Entrepreneurs are not born, but can be made
- Entrepreneurs are not gamblers, but take calculated risks
- Entrepreneurs are motivated by more than just money
- Entrepreneurs don't always love the spotlight
- Entrepreneurs can be of any age and energy level
Creativity and Opportunity
- Creativity is the process of generating novel or useful ideas through preparation, incubation, insight, evaluation, and elaboration
- An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business
- A window of opportunity is the period in which a company can realistically enter a new market
- Opportunities can be identified by observing environmental trends driven by economic, social, technological, and political forces
Feasibility Analysis
- Feasibility analysis determines whether a business idea is feasible
- It involves assessing product/service feasibility, industry/target market feasibility, and financial feasibility
- Product/service feasibility involves assessing desirability, demand, and concept testing
- Industry/target market feasibility involves assessing industry attractiveness and target market attractiveness using Porter's five competitive forces model
The Big Data Business Model
- There are six types of big data business models:
- Type A: Free data collector and aggregator
- Type B: Analytics-as-a-service
- Type C: Data generation and analysis
- Type D: Free data knowledge discovery
- Type E: Data-aggregation-as-a-service
- Type F: Multi-source data mash-up and analysis
Business Process and Financing
- A business process is a set of activities that accomplish a specific organizational goal
- BPMN (Business Process Model and Notation) is used to design business processes
- Initial Public Offering (IPO) is the first sale of stock to the public, which raises equity capital, raises a firm's public profile, and is a liquidity event
- Debt financing involves loans, but banks are often not practical for startups due to risk aversion
- Creative sources of financing include crowdfunding, which has advantages such as convenience, validation of a concept, reduced risk, and real-time feedback
Business Plan Components
- A business plan is a written narrative that describes how a new company will achieve its goals
- Components of a business plan include:
- The economics of the business (revenue drivers, profit margins, etc.)
- Marketing plan
- Design and development plan
- Operations plan
- Management team
- Overall schedule
- Financial management and projections
- Financial objectives include profitability, liquidity, efficiency, stability, and overall health of the company
- Companies rely on three financial statements: the income statement, balance sheet, and cash flow statement
Test your knowledge on entrepreneurship misconceptions, the creative process, and recognizing opportunities in this quiz. Learn about common misconceptions about entrepreneurs and the stages of creativity, as well as identifying favorable circumstances for new products or services.
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