Entrepreneurship Test Notes PDF

12/4/23, 7:32 PM Entrepreneurship Entrepreneurship What is Entrepreneurship? Entrepreneurship is the process of starting, organizing, and managing a business to make a...

12/4/23, 7:32 PM Entrepreneurship Entrepreneurship What is Entrepreneurship? Entrepreneurship is the process of starting, organizing, and managing a business to make a profit. It involves identifying opportunities, taking risks, and using resources effectively. Entrepreneurs have innovative ideas, take calculated risks, and bring their ideas to life. They drive economic growth, create jobs, and foster innovation. Benefits of Entrepreneurship? Entrepreneurship offers several benefits, including: 1. Independence and Autonomy: Entrepreneurs have the freedom to make their own decisions and be their own boss. 2. Financial Rewards: Successful entrepreneurs have the potential to earn higher profits and financial rewards compared to traditional employment. 3. Creativity and Innovation: Entrepreneurship allows individuals to pursue their creative ideas and bring innovative solutions to the market. 4. Personal Growth and Development: Starting and running a business can lead to personal growth, as entrepreneurs face challenges and learn new skills. 5. Job Creation: Entrepreneurs contribute to job creation by hiring employees and stimulating economic growth. 6. Flexibility and Work-Life Balance: Entrepreneurs have the flexibility to set their own work hours and achieve a better work-life balance. 7. Impact and Legacy: Entrepreneurs have the opportunity to make a positive impact on society and leave a lasting legacy through their ventures. 8. Networking and Collaboration: Entrepreneurship provides opportunities for networking and collaboration with like-minded individuals, industry experts, and potential partners. 9. Personal Satisfaction: The ability to build something from scratch and see it succeed can bring a sense of personal satisfaction and fulfillment. Benefits of entrepreneurship include independence, financial rewards, creativity, personal growth, job creation, flexibility, impact, networking, personal satisfaction, and continuous learning. 1. Continuous Learning: Entrepreneurship involves continuous learning and staying updated with industry trends, which can be intellectually stimulating. Rewards of Entrepreneurship? Some rewards of entrepreneurship include: https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 1/12 12/4/23, 7:32 PM Entrepreneurship Financial independence and potential for high profits Being your own boss and having control over decision-making Pursuing your passion and turning it into a business Creating job opportunities for others Personal and professional growth Flexibility in work schedule and location Making a positive impact on society through innovation and problem-solving. Make Shorter: Entrepreneurship rewards include financial independence, being your own boss, pursuing passions, creating jobs, personal growth, flexibility, and making a positive impact on society. Drawbacks of Entrepreneurship? Entrepreneurship has several drawbacks that individuals should consider before embarking on this path: 1. Financial Risk: Starting a business involves financial investments, and there is a risk of losing money if the venture fails. 2. Uncertainty and Instability: Entrepreneurship often comes with a high level of uncertainty and instability. Market conditions, customer preferences, and industry trends can change rapidly, making it challenging to predict outcomes. 3. Long Working Hours: Entrepreneurs often work long hours, including weekends and holidays, to establish and grow their businesses. This can lead to a poor work-life balance and increased stress levels. 4. Responsibility and Pressure: Entrepreneurs bear the ultimate responsibility for the success or failure of their ventures. This can create significant pressure and stress, as they must make critical decisions and handle various aspects of the business. 5. Limited Resources: Starting a business typically requires significant resources, such as capital, skilled labor, and infrastructure. Limited access to these resources can pose challenges for entrepreneurs, especially in the early stages. 6. Lack of Stability and Benefits: Unlike traditional employment, entrepreneurship may not offer the stability of a regular paycheck, employee benefits, or job security. 7. Emotional Rollercoaster: Entrepreneurship can be emotionally demanding, with highs and lows. Dealing with setbacks, failures, and the constant need to adapt can take a toll on an individual's mental well-being. Drawbacks of Entrepreneurship: 1. Financial Risk: Investing in a business can lead to losses if it fails. 2. Uncertainty and Instability: Rapid market changes make outcomes unpredictable. 3. Long Working Hours: Entrepreneurs work extensively, impacting work-life balance and increasing stress. 4. Responsibility and Pressure: Entrepreneurs carry the ultimate responsibility for success, leading to pressure and stress. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 2/12 12/4/23, 7:32 PM Entrepreneurship 5. Limited Resources: Starting a business requires significant resources, which may be scarce initially. 6. Lack of Stability and Benefits: Entrepreneurship lacks stability, regular paychecks, employee benefits, and job security. 7. Emotional Rollercoaster: Dealing with setbacks and failures can negatively affect mental well-being. Despite these drawbacks, entrepreneurship offers personal growth, financial success, and the opportunity to pursue passions. It is important to note that while entrepreneurship has its drawbacks, it also offers opportunities for personal growth, financial success, and the ability to pursue one's passion. The elements of the Marketing Mix? The elements of the marketing mix in entrepreneurship are commonly referred to as the 4Ps: Product, Price, Place, and Promotion. These elements are essential for developing and implementing effective marketing strategies in entrepreneurship The 7 Ps in the Marketing Mix are: MAIN 1. Product: The goods or services offered by a company to meet customer needs. 2. Price: The amount customers are willing to pay for a product or service. 3. Place: The locations and channels through which a product is made available to customers. 4. Promotion: The activities used to communicate and promote a product to target customers. OTHER 1. People: The individuals involved in delivering and managing the product or service. 2. Process: The procedures and systems used to deliver a product or service to customers. 3. Physical Evidence: The tangible elements that customers can see, touch, or experience when interacting with a product or service. These elements are essential for developing and implementing effective marketing strategies. What is a feasibility study? A feasibility study is an assessment conducted to determine the practicality and viability of a proposed project or venture. It involves evaluating various factors such as economic, technical, legal, operational, and scheduling aspects to determine if the project is feasible and worth pursuing. The study helps stakeholders make informed decisions by analyzing potential risks, benefits, costs, and potential outcomes. It typically includes market analysis, financial projections, risk assessment, and an evaluation of the project's impact on the organization or community. The findings of a feasibility study provide valuable insights to guide decision- making and determine the project's likelihood of success. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 3/12 12/4/23, 7:32 PM Entrepreneurship What are the elements of the feasibility study? Please note that the specific elements may vary depending on the nature and complexity of the project. The elements of a feasibility study typically include: 1. Market Feasibility: Assessing the demand, competition, and potential market size for the proposed project or product. 2. Technical Feasibility: Evaluating the technical requirements, resources, and capabilities needed to implement the project successfully. 3. Financial Feasibility: Analyzing the financial aspects, such as cost estimation, revenue projections, and return on investment, to determine if the project is financially viable. 4. Operational Feasibility: Examining the operational aspects, including the availability of resources, skills, and infrastructure required to operate the project effectively. Mark - Market Feasibility Took - Technical Feasibility Five - Financial Feasibility Oranges - Operational Feasibility These four elements are commonly considered in a feasibility study to determine the viability and potential success of a project. What is a Business Model Canvas? A Business Model Canvas is a strategic management tool that provides a visual representation of a company's business model. It consists of nine key elements, including customer segments, value propositions, channels, customer relationships, revenue streams, key activities, key resources, key partnerships, and cost structure. The canvas helps businesses analyze and communicate their business model in a concise and structured manner. What are the 9 elements of the Business Model Canvas? The 9 elements of the Business Model Canvas are: 1. Customer Segments: The different groups of customers a business targets. 2. Value Proposition: The unique value or benefit that a business offers to its customers. 3. Channels: The methods or channels through which a business delivers its value proposition to customers. 4. Customer Relationships: The types of relationships a business establishes and maintains with its customers. 5. Revenue Streams: The sources of revenue or income for a business. 6. Key Resources: The essential assets, capabilities, or resources required to operate a business. 7. Key Activities: The crucial activities a business must perform to deliver its value proposition. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 4/12 12/4/23, 7:32 PM Entrepreneurship 8. Key Partnerships: The strategic alliances or partnerships a business forms to enhance its operations. 9. Cost Structure: The costs and expenses associated with running a business. These elements are used to describe, analyze, and design business models. short thing to remember these by : “Customer-Valuable Channels Relations Revenue, Resources-Activities Partnerships-Structure" What are Financial Statements? Financial statements are formal records that provide an overview of a company's financial activities and position. They are typically prepared by businesses at the end of an accounting period and include three main statements: 1. Income Statement (or Profit and Loss Statement): This statement shows the company's revenues, expenses, and net income or loss over a specific period. It helps assess the profitability of the business. 2. Balance Sheet: The balance sheet presents the company's assets, liabilities, and shareholders' equity at a specific point in time. It provides a snapshot of the company's financial position. 3. Cash Flow Statement: This statement tracks the inflow and outflow of cash from operating, investing, and financing activities. It helps evaluate the company's liquidity and cash management. Financial statements are crucial for stakeholders, such as investors, creditors, and management, to assess the financial health and performance of a company. Why are Financial Statements important? Financial statements are crucial for evaluating a company's financial performance and position. They provide stakeholders with information on profitability, liquidity, and solvency. Income statements, balance sheets, and cash flow statements offer vital data for decision-making, financial analysis, and assessing overall health. They also enable comparison with industry benchmarks and historical data, aiding in trend identification and informed decision-making. EXAMPLE OF A CASE One example of an entrepreneurial case that epitomizes the spirit of innovation and success is the remarkable story of Mark Zuckerberg, the co-founder of Facebook. In 2004, while studying at Harvard University, Zuckerberg embarked on a journey that would redefine the landscape of social networking forever. Armed with his entrepreneurial vision and unwavering determination, he set out to create a platform that would revolutionize the way people connect and communicate online. Zuckerberg's entrepreneurial journey began in his humble Harvard University dorm room, where he meticulously crafted the initial framework for what would eventually become Facebook. Fuelled by his passion for connecting people and his innate talent for coding, he https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 5/12 12/4/23, 7:32 PM Entrepreneurship poured countless hours into developing the platform. With each line of code he wrote, Zuckerberg's vision grew clearer, and he became increasingly convinced that he had stumbled upon something truly extraordinary. As Facebook started gaining traction among Harvard students, Zuckerberg realized the immense potential his creation held. Sensing an opportunity to expand its reach beyond the confines of his university, he made the audacious decision to drop out of Harvard and dedicate himself fully to the development of Facebook. This bold move not only showcased his unwavering belief in his creation but also demonstrated his entrepreneurial spirit - the willingness to take calculated risks in pursuit of a greater goal. With his sights set on global domination, Zuckerberg tirelessly worked to refine and enhance Facebook's features, constantly pushing the boundaries of what was possible. His innovative ideas and relentless drive to improve the user experience propelled Facebook to unprecedented heights. The platform quickly gained popularity worldwide, attracting millions of users who were drawn to its simplicity, intuitive design, and ability to connect people from all corners of the globe. However, Zuckerberg's entrepreneurial journey was not without its fair share of challenges. As Facebook grew exponentially, it faced numerous obstacles, including privacy concerns, competition from other social media platforms, and the need to constantly adapt to an ever- evolving digital landscape. Yet, through it all, Zuckerberg remained steadfast in his commitment to his vision, constantly seeking new ways to overcome obstacles and propel Facebook forward. Today, Facebook stands as a testament to Zuckerberg's entrepreneurial brilliance. It has become one of the most influential and successful companies in the world, with billions of users actively engaging with the platform on a daily basis. Beyond its staggering user base, Facebook has also transformed the way businesses advertise, connect with customers, and build communities online. Mark Zuckerberg's entrepreneurial journey exemplifies the power of a single idea and the determination to turn that idea into a global Identify the P.E.Cs The Personal Entrepreneurial Characteristics (PECs) exhibited by Mark Zuckerberg in this entrepreneurial case include: 1. Visionary: Zuckerberg had a clear vision of creating a platform that would revolutionize social networking and connect people globally. 2. Passionate: He was fueled by his passion for connecting people and dedicated countless hours to developing and refining the platform. 3. Risk-taker: Zuckerberg made the bold decision to drop out of Harvard to fully commit himself to the development of Facebook, showcasing his willingness to take calculated risks. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 6/12 12/4/23, 7:32 PM Entrepreneurship 4. Determined: Despite facing challenges and obstacles, Zuckerberg remained steadfast in his commitment to his vision and constantly sought ways to overcome them. 5. Innovative: He constantly pushed the boundaries of what was possible, refining and enhancing Facebook's features to improve the user experience. 6. Adaptable: Zuckerberg recognized the need to constantly adapt to an ever-evolving digital landscape and sought new ways to overcome obstacles. The Specific Entrepreneurial Functions (SEFs) demonstrated in this case include: 1. Opportunity recognition: Zuckerberg identified the immense potential of expanding Facebook beyond Harvard and seized the opportunity to create a global platform. 2. Resource management: He effectively managed resources, including his own time and talent, to develop and grow Facebook. 3. Innovation and creativity: Zuckerberg continuously innovated and introduced new features to differentiate Facebook from its competitors. 4. Strategic planning: He strategically planned and executed the growth and expansion of Facebook, constantly seeking ways to propel the platform forward. 5. Networking and relationship building: Zuckerberg fostered connections and built relationships with users, businesses, and other stakeholders to grow and sustain Facebook's success. 6. Leadership and decision-making: He provided leadership and made critical decisions to guide the direction of Facebook and overcome challenges. Overall, Mark Zuckerberg's entrepreneurial journey showcases a combination of personal characteristics and entrepreneurial functions that contributed to the success of Facebook as a global platform. Identify the S.E.Fs The supporting and enabling factors in Mark Zuckerberg's entrepreneurial journey include his entrepreneurial vision, unwavering determination, passion for connecting people, innate talent for coding, audacious decision-making, willingness to take calculated risks, constant drive for improvement, innovative ideas, adaptability to challenges, and commitment to his vision. These factors played a crucial role in the success and transformation of Facebook into one of the most influential and successful companies in the world. What is Breakeven? Breakeven refers to the point at which total revenue equals total costs, resulting in neither profit nor loss. It is the level of sales or production at which a business covers all its expenses, including fixed and variable costs. At this point, there is no net income or loss. 4 Steps to calculating Breakeven To calculate the breakeven point, follow these four steps: 1. Determine the fixed costs: Fixed costs are expenses that do not change regardless of the level of production or sales. Examples include rent, salaries, and insurance. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 7/12 12/4/23, 7:32 PM Entrepreneurship 2. Calculate the contribution margin: The contribution margin is the difference between the selling price per unit and the variable cost per unit. It represents the amount that contributes to covering the fixed costs and generating profit. 3. Determine the breakeven point in units: Divide the fixed costs by the contribution margin per unit to calculate the number of units that need to be sold to cover all costs and reach the breakeven point. 4. Calculate the breakeven point in sales revenue: Multiply the breakeven point in units by the selling price per unit to determine the sales revenue needed to reach the breakeven point. Remember, the breakeven point is the point at which total revenue equals total costs, resulting in neither profit nor loss. Breakeven Calculation Examples Sure! Here are a few examples of calculating breakeven: 1. Example 1: A company sells a product for $10 per unit. The fixed costs are $5,000, and the variable costs per unit are $6. To calculate the breakeven point, divide the fixed costs by the difference between the selling price and the variable cost per unit: $5,000 / ($10 - $6) = 1,250 units. 2. Example 2: A restaurant has fixed costs of $10,000 per month. The average revenue per customer is $20, and the variable costs per customer are $10. To calculate the breakeven point, divide the fixed costs by the difference between the average revenue and the variable cost per customer: $10,000 / ($20 - $10) = 1,000 customers. 3. Sure! Here are a few examples of calculating breakeven: 1. Example 1: A company sells a product for $10 per unit. The fixed costs are $5,000, and the variable costs per unit are $6. To calculate the breakeven point, divide the fixed costs by the difference between the selling price and the variable cost per unit: $5,000 / ($10 - $6) = 1,250 units. 2. Example 2: A restaurant has fixed costs of $10,000 per month. The average revenue per customer is $20, and the variable costs per customer are $10. To calculate the breakeven point, divide the fixed costs by the difference between the average revenue and the variable cost per customer: $10,000 / ($20 - $10) = 1,000 customers. Remember, these are just simplified examples, and breakeven analysis can be more complex in real-world scenarios. Sure! Here are a few more examples of calculating breakeven: 3. Example 3: A clothing store sells t-shirts for $15 each. The fixed costs are $2,500, and the variable costs per t-shirt are $8. To calculate the breakeven point, divide the fixed costs by the difference between the selling price and the variable cost per unit: $2,500 / ($15 - $8) = 500 t-shirts. 4. Example 4: A software company has fixed costs of $50,000 per month. The average revenue per software license is $100, and the variable costs per license are $30. To calculate the breakeven point, divide the fixed costs by the difference https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 8/12 12/4/23, 7:32 PM Entrepreneurship between the average revenue and the variable cost per license: $50,000 / ($100 - $30) = 714 licenses. Remember, these examples are simplified and may not capture all the complexities of real-world scenarios. The formula to calculate the breakeven point is: breakeven = fixed costs / (selling price - variable costs) Remember, the breakeven point is the level of sales or production at which total costs equal total revenue, resulting in neither profit nor loss. Fixed costs and variable costs are two types of costs that businesses incur in their operations. Fixed costs are expenses that do not change with the level of production or sales. They remain constant regardless of the volume of output. Examples of fixed costs include rent, salaries of permanent employees, insurance premiums, and lease payments. Fixed costs are incurred regardless of whether the business is producing or selling anything. Variable costs, on the other hand, are expenses that vary in direct proportion to the level of production or sales. These costs increase or decrease as the volume of output changes. Examples of variable costs include raw materials, direct labor, sales commissions, and packaging costs. Variable costs are directly tied to the level of activity in the business. In summary, fixed costs remain constant regardless of the level of production or sales, while variable costs fluctuate based on the volume of output. What are Cashflow Statements\Projections? Cash flow statements/projections are financial documents that provide a summary of the cash inflows and outflows of a business or individual over a specific period of time. They show the sources and uses of cash, including operating activities, investing activities, and financing activities. Cash flow statements/projections help assess the liquidity and financial health of an entity, as well as its ability to generate cash to meet its obligations. What are Organizational Structures? Organizational structures refer to the framework that defines how an organization is designed, organized, and operated. It determines the relationships, roles, and responsibilities within the organization. Common types of organizational structures include hierarchical, matrix, functional, and divisional structures. 6 Elements of Organizational Structures The six elements of organizational structures are: 1. Work specialization: Dividing tasks and responsibilities among employees. 2. Departmentalization: Grouping employees based on functions, products, geography, or customers. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 9/12 12/4/23, 7:32 PM Entrepreneurship 3. Chain of command: Establishing a clear hierarchy of authority and reporting relationships. 4. Span of control: Determining the number of employees a manager can effectively supervise. 5. Centralization and decentralization: Deciding the level of decision-making authority within the organization. 6. Formalization: Creating rules, procedures, and policies to guide employee behavior. The elements of organizational structures in order. The elements of organizational structures, in order, typically include: 1. Division of Labor: This refers to the way tasks and responsibilities are divided among individuals or departments within an organization. 2. Hierarchy: It establishes the chain of command and the levels of authority within the organization. 3. Span of Control: This refers to the number of subordinates that a manager or supervisor can effectively oversee. 4. Centralization and Decentralization: It determines the extent to which decision-making authority is concentrated at the top or distributed throughout the organization. 5. Departmentalization: It involves grouping individuals or functions into departments based on similarities in tasks, skills, or products. 6. Formalization: This refers to the degree to which rules, procedures, and policies are established and followed within the organization. Dirty - Division of labour Harry - Hierarchy Spits - Span of Control Coffee - Centralization & Decentralization Down - Departmentalization Fields - Formalization Please note that the specific elements and their order may vary depending on the organization and its specific needs. What are the legal aspects of a business? Legal aspects of a business refer to the laws and regulations that govern its operations. These include: 1. Business formation: The legal requirements for establishing a business entity, such as registering with the appropriate government authorities. 2. Contracts: The legal agreements between the business and its stakeholders, including customers, suppliers, and employees. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 10/12 12/4/23, 7:32 PM Entrepreneurship 3. Intellectual property: The protection of a business's intangible assets, such as trademarks, copyrights, and patents. 4. Employment law: The regulations governing the relationship between the business and its employees, including hiring, termination, and workplace safety. 5. Taxation: The legal obligations related to paying taxes, including income tax, sales tax, and payroll tax. 6. Consumer protection: The laws that safeguard consumers from unfair business practices, such as false advertising or product defects. Brown - Business formation Chris - Contracts Is - intellectual property Ever - Employment law Troubling - Taxation Cows - Consumer protection N - Need for lawyer I - Intellectual Property & Rights T - Taxation R - Research & D contracts I - Insurance C - Contract Understanding and complying with these legal aspects is crucial for businesses to operate ethically, avoid legal disputes, and protect their interests. What is Human Resource Management? HRM is the strategic management of the workforce in an organization. It includes recruitment, training, performance evaluation, and employee relations. The goal is to maximize productivity and satisfaction while ensuring legal compliance and organizational objectives. What are ways people use to recruit staff for a business? There are several ways people use to recruit staff for a business: 1. Job Advertisements: Posting job openings on job boards, company websites, and social media platforms. 2. Employee Referrals: Encouraging current employees to refer qualified candidates for open positions. 3. Recruitment Agencies: Partnering with external agencies that specialize in finding suitable candidates for specific roles. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 11/12 12/4/23, 7:32 PM Entrepreneurship 4. Campus Recruitment: Visiting colleges and universities to recruit fresh graduates for entry-level positions. 5. Networking: Utilizing professional networks and connections to identify potential candidates. 6. Online Platforms: Utilizing online platforms such as LinkedIn to search for and connect with potential candidates. 7. 7. In-house recruitment fills job vacancies internally by promoting existing employees. It boosts morale, saves costs, and retains knowledge. However, fairness and transparency are crucial to avoid bias. Occupational Health and Safety Occupational Health and Safety (OHS) ensures employee well-being by minimizing hazards, providing training, and enforcing safety guidelines. It prevents accidents, injuries, and illnesses, following country-specific laws. https://knowt.com/note/c920e000-6d7d-4ad9-836d-6e524ae8060a/Entrepreneurship 12/12