AFM 132 - Chp. 6 - Entrepreneurship Flashcards
What does is mean to be entreprenuerial?
ability to manage uncertainty, take risks, be creative, and problem solve
What are the traits of an entrepreneur?
passion + motivation, tolerant of uncertainty, learning and growth mindset, confidence
Why is there increased support for entrepreneurship?
Education, technology, social acceptance, support system
What is intrapreneurship?
Being entrepreneurial within a corporate setting - one can exercise creativity to launch new products or services or evolve processes using a company’s existing resources and reputation
What’s the life cycle of entrepreneurial venture?
- Birth/introduction - define the business model + make money
- Breakthrough/growth - where business model proves itself to work well - managing growth
- Maturity/exit - how to keep business relevant, exit strategy
What some challenges in launching an idea?
- getting customers - established web presence or storefront?
- managing time - self-discipline + time management to remain productive?
- abiding by local rules - restrictions on where you can set up business? any rules and regulation?
What are the other ways to get into business - not entrepreneurship
- buying an existing business
- franchising
Why would you want to buy an existing business?
chances of success increase as you may being with an established customer base, supplier relationships, and an existing reputation
What are some considerations to think of when buying an existing business?
- why is it up for sale? - understand the opportunities/challenges you’re stepping into
- due diligence
- what a price to pay
What is the process of due diligence?
verifying the info of a business
starts with a letter of intent between the current owner + potential buyer + addresses any privacy/confidentiality concerns during these discussions - allows the buyer to assess financial records + agreements
involves assessing any potential issues which could cause future problems
getting outside advice from accountants + lawyers is advised at this stage
What is the value of companies based on?
- what the business owns (assets)
- what the business currently earns + future profit potential
- what makes it unique - reputation or quality of employees
what are the benefits of Franchising
- franchisor’s experience + reputation - franchisor can provide franchisee with ongoing management support, assistance in setting up location, training, marketing, and managing the supply chain to get the best prices
- proven product or service - failure rates for franchise can be lower than starting a business form scratch
What does the franchising agreement usually include?
day-to-day responsibilities, standards to follow, and franchising (fee) payments from your profits
What’s a drawback of franchising?
potential lack of control - franchisor may dictate the look or have final say in product/services offerings + operational decisions
What types of resources are available for entrepreneurs?
- innovative work locations
- government support
- various forms of financing
Define incubators (in terms of entrepreneurship context)
supportive environments that provide working space + support to grow ideas + mange a business
What’s an advantage of launching an idea within an incubator”
community + structure it provides - provides a support system to get creative minds together + structured environment = crucial in the early development stages for a business
Does the Canadian government support innovation + small business creation?
Yes! VARIOUS LEVELS DO!
What’s the role of Business Development Bank of Canada?
helps small + medium-sized companies launch + grow
they are devoted to entrepreneurs + provide financing + advisory services on how to manage your business, increase revenues, + optimize operations
What are the 2 largest sources of funds for small businesses? what are their percentages?
- personal savings (84%)
- bank loans (37%)
What are 2 smaller sources of funds for small businesses?
- borrowing from family + friends
- accessing government grants
what are Angel investors?
wealthy individuals that typically invest in early-stage business - in return for investing money into the business, they want some control in the business operation + seeking a return on their investments
they may act as mentors, and provide suggestions on business operations
What is venture capitalists?
individuals or companies that invest in businesses that are already established + expect a return on their investment
those that receive venture capital (typically millions of dollars, use these funds to significantly expand + grow the business
what is Crowdfunding?
raising capital from online
backers typically contribute small amounts to get something in return (early access or reduced price for a unique product or additional perks + benefits)
What are “backers”
People from online who are willing to provide funds to grow a business
What’s a benefit of crowdfunding?
the ability to gauge customer interest in an idea or product before you commit too many resources or operations around it
What are some helpful tools in making plans for a business?
- value proposition
- business modal canvas (BMC)
- Business plans
Define Value proposition
describe the benefits customers can expect from using the products + services of a company
describes what the company offers its customers + what they will value
Jobs, pains and gains
What’s helpful to do before crafting a value proposition/
develop a profile of your customer - conduct market research + reflecting on what their jobs, pains (obstacles/challenges) + gains (desires) are
What is a way that companies continuously try to understand these gains, pains + jobs?
using survey found at the bottom of receipts
Define a business model Canvas
captures how you create + deliver value to customers through your product/services + capture value as a company (earn money through revenue streams)
BMC helps new or existing businesses design + map out their business models
What is business plan?
summarizes an idea + how the business will operate, can be be shared with banks + investors to request funding
What does the business plan aim to capture?
- nature of the business - mission + vision of the business
- target market - who you are reaching
- understanding the competition + industry - how a business fits within its external environment, assessment of the competitive landscape, opportunities + challenges they face
- qualifications of the people involved
What are some common mistakes when writing a business plan?
- ignoring competition - consider how you will maintain a competitive edge s the business environment evolves
- relying on a few customers - maintaining relationships with existing + new customers
- procrastinating - business plan provides direction for business - helps strategize + act quickly in a competitive + changing business environment
- being too optimistic - important to be realistic with projections + consider all possible scenarios
What do businesses without proper record keeping practices face?
higher risk of failure
Define accounting systems + importance of them
capture financial transactions to know how much money the company has, how much is being spent, how much is borrowed , and if more funds are required
consider financial impact of common business activities
Define inventory + importance
materials for producing goods + services
consider the cost of time + money to stop or delay production due to not enough inventory
Define customer records + importance
consider if customer information is up to date + ability to capture additional data (past purchases or prior communications) - helps to tailor future engagement efforts
define employee records + importance
data company has on their employee
