Business Model Analysis for entrepreneur

Question 1

What is the definition of a “Business Model”?

Answer 1

A summation of the core business decisions and trade-offs employed by a company to earn a profit.

Question 2

Business-model business decisions and trade-offs fall into four groups. Be able to recognize these four groups.

Answer 2

Revenue sources

Cost drivers

Required investment

Critical success factors

Question 3

Recognize the five steps in a Business Model Analysis.

Answer 3

Revenue analysis: Determine the amount and timing of projected revenue. Identify key factors that influence total revenue.

Cost analysis: Determine the amount and timing of projected expenses. Identify key cost factors.

Investment analysis: Determine amount and timing of required investment, includind investment in accounts receivable and inventory.

Create a cash curve, which is cash flow as a function of time.

Identify the critical success factors and perform a systematic sensitivity analysis.

Question 4

Know the definitions and examples of fixed costs, semi-variable costs, variable costs, and non-recurring costs.

Answer 4

Fixed costs: Costs that respond only to very large changes in volume(rent, property taxes, management salaries)

semi-variable costs: Costs that respond less than proportionally to changes in volume(retail business payroll)

Variable costs: Costs that respond propotionall to changes in volume (COGS, commissions)

Non-recurring: (purchasing building or equipment)