Chapter 8

Question 1

What is an entrepreneur?

Answer 1

someone willing to accept the risk associated with investing money to make more money

Question 2

MERFS

Answer 2

M= Motivation
E= Expertise
R= Risk Management
F= Focus
S= Self-Belief

Question 3

Social Entrepreneurship

Answer 3

Hybrid between for-profit, Non-Profit, and social environmental benefits

-More democratic structure
-A social Mission

Question 4

The Business of Entrepreneurship

Answer 4

• Uniqueness of product
  -Market size and opportunity
  -Current conditions of the market
  -Investment hypothesis
  -Quality of management

Question 5

Is Risk avoidable?

Answer 5

Yes risk can be mitigated especially when going into a new market space where there is greater risk of uncertainty

Question 6

To mitigate uncertainty you need a business plan, what are the steps?

Answer 6

• Set the scene/ describe the business you are going into
  -Review the Market/Competition
  -Explain your mission, Why are you going into this Market?
• Explain your strategy, How are you going to win
  -Explain your plans for developing the product
  -Develop financial projections
  -Explain why you will succeed

Question 7

What are the 5 Rules of the road when developing a business plan?

Answer 7

Rule #1 know your customer
Rule #2 Know why you will win
Rule #3 Know how you will win
Rule #4 Know what will take you to win
Rule #5 Demonstrate why others should believe in you

Question 8

Franchising can Mitigate risk, what are the pro’s?

Answer 8

-Brand recognition
-Pre-launch and ongoing owner and staffing training.
-Purchasing power trough economies of scale
Regional/Global marketing support
-Product development

Question 9

Franchising can Mitigate risk, what are the con’s

Answer 9

-Initial franchise fee
-ongoing royalties
-contribution to a national marketing fund
-restricted freedom/reduce control

Question 10

Business start up, you need a lot of capital. Who can provide that capital?

Answer 10

You can create crowdfunding like a go-fund-me or a kick-starter.
But a better option is always angel investors.

Question 11

what are the 5 benefits of Angel investors?

Answer 11

-Capital, They can give you a lot of capital to start your business
-Reputation/Credibility, Adds legitimacy to the business
-Business relationships, Have connections/ties to distributors
-Business Expertise, possesses expertise in the field of target market
-Has access to managerial expertise

Question 12

what are the 5 Key factors influencing legal structure decisions

Answer 12

• Ease of setup, how easy it is to start the business
• Degree of control, How much of the company can you control?
  -Magnitude of risk, How much risk are you taking on?
  -Financial capacity, how much money can you put forth?
  -Required skill, how much knowledge do you have in the field you are going into?

Question 13

Business Ownership options

Answer 13

-Sole proprietorship, You go alone in your business venture.
-Partnership, either general or limited. you go with a partner into business.
-Corporation, either publicly or privately traded. many people go into business together.

Question 14

Factor analysis: sole proprietorship

Answer 14

-Easy to set up
-100% degree of control
-Full liability and risk associated with starting the business
-Limited to only the sole persons resources
-Limited to the persons sole skills and knowledge about the business.

Question 15

Factor analysis: Partnership

Answer 15

-Easy to set up
-No full control of the business
-Fully responsible for risk
-can share financial implications with partner
-can use both the partners skill and knowledge to get started.

Question 16

Private corporations

Answer 16

Ownership is private
-not publicly traded

Question 17

Public corporations

Answer 17

Ownership is public
-shares offered trough an “initial public offering’ - then publicly traded.