Performance Indicators Flashcards
Identify the impact of small business/entrepreneurship systems on market economies.
Small businesses diversify the market economy by claiming portions of the market share. They create products that appeal to more specific consumers. Such as a local store making custom handmade baby toys that appeal to the local parents with babies instead of generic factory toys. Overall, small businesses also affect the market economy by innovating products and creating competition, offering a variety of different goods and services that large businesses don’t offer, generating tax revenue for the government, and also by providing income for the community.
Explain the concept of private enterprise
The company is owned by people and not the government. Businesses are free to choose what they wish to provide, how they produce products, and the price they charge for the product/service. They also have the free will to buy and sell private property. The main goal is to make profit, which creates competition between competing companies.
Identify factors affecting a business’s profit
Factors include: less demand, expenses needed to function the company, prices, the overall market economy (too much competition, less market share, no want for your product/service), and external factors (cost of materials and labor). Ways to increase profit is by increasing worker efficiency, increasing sales, and decreasing expenses
Determine factors affecting business risks
Factors include the uncertainty of demand for the product, highest profitable selling price, industry competition, and operating costs (whether it’s better to invest more in the company and drive up fixed costs or outsourcing production and increasing variable costs)
Explain the concept of competition
Competition is the struggle among businesses to increase their market share. This can be done through lower prices, higher quality products/services, and innovation
Determine the relationship between government and business
The government serves as both the regulator and protector of businesses. They protect businesses by enforcing contracts and settling disagreements. The government regulates industries by creating safety standards, prohibiting unlawful behavior, and by controlling monopolies. The goal of both the government and businesses in this field are to provide products and services to people and to overall improve society.
Describe the nature of taxes
Taxes are payments paid to the government for the services that they provide. As business employees we will have to pay income tax, employment tax (only if you are owner), and property tax (for the land of the business).
Describe the concept of economies of scale
The proportionate saving in cost that is gained by an increased level of production. If money is invested into more production such as machines, in the long-run, the average cost per unit will go down, which will generate a long-term profit.
Describe the nature of entrepreneurship
The process of starting a new enterprise and operating it, so that a valuable product/service is created. Entrepreneurs invest necessary time and effort into the business, while bearing the financial risks. Entrepreneurs need problem-solving skills and perseverance to succeed.
Explain the role requirements of entrepreneurs and owners
They should be problem solvers, perseveres, good leaders, and also be well-versed in business.
Describe the use of business ethics in entrepreneurship
Business ethics are the set of practices and policies that companies use to guide them through decisions about finances, negotiations and deals, corporate social responsibility, and much more. Without the use of business ethics, a business can break the law, encounter financial struggles, lose customers and employees, and also face moral dilemmas.
Describe small-business opportunities in international trade
Small businesses can utilize the internet to expand their customer base and reach a wider audience to sell to. They can also offer products and services that are molded for international customers.
Explain the need for entrepreneurial discovery
The need for discovery goes along with innovation. It increases market competition, inspires more innovation and leads to industrial progress by producing better products and higher quality services.
Discuss entrepreneurial discovery processes
It is a learning process. You need to learn about the markets and about competitors. You need to be on the lookout for new opportunities in existing or emerging sectors. You also need to be motivated to take advantage of the situation and make an idea come into fruition.
Assess global trends and opportunities for business ventures
Look for patterns in global markets and ideas that can make money.
Determine opportunities for venture creation
Understand the opportunity space around an idea, find and idea in an attractive and fast growing opportunity space.
Assess opportunities of for venture creation
Use SWOT analysis
Generate venture ideas
Create an idea that will make money
Determine feasibility of venture ideas
Use TMMD analysis
Describe entrepreneurial planning considerations
Identify the opportunity, create a plan to address the opportunity, forecast the plan, fund the idea, market the idea, and see if it’s feasible.
Explain tools used by entrepreneurs for venture planning
They use SWOT analysis, PEST analysis, and input from others.
Assess start-up requirements
You need a business structure, business plan, FEI number, company bank account, and licenses and permits.
Assess risks associated with venture
Market-timing risk, market adaptation risk, execution risk, technology risk, business model risk, business plan risk, leadership risk, financial risk, and legal risks
Describe external resources useful to entrepreneurs during concept development
Internet to do proper research on the concept. The patent and trademark office to search for products that the company shouldn’t waste time in making.
Assess the need to use external resources for concept development
Analyze the situation and see if it’s needed to use external resources.
Describe strategies to protect intellectual properties
File patents on products, trademark logos and designs, copyright original works, keep secrets of formula/processes/algorithms, sign non-disclosure agreements, educate team members on confidential information, and hire attorneys
Use components of business plan to define venture idea
PMMOOFIG analysis
Select sources to finance venture creation/start-up
Personal investments, patient capital (personal relations), venture capital (investors), crowdfunding, through business incubators, government grants
Describe processes used to acquire adequate financial resources for venture creation/start-up
Networking, finding investors, applying for grants
Explain factors to consider in determining a venture’s human-resources needs
Production, management, communications
Explain considerations in making the decision to hire staff
Look at work needed, skills and experience of employee, mindset, communication skills, and also salary
Describe the considerations in selecting capital resources
Capital resources are the money, tools, machinery, buildings, and employees needed to make products. Affordability, productivity, ease of access, and long-term sustainability are considered.
Identify capital resources needed for venture
Equipment, machinery, buildings, money
Assess the costs/benefits associated with resources
The costs are acquiring the resources needed. The benefits is that it will make it easier to get your business running
Establish banking procedures
Create a bank account for the company. Get loans for business if needed
Use external resources to supplement entrepreneurs expertise
Production facilities can fasten production, manufactures can take care of making products, anyone who can fill in what the entrepreneur is lacking
Explain the complexity of business operations
Talk about the structure of the business, infrastructure used, stakeholders (if any), tech used…
Evaluate risk-taking opportunities
See an opportunity, identify the risk, find feasibility
Explain the need for business systems and procedures
The products that are produced will be identical. On a employee level, systems are needed to keep everyone happy. No one will be put above another.
Describe the use of operating procedures
Standard operating procedures are step-by-step instructions made by a business to help carry out routine operations. It makes a baseline to make sure that all regulations are met
Explain methods/processes for organizing workflow
You can either organize by steps, time required to do a task, by important documents, or by type of task
Develop and/or provide product/service
Get an idea based on situation and create an idea
Use creative problem solving in business activities/decisions
Persevere and find good ideas
Explain the impact of resource productivity on venture success
If the machinery is productive, more units can be made and sold bringing more profit and vice-versa
Create processes for ongoing opportunity recognition
Evaluate situation, find improvements that can be made (opportunity), recognize the opportunity, act to create an idea and business
Develop plan to invest resources into improving current products or creating new ones
Is the product making good profit, is it well liked, if so, will investing do any gain for the company. Does the product have any flaws, if so, invest or create new product.
Adapt to changes in business environment
Adapt to market, supply chain, product mix
Explain the need for continuation planning
A business continuation plan is a plan that a business makes so that if needed it will be able to deliver its product/service even if there is a major disruption. It is made by determining threats and creating plans for how to maintain business.
Describe methods of venture harvesting
Harvesting is the final phase of entrepreneurship. It’s when the entrepreneurs and investors liquidate the their investment and exit the business. Harvesting also happens when the business is projected to fail
Evaluate options for continued venture involvement
Is there still profit that can be made, is it worth the time, do you want to continue
Develop exit strategies
Merger with another company, get acquired by a company, allow shareholders to control, while extracting your money (IPO), sell the business, pass it down, liquidate the company
