WEEK 1 Flashcards
A person who is engaged in carrying out any activity, related to commercial and industrial purposes is known as __________________
Businessman
Sets up hisbusiness as a new entrant in the market as for the existing business. When it comes to originality of ideas, most of the businessmen go for a business which is highly in demand, or which can make huge profits for them irrespective of uniqueness.
Businessman
____________ is a person who conceives a unique idea or concept to start an enterprise and brings it into reality.
Entrepreneur
He is the person who bears risks and uncertainties of the business.
Entrepreneur
The venture established by the entrepreneur is known as _____________, which is formed for the very first time regarding the idea, innovation or business process.
Startup Company
Main Difference between Businessman and Entrepreneur
Businessman:
-Starts business from an existing idea
- Traditional
- Avoids taking risks
- Profit Oriented
- Market Player
Entrepreneur
- Start business from a unique and innovative idea
- Revolutionary
- Risk Taker
- Customer Oriented
- Market Leader
The activity of setting up a business or businesses, taking on financial risks in the hope of profit.
Entrepreneurship
The process of starting and developing a company, with the aim of delivering something new or improved to the market, or by organizing the means of production in a superior way.
Entrepreneurship
The process of creating a new enterprise and bearing any of its risks, with the view of making the profit.
Entrepreneurship
TRUE OR FALSE:
Entrepreneurship is Prone to High Failure
False
Entrepreneurship is Dependent on Performance
TRUE OR FALSE:
Entrepreneurs are Made
True
TRUE OR FALSE:
Entrepreneurs Have to be challenge-takers
True
TRUE OR FALSE:
Entrepreneurs are Mainly Motivated by Money
False
Entrepreneurs are Motivated by Passion
TRUE OR FALSE:
Entrepreneurs are Essentially Inventors
False
Entrepreneurs are Ideators
10 Principles of Entrepreneurship
- Be a solution Provider
- Have a Vision
- Select Team Wisely
- Make Viable Products or Services
- Proper Identification of Capital Requirements
- Accountability and Responsibility with Integrity
- Effective Growth and Marketing
- Know your Customers
- Find the Right Opportunity
- Respect your Customers and Employees.
Traits of an Entrepreneur
- Good Leader
- Optimistic
- Confident
- Passionate
- Disciplined
- Proactive
- Open-minded
- Competitive
- Kind
It is the process of managing your money to achieve specific financial goals and objectives. It involves setting financial goals, creating a budget, saving, and investing, and managing risks.
Financial Planning
Tips and Tools for Financial Planning
A. Budgeting
B. Emergency Fund
C. Debt Management
D. Investing Basics
E. Insurance Planning
It is the foundation of financial planning. It helps individuals understand their income, expenses, and how they allocate their money.
Creating a Budget
_______________ provides insights into spending habits, making it easier to identify areas for improvement and potential savings.
Track Expenses
It is a crucial safety net for unexpected expenses like medical bills or car repairs, preventing the need to rely on credit cards or loans.
Emergency Fund
Rule of Thumb of Emergency Fund
Have at least 3 to 6 months worth of living expenses in the Emergency Fund
It is typically considered an investment in your future, as it has the potential to generate long-term benefits or increase your overall net worth.
Good Debt
Example of Good Debt
Mortgage, School Loans, and Business Loans
Generally considered non-essential and does not contribute to wealth creation. It often involves high-interest rates and can lead to financial stress if not managed properly.
Bad Debt
Example of Bad Debt
Credit Card Debt
Car Loans of Depreciating Assets
Payday Loans
What are the two Debt Management Strategies
Debt Snowball Method - prioritizing small debts first before large debts. It provides motivation to pay the next debt
Debt Avalanche Method - prioritizing large debt first then small debts. It reduce the interest paid overtime
It involves spreading investments across different asset classes (e.g., stocks, bonds, real estate) to reduce risk. The goal is to create a well-balanced portfolio that can withstand market fluctuations.
Diversification
Investment strategies differ based on the time horizon of financial goals. Long-term goals, such as retirement, allow for a more aggressive and growth-oriented investment approach.
Long Term Vs Short Term Goals
Types of Insurance
- Health Insurance
- Life Insurance
- Auto Insurance
- Property Insurance (Homeowners’ and Renter’s Insurance)
- Liability Insurance (Umbrella and Professional Liability (Errors and Omissions) Insurance)
Discuss how insurance can be a crucial tool in managing financial risks.
Risk Management
Financial Planning Cycle
- Assessment Phase
- Planning Phase
- Implementation Phase
- Monitoring and Adjustment Phase
Importance of Financial Planning
A. Achieving Financial Goals
B. Risk Management
C. Building Wealth
Financial planning empowers individuals to take control of their financial future and work towards their goals.
Empowerment
Having a well-thought-out financial plan provides a sense of security and peace of mind.
Peace of Mind
Financial planning involves a systematic approach to identify and understand potential risks that could impact one’s financial stability. These risks may include market volatility, economic downturns, job loss, or unexpected expenses.
Minimizing Financial Risk
An emergency fund is a designated pool of money set aside to cover unforeseen expenses or financial emergencies. It serves as a crucial component of financial planning to provide a financial safety net in times of need.
Emergency Preparedness
are two fundamental financial activities that individuals engage in to build wealth, achieve financial goals, and secure their financial future. While both involve putting money aside with the goal of increasing financial well-being, they serve different purposes and come with distinct characteristics.
Saving and Investing
is the process of determining how much money you need to save for retirement and creating a strategy to achieve that goal.
Retirement Planning
