Essential Business Management and Entrepreneurship Concepts

Key Business Approaches

3 Approaches:

• Work and organizations (planning, organizing, controlling)
• People (communication, motivation, leadership, work group formation)
• Production and operations

Essential Entrepreneur Skills

5 Critical Entrepreneur Skills:

• Leadership
• Communication
• Decision-making
• Teamwork
• Strategic Vision

Common Entrepreneurial Mistakes

5 Mistakes:

• Unclear goals
• Trying to prove you're smart
• Greed
• Hiring people they like instead of need

The 3 C's of Business

3 C's:

• Company
• Customers
• Competition

Start-Up Costs

Start-Up Costs:

1. Expenses (legal structure, workspace, remodeling, stationery, logos, web page)
2. Purchase assets (inventory, office supplies)
3. Ongoing monthly expenses (rent, utilities, payroll, insurance)
4. Monthly sales projections

Business Plan Components

Executive Summary:

Main points of the business plan

Economics of the Business:

Gross operating margin, profit potential, fixed, variable, and semi-variable costs, breakeven analysis

Financial Plan:

Pro forma income statements, balance sheets, cash flow analysis, break-even chart, and cost control

Harvest Options:

Cash cow, employee stock ownership plan, management buyout, sale, public offering

Decision-Making Process

Decision-Making Process:

1. Identify the problem
2. Identify decision criteria
3. Weight criteria
4. Develop alternatives
5. Analyze alternatives
6. Select alternative
7. Implement alternative
8. Evaluate decision effectiveness

Effective Goal Setting

Well-Written Goals:

1. Consistent with the company's mission
2. Time frame stated
3. Balance concerns of stakeholders
4. Objectives must be measurable

Measuring Objectives

Measure Profitability Objectives:

1. Profit margin
2. Return on assets (ROA)
3. Return on investment (ROI)

Measure Marketing Objectives:

1. Market share
2. Sales volume
3. Rate of new product development
4. Number of outlets carrying the product

Measure Productivity Objectives:

Ratio of output to labor and capital costs, value added to sales and profit

Measure Physical and Financial Objectives:

1. Current ratio
2. Ratio of debt to equity
3. Accounts receivable turnover
4. Inventory turnover

Forecasting Methods

Forecasting:

1. Hunches
2. Market survey
3. Time-series analysis
4. Economic model
5. Variable budgeting
6. Moving budgeting

Strategic Management

Strategic Management Process:

1. Identify goals
2. OT analysis (external)
3. Internal SWOT analysis
4. Create strategies
5. Implement strategies
6. Evaluate

External Analysis:

PESTLE (political, economic, social, technological, legal, and environmental factors)