Entrepreneurship

• The 4 M's of Production

  • Manpower
  • Method
  • Machine
  • Materials
• Manpower


  Human labor force involved in the manufacture of products. Criteria include educational qualifications, experience, employment status, numbers required, skills and expertise
• Materials


  Raw materials necessary in the production of a product. Criteria include cost, quality, availability, credibility of suppliers, waste
• Machine


  Manufacturing equipment used in the production of goods or delivery of services. Criteria include types of products, production system, cost, capacity, availability of spare parts, efficiency, skills required
• Method


  Production process of transforming raw materials to finished products. Criteria include product to produce, mode of production, manufacturing equipment, required skills
• Business plan


  A document that details a company's goals and how it intends to achieve them. Can be essential for startups to win over lenders and investors, and useful for established businesses to stay on track
• Major parts of a business plan

  • Introduction
  • Executive Summary
  • Environmental Description
  • Business Description
  • Organizational Plan
  • Production Plan
  • Operational Plan
  • Marketing Plan
  • Financial Plan
  • Appendix
• Introduction


  Discusses what the business plan is all about
• Executive Summary


  The first part presented but the last to be made
• Management Section


  Shows how the business will be managed and the people needed to help in operations
• Marketing Section


  Shows the design of the product/service, pricing, where it will be sold, and how it will be introduced to the market
• Financial Section


  Shows the money needed for the business, how much will be taken in and how much will be paid out
• Production Section


  Shows the area, equipment and materials needed for the business
• Competitive Analysis


  The strategy where major competitors are identified and their products, sales and marketing strategies are researched
• Market


  The persons who will buy the product or services
• Organizational chart


  A diagram showing the relation of one official to another, or others of a company
• Business model


  Describes the reasons of how an organization creates, delivers, and captures value in economic, social, cultural or other contexts
• Important phases in developing a business model

  • Identifying the specific audience
  • Establishing business process
  • Recording business resources
  • Developing strong value proposition
  • Determining key business partners
  • Creating a demand for today's generation strategy and be open for innovations
• After developing a business model, the next step is to proceed in developing a business plan
• A business plan is an important tool to have an idea about the future of the business and will be a guide when implementing and operating the business proposal
• A business plan can be used to secure investment capital, influence people to work for the enterprise, secure credit from suppliers, and attract potential customers
• The Wealth of Nations was written in 1776
• Rational


  (in classical economic theory) economic agents are able to consider the outcome of their choices and recognise the net benefits of each one
• Rational agents will select the choice which presents the highest benefits
• Rational agents


  • Consumers
  • Producers
  • Workers
  • Governments
• Consumers act rationally by


  Maximising their utility
• Producers act rationally by


  Selling goods/services in a way that maximises their profits
• Workers act rationally by


  Balancing welfare at work with consideration of both pay and benefits
• Governments act rationally by


  Placing the interests of the people they serve first in order to maximise their welfare
• Groups assumed to act rationally


  • Consumers
  • Producers
  • Workers
  • Governments
• Rationality in classical economic theory is a flawed assumption as people usually don't act rationally
• Marginal utility


  The additional utility (satisfaction) gained from the consumption of an additional product
• If you add up marginal utility for each unit you get total utility
• Product description


  The promotion that explains what a product is and why it's worth buying. The purpose is to provide customers with details around the features and benefits so they're obliged to buy
• Guidelines for a good product description

  • Know your target market
  • Focus on product benefits
  • Tell the full story
  • Use natural language and tone
  • Use power words that sell
  • Use good images
• Prototype


  A duplication of a product as it will be produced, which may contain details like color, graphics, packaging and directions. An important early step in the inventing process
• Benefits


  The reasons why customers will decide to buy the products, such as affordability, efficiency or ease of use
• Features


  Descriptive facts about the product or service
• It is better to test your product prototype to meet customers' needs and expectations, and for your product to be known and saleable
• Pretesting


  Similar to a sample of the product or service given to the consumer free of cost so they can try it before committing to a purchase