Business 180

Income Statement

Revenues - Expenses = Net Income

Difference Consumer and Business

1) Purchase Volume

2) Number of Customers

3) Location of Buyers

4) Direct Distribution

External Business Environment

1) Economic

2) Political and legal

3) Demographic

4) Social

5) Competitive

6) Global

7) Technological

Demand

The quantity of a good or service that people are willing to buy at various prices

Standard of Living:

Output of goods and services people can buy with the money they have

What is the second step for a Business Plan?

Summary of services or products

What is the fifth step for a Business Plan?

Financial Planning - overall what investment

Balance Sheet

Liabilities + Equity = Owner's Equity

3 Production Resources

1) Production Planning

2) Production Control

3) Improving production and Operations

Contribution Margin

Price-Variable Cost = Contribution Margin

Key Accounting Equation

Assets = Liabilities + Owner's Equity

Managerial Accounting

the internal use of accounting statements by managers in planning and directing the organization's activities

What are the 3 different types of Business?

1) Commercial

2) Industrial

3) Professional

Business Plan

Are used to organize and plan a business and are often shown to Banks and Credit Unions.

ROI

Return on Investment

ROE

Return on Equity

ERP

Enterprise Resource Planning

What does an ERP do?

Software that helps run a company

PO

Purchase Order

KPI

Key Performance Indicators

SKU

Stock Keeping Unit

P&L

Profit and Loss

FIFO

First In First Out

LIFO

Last In Last Out

What does a business do?

1. Create products

2. Offer services

What is the essential role of a business?

To satisfy the customer's needs or wants.

What does ABC Costing stand for?

Activity Based Costing

What are examples of ABC?

1) Time Cost

2) Opportunity Cost

3) Economic Cost

What are the 5 steps of Business?

1) Marketing

2) Production

3) Accounting

4) Finance

5) Research and Development

How do customers make purchasing decisions?

1) Need Recognition

2) Information Search

3) Evaluation of Alternatives

4) Purchase

5) Post Purchase Behavior

B2B

Business to Business how they use the product

Market Segmentation

Process of separating, identifying, evaluating the layers of a market to identify a target market

What are the different Market Segmentations?

1) Demographic

2) Geographic

3) Psychographic

4) Benefit

5) Volume

What are the 5 p's of Marketing?

1) Product

2) Price

3) Place

4) Promotion

5) People

What p was recently added in the 5 p's of marketing?

People

Target Market

Specific group of customers

Internal Business Environment

1) Entrepreneurs

2) Managers

3) Workers

4) customers

Microeconomics

the study of households, businesses, and industries

Goods

Tangible items made by a business

Services

Intangible offerings can't be held, touched, or stored

Quality of Life

General level of human happiness based on things such as life expectancy, education standards, health, sanitation, and leisure time

Revenue

money a company receives by providing services or selling goods to customers

Costs

expenses for rent, salaries, supplies, transportation, other items that a company incurs from creating and selling goods and services

Factors of Production

1) Natural resources

2) Labor (human resources)

3) Capital

4) Entrepreneurship

5) Knowledge

Capitalism

Private Enterprise system based on competition in the marketplace and private ownership of the factors of production (resources)

What margin do you have to negotiate?

5-10%

B.E.

Break Even

Marketing Goals

1) Identify Customer

2) Entice Customer

3) Add Value for customers (real or perceived)

Marketing Challenges

We can't provide high quality products and services at the lowest price

What is the first step for a Business Plan?

Business Summary - 5 sentences of the overall business

What is the third step for a Business Plan?

Market Analysis - analyzing what you are doing and how you are doing

What is the fourth step for a Business Plan?

Marketing Strategy

What is the sixth step for a Business Plan?

Budget, Projected Revenues, Operating Cost

What is the seventh step for a Business Plan?

Projection of Expected Performance

What do you usually increase the average price to?

3-4 times

Tennax

10 times the manufactor cost

What does it mean to Break Even?

Break even enough money that you can pay for everything

What does production do?

Creating something to sell that

1) Satisfies the customer's demand

2) Makes a profit

Operations

All activities that enable a company to be profitable

Inventory Control

Have to predict the demand to determine production

What controls do you try to determine with inventory?

1) Avoid running out of inventory

2) Avoid too much inventory (>2 months)

What's more expensive stocking out or carrying too much?

Stocking Out

Carrying Cost

The price for keeping things in stock

Economies of Scale

The more you make the less you charge for it

Working Capital Cycle

The time it takes a business to change it's liablieties and assets into cash.

1. Buy

2. Produce

3. Sell

4. Collect

3 types of Cost

Time

Economic

Opportunity

Cash Flow Statement

1) Operating Activities, 2) Investment Activities, 3) Financing activities

7 Steps of a Business Plan

1. Business Summary

2. Summary of services or product

3. Market Analysis

4. Marketing Strategy

5. Financial Planning

6. Budget, Projected Revenues, Operating Cost

7. Projection of Expected Performance

Negotiation Steps

1) Flinch

2) Use Silence to your advantage

3) Ask for more than you want/will take

4) Information is King/Queen

5) Stay Unemotional

6) Practice, Practice, Practice

7) Maintain your walk away Power

8) Always End your Negotiation on a good note

Ways to Improve Contribution Margin

1) Raise Price

2) Lower the Material Cost

3) Reduce Labor Cost

4) Economies of Scale

Benchmarking Stages

1. Benchmark Yourself or your Team

2. Your company

3. Other companies similar competitors

4. The best of the best

Factors of Production

1) Natural Resources

2) Labor (Human Resources)

3) Capital

4) Entrepreneurship

Economies of Scale

a proportionate saving in costs gained by an increased level of production.

Chapter 7 Bankruptcy

The door is closed and you don't have to pay back the business shuts down.

Chapter 11 Bankruptcy

You issue bankrupt but you keep the business going and you get an extension on the loans

6 steps of Supply Chain

1. Raw Materials

2. Supplier

3. Manufactoring

4. Distribution

5. Customer

6. Consumer

15 steps of Presenting

1) Know Your Audience

2) Overcoming Fear

3) Understanding the "Why" of your presentation

4) Great Opening

5) Credibility Statement

6) Make Your Audience Comfortable

7) Power Pause

8) Effective Movement Strengthens a Presentation

9) Avoid the Wall

10) Depending, Share Brief Agenda

11) Effective Content

12) Deliver a great hook!

13) Perfect Practice

14) Be Creative

15) Rock your Q and A

Whats the difference between making money and earning money?

Earning money is when you have a job that makes you money, making money is when your money works for you and that's like your investments and things.

What does MSI stand for?

Multiple Streams of Income

Accounts Payable AP

Amounts to be paid in the future for goods or services already acquired

Accounts Receivable AR

Money owed to the company from the customer.

Financial Accounting

The field of accounting that focuses on providing information for external decision makers.

What are the two types of pain?

Discipline and Regret

Average Markup Price of Goods

3-4 times

What are the four business expenses?

1) Inventory

2) Payroll

3) Rent and Utilities

4) Equipment

Payment Terms

10 net 30

Productivity of a company

Ratio of output to inputs

1) Economic

2) Opportunity

3) Time

Carrying Cost

cost of holding an item in inventory

what is more expensive over stock or stocking out?

stocking out

Customization

making products to meet a particular customer's needs or wants

mass production

Process of making large quantities of a product quickly and cheaply

Bad Financial Friends

1) Banks

2) Convenience Stores

3) Credit Cards Used Poorly

4) Poor Relatives

Great Financial Friends

1) Credible Investment Companies

2) Honest Financial Planners

3) Credit Cards Used Wisely

4) Concrete Block

Steps for Networking

0) Do Something for them

1) Look for the right people

2) Be Proactive

3) Offer Assistance

4) Cultivate Personal Contacts Online

5) Attend Company Events

6) Follow up After Events

7) Develop an elevator Pitch

What does SWOT stand for?

strengths, weaknesses, opportunities, threats

Perceived Value

the value a consumer expects to obtain from a purchase

Owe Vs Own

Owe is a liabilities and Own is an asset

Two kinds of people with interest

Those who understand earn Interest those who don't pay it

6 Effective Meeting Strategies

1) Have an Agenda

2) Meet and Review

3) Effective Brainstorming

4) Meat of the meeting

5) confirm Assignments going forward

6) Send out an email confirming

Long Term Financing

money needed for the main resources of a business (such as land, buildings, and equipment) that will last for many years.