1. A Business plan serves what purposes?

1) To ensure the at entrepreneur understands all of the variables that can affect the business.

2) Provide the details of the business when communicating to others for advice, financing, or support of the business.

3) Provide a tool to monitor the business's progress in accordance with the plan so that adjustments can be made based on actual performance.

2. What is the "business environment"?

Anything that directly affects all of the businesses in an industry to one degree or another (e.g. retail, automobiles, steel, government, nonprofits).

3. What is "competition"?

Bussinesses vying for the same sales dollars (e.g. McDonalds vs Wendy's).

4. What are customers?

The beneficiaries of an organization's objective (e.g. auto buyers, shoppers, taxpayers).

5. What is location?

The place in which a business and its customers are situated (e.g. a Hallmark card store at the mall).

6. What is objective?

The stated reason for an organization to exist (e.g. to manufacture and sell automobiles).

7. Who are the owners?

The people who have an ownership interest in the organization (e.g. taxpayer and stockholders).

8. What Special Organization Components?

Organizaitonal components that are unique to a given business (e.g. distributor networks, dealers, and agents).

9. Who are suppliers?

The people of businesses who sell material or services that a business needs to achieve its objectives.

10. What are the indirect, uncontrollable variables that help define the environment in which a business must function?

1) Governmental regulation

2) Environmental Factors

3) Politics

4) Laws

5) Ethics

6) Time

7) Risk

11. What are the three basic business models used today?

1) The Profit Model

2) The Nonprofit Model

3) The Government Model

12. What are the four factors that affect the competitive environment and, to some degree, all of the competitive groups?

1) Substitute Products

2) New Market Entrants

3) Suppliers

4) Customers

13. The resources a business has that it uses to achieve its objective (money and short-term investments).

Assets

14. Assets of a more permanent nature that are used in the business (warehouses, vehicles, and prepaid expenses like insurance)

Fixed Assets

15. These are all debts that the business owes (accounts payable [current bills], long-term debt).

Liabilities

16. This is the difference between assets and liabilities, sometimes called net worth, the owner's interest in the company.

Equity

17. Costs that do not vary within a range of capacity.

Fixed Cost.

18. Cost that vary with the production or units of work (if I were selling quarts of olive oil, the variable cost would be what I at the supplier for the oil).

Variable Cost.

19. The mix of cost for a company between fixed and variable (an airline has high fixed costs and high variable cost, a consulting firm has low fixed and high variable cost).

Cost Structure.

20. The difference between the revenue and the variable cost per unit applied to pay fixed cost or when they are paid off; equals profit per unit.

Contribution Margin

21. The number of units that must be sold so that the contribution margin pays all of the fixed costs and profits can begin.

Break-Even Point (BEP)