Domain 1 Lesson 1

ESB Version 2 Domain 1 Lesson 1

By Stephanie Wheeler

​Entrepreneurs

1. interested in taking on new opportunities

2. willing to explore new opportunities and unknown risks-grow their business and achieve profits rapidly

Small Businesses

1. owned and managed by an individual or small group of people who provide some type of capital into the business and are involved in the decision-making process for the business

2. The key objective is to generate profit

Franchises

1. Owners license their operations, products or services, branding and knowledge for a franchise fee

2. Agreed-upon amount in revenue be paid to the owner

3. Higher upfront costs but are less risky

4. Provide continued direction, guidance, and training by franchise owners

Fill in the Blank

The key objective of a small business owner is to generate

Types of Businesses

1. Products or services sometimes both

   1. Products

   2. Tangible items

   3. Services

      1. Intangible things like a skill or expertise that is performed

E-Commerce

1. Becoming More Common

   1. Tangible items (require pick-up or delivery)

   2. Digital goods and services are intangible like dropbox, grammarly, ebooks, egift cards

Physical Product Pros & Cons

1. Pros-Most people are willing to pay more $,

2. Cons-inventory tracking, storage space, people to track, etc and shipping and packaging costs

Digital Product Pros & Cons

1. Pros-Does not require storage location, inventory, additional employees, or shipping costs

2. Cons-Sometimes digital items are more difficult for customers to perceive the value of

Fill in the Blank

Tangible items that require pick-up or delivery are________ products

Classifying Types of Businesses

1. Business to Consumer 

   • Customer purchases item from a business (B2C)

2. Business purchases a product, service or information from another business, it is a business to business (B2B) transaction

   • B2B commonly take place when one business supplies materials to another business to produce its products

Fill in the Blank

When a _________purchases an item from a business, it is a business-to-consumer transaction.

Business Legal Structures

1. S-Corporation 

• provided with a special tax advantage that allows the company to pass its income, losses, and credits through its shareholders (low taxation) 

• Offers similar liability protection as a c corp

• Is a for-profit organization

• VERY strict qualification requirements must be met to become one

Business Legal Structures Cont'd

​

1. C-Corporation

• Taxes the corp separate from its owners

• The company’s profits are taxed when earned

• Shareholders’ dividends are taxed after they are distributed

• Although this creates double taxation, C Corps are ideal for international businesses because international business owners do not have to file a personal US income tax return

Business Legal Structures Cont'd

​

1. Limited Liability Company (LLC)

• Costs less to create

• Pass-through taxation similar to an s corp

• Uses owner's own taxes and personal tax rate

• Ideal for a single owner desiring low risk because owners are not personally liable for the company’s debts

Business Legal Structures Cont'd

​

1. Sole Proprietorship

• Easy to create due to the lack of government regulation

• The owner is responsible for all of the business’s debt whereas a partnership shares the responsibility for

Business Legal Structures Cont'd

​

1. Non-Profit entity

• No one owns a non-profit entity

• Tax-exempt (does not have to pay US federal taxes)

Fill in the Blank

______________are for profit corporations with limited liability

Fill in the Blank

______________are ideal for international businesses

Business Roles & Responsibilities

​

1. CEO

   1. Highest-ranked employee in the company

   2. Responsible for the business’s success

   3. Makes the major decisions

   4. Oversees operations & resources

   5. Develops the company’s vision, strategies & mission

   6. Reports to the Board of Directors

Business Roles & Responsibilities Cont'd

​

1. Chief Financial Officer (CFO)

   1. In charge of the company’s finances

   2. Manages and plans the cash flow

   3. Creates budgets

   4. Forecasts whether the company will meet set budget requirements or not

   5. Negotiates on all of company’s financial matters

Business Roles & Responsibilities Cont'd

​

1. Chief Operating Officer (COO)

   1. Oversees the business’s day to day operational and administrative functions

Business Roles & Responsibilities Cont'd

​In a large company, the Owner works with CEO, CFO and COO to make strategic decisions.

In small businesses the owner may bear some or all of the responsibilities of CEO, CFO and COO.

Business Roles & Responsibilities Cont'd

1. The founder is the individual who developed or created the company or organization

   1. Is the only role that is not interchangeable

Business Roles & Responsibilities Cont'd

1. Stakeholders are the individuals or groups that have an interest in the success of a company

   1. Can be investors, customers, suppliers, or employees. 

   2. Many stakeholders are also inventors. 

   3. Play various roles like directing the management, financing and budgeting

   4. Major stakeholders are commonly on the board of directors and play a large role in the company’s decision-making

Business Roles & Responsibilities Cont'd

1. Partnership

   1. One or more partners share the business’s financial responsibilities

Business Roles & Responsibilities Cont'd

1. Stockholders

   1. Ensure standards for management

   2. Must own one share of stock in the company

Business Roles & Responsibilities Cont'd

1. Employees

   1. Responsible for completing specific tasks while adhering to safety and ethical guidelines and policies

   2. Paid a wage or salary by the company

Fill in the Blank

______ _______ __________oversees daily operational and administrative functions.

Fill in the Blank

______ _______ __________is the highest-ranked employee in the company

Business Compensation Structures

1. Employment contract 

   1. Outlines the employee’s and the employer’s obligations and the terms of employment

      1. Compensation

      2. Schedule

      3. Duration of Employment

      4. Benefits 

      5. Responsibilities

Common Types of Compensation

1. Hourly

   1. Paid for hours worked

      1. Con-not always a consistent amount

Common Types of Compensation Cont'd

1. Salary

   1. A fixed payment each pay period

      1. Pro-fixed amount each month

Common Types of Compensation Cont'd

1. Commission

   1. Fee paid to an employee for completing a task

      1. Common in sales (percentage of the sales amount)

Common Types of Compensation Cont'd

• Piece work

Compensated for the number of units they produce

Common Types of Compensation Cont'd

• Equity

  1. A non-cash compensation that is commonly offered to employees in place of cash or in addition to a lower salary

  2. May include an investment vehicle like ownership in the company, restricted stocks or shares

Fill in the Blank

Businesses can compensate employees for work they produce when being paid by paying a ____________.

Fill in the Blank

________ in addition to a lower salary is sometimes used to compensate employees.

Business Life Cycle Stages

4. Take-off stage

• Continue to grow? How to finance?

5. Maturity

• Owners separate financially and operationally from a business

6. Pivot or Persist

   1. continue to grow or new projects?

7. Exit Plan Stage

• Sell and make a profit?

1. Existence Stage

   1. Business BEGINS

2. Survival Stage

   1. Making Income

   2. Customer Growth

3. Success Stage 

   1. Business is economically healthy

​Business Life Cycle Acronym

​Every Single Student Takes More Practice Exams

Every=Existence

Single=Survival

Student=Success

Takes=Take OFF

More=Maturity

Practice=Pivot or Persist

Exams​=Exit

Fill in the Blank

During the ____________stage of the business life cycle, a company is regularly taking on new customers and starting to generate consistent income.

Fill in the Blank

The owner may decide to sell their ownership in the company during the _________ _____ stage.

The Design Thinking Process

• Design Thinking

  1. A learning process focused on customers and their needs

  2. Used to develop user friendly products

Design Thinking Elements

1. Empathize

   1. Observe, engage and empathize with customers to understand their experiences and needs and challenges

2. Define

   1. Analyze observations and information gathered

   2. Identify the core problem

   3. Define as a problem statement (customers’ needs first)

3. Ideate

   1. Comes up with solution ideas

   2. As many as possible and then narrow down

4. Prototype

   1. Create inexpensive versions or (Minimum Viable Products)

   2. Basic functioning products that address the user’s core problem

   3. Used to test the problem solutions that the team came up with in the previous ideation stage

5. Test

   1. Final testing stage

      1. Reviews and refines

​Design Thinking Elements Acronym

​Every Day I Prepare To Test

​

Empathize

Define

Ideate

Prototype

Test​

​

​

​

Fill in the Blank

The five elements of the design thinking process are: empathize, define, ideate, ________, and test.

Fill in the Blank

__________Allows one to see and experience a customer's perspective

Fill in the Blank

The design team creates multiple inexpensive versions, known as __________ _________ ________ (MVP).