Expenses & Costs - How to Spend Money Wisely: Crash Course Entrepreneurship

The video discusses the importance of understanding and managing business expenses to avoid failure. It covers operating costs, differentiating between direct and indirect costs, and explains fixed and variable costs. The video contrasts cost-driven and value-driven business models, using examples like No Frills and Ritz Carlton. It also introduces economies of scale and scope, and provides a case study on managing costs in a small business. The importance of expense tracking for profitability and social entrepreneurship is emphasized.

What is a potential risk for businesses even if they are doing everything else correctly?

• Poor marketing strategies

• Running out of money

• High employee turnover

• Lack of customer interest

What are the two main categories under operating costs?

• Product and service costs

• Fixed and variable costs

• Cost of goods sold and SG&A

• Direct and indirect costs

Which of the following is considered a fixed cost?

• Rent for office space

• Cost of raw materials

• Advertising budget

• Shipping expenses

What is a characteristic of a cost-driven business structure?

• Investing heavily in marketing

• Focus on high-quality service

• Offering luxury products

• Minimizing costs wherever possible

Which company is known for its cost-driven approach with a humorous twist?

• Walmart

• Southwest Airlines

• Ritz Carlton

• No Frills

What is a value-driven business more focused on?

• Expanding product lines

• Increasing automation

• Creating customer value

• Reducing production costs

What is an economy of scale?

• A way to diversify product offerings

• A cost advantage from producing larger quantities

• A strategy to increase product prices

• A method to reduce employee numbers

How can Piper improve her business profitability?

• By buying materials in bulk

• By hiring more contractors

• By reducing her marketing efforts

• By increasing her prices

What did Piper initially overlook in her business expenses?

• Gas for transportation

• Contractor wages

• Cost of paint

• Website setup

Why is tracking expenses crucial for social entrepreneurs?

• To maximize profits

• To reduce operational costs

• To increase market share

• To ensure effective budgeting