INDIVIDUAL ASSIGNMENT

Entrepreneurship - ETR401

Name: Lê Thị Hương

Student ID: HS140412
Class: FIN1402
Lecturer: Trịnh Trọng Hùng
1. Briefly describe the sources that lead small business owners to their business ideas

Work experience: Past work experience, especially business experience, will help you
navigate all odds while thinking about your next business idea. Entrepreneurship doesn't
have any rules as it is greatly guided by creativity, motivation and self-confidence. Many
successful business owners spent years working for a company and gained valuable
experience about how things might be done differently. Sometimes the idea grows out of
listening to customer complaints. You can use your own work and personal experiences to
think of ideas for doing things differently. Sometimes the best business ideas come from
your own frustration or from not finding exactly what you are looking for as a consumer.

A similar business: Even if you don’t have years of work experience in an industry or
market, you might see a business in an area that intrigues you because you like certain
products, or you learn that there is a growing market for this business and you think of a
way to expand on the opportunity. Currently, many small businesses also form business
ideas based on other businesses.

Hobby or personal interest: A hobby is an activity that you enjoy doing during your leisure
time and is one of the primary sources of business ideas for entrepreneurs. In fact, most
people have founded great successful businesses while pursuing their interests or hobbies.
For instance, if you enjoy travelling, playing with computers, music, sports, performing or
cooking, you can seamlessly develop it into a business.

Family and friends: Family and friends are also a great way of coming up with a business
idea. Experiences from family members are a great resource. Ideas can come to you through
your conversations with your family and friends. If you are open to their suggestions, a great
business idea can result.

Education and expertise: Decide first to own a business, then searching for a viable idea
for that business. As we saw earlier in the chapter, some small business owners decide first
that they want to own a business and then go about searching for a viable idea for that
business. Often, would-be entrepreneurs look to their own skills and talents for business
ideas.

Customer surveys: Customers are the largest source of new product ideas as they are the
direct consumers of the products you plan on introducing to the market. Opening up a
business that will improve the current products to customers' tastes and preferences will help
you navigate quickly through the business world. The relationship you build with your
potential customers during the survey leads you to new sources of business ideas as they
freely share their challenges with you. Thus, ensure that you talk to several existing and
potential customers to understand their needs.

Mass media: The mass media, including television, newspapers, the internet, radio, and
magazines, are a great source of ideas, information, and opportunities. One way to become
a successful entrepreneur is taking a careful look at the advertisements and commercials in
these media. By reading a magazine or newspaper, you can easily come across a business
for sale that interests you. In addition, business ideas can arise from your access to the
Internet. As you compare the different sources of business ideas and the available

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opportunities, you can easily go for an idea that involves insignificant risks and no possible
failure at the starting stage. With time, you will also give a testimony that you started off
with an idea, and it developed gradually into a thriving business.

2. How can business ideas be screened for their viability? Explain.

There are 4 general ways to screen the viability of business ideas

Do the Research- Market
Market research is the key step in launching a successful business. All ideas need
information about customers and potential competitors before they’re put into action. As
Jessica Mah of inDinero advised in a recent Smart Hustle interview, you must complete
market research before you quit your day job to launch your new business. How do you
conduct research on your intended audience? One entrepreneur suggests the “Starbucks test.”
Go into a coffee shop and strike up a conversation with someone who looks like he or she
could be your target customer. Offer to buy them a coffee and pitch them your business idea
to gather some honest feedback. Informal conversations can give you insight that you
otherwise wouldn’t receive. Similarly, sites like PickFu can help you gather feedback on
everything from business ideas to marketing copy.

Crunch the Numbers- Capital

Sometimes, the failure of a business has nothing at all to do with the quality of the idea and
everything to do with financial realities. To put it more succinctly, you need a budget and a
way to test whether your intended company structure and business model have staying
power, or if you’ll run out of money on the launch pad. Take the time you need to plot out
every possible expense, and adjust profit expectations and price points based on the industry
research you’ve done. If the numbers simply don’t add up, go back to the drawing board.

Run a Pilot Test (or a Beta)

If you want to test your business idea in a more concrete way than just soliciting written
feedback, you might want to consider running some sort of small pilot test before you ramp
up into full production mode. This will help you iron out any major problems and plan for
bottlenecks that could cripple full-scale production. Depending on the type of product or
service you want to offer, there are a number of ways to go about this. Kickstarter is an
obvious one — it lets you essentially pitch a raw idea and offer an amount to prototypes to
folks with specific interests who love trying out new products before the rest of the world.
If your trade is software, give Apple’s TestFlight a shot to offer open betas for new apps or
digital services.

Find a Mentor

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 One of the most unfortunate mistakes a fledgling business owner can make is assuming you
can do everything on your own. The truth is, nobody ever took on the world by themselves.
Nine-tenths of leadership is surrounding yourself with people who know more than you do
and aren’t afraid to challenge your beliefs. With that in mind, take the time to find somebody
who’s been where you are now, and who knows how to walk the walk and talk the talk. If
nobody comes to mind, the internet is full of coaching groups and other opportunities to help
you build a supportive network of like-minded folks who can show you the way.

3. What are the main concerns when individuals moonlight? Explain.

Moonlighting- working a part-time job or having a business “on the side”—can pose a challenge for
employers. Moonlighting can lead to divided allegiance, conflicts of interest, and poor job performance.
Given the tight labor market in the service industry, it’s not uncommon for hourly employees to
moonlight with other retail or foodservice operations, possibly even your competitors. Depending on
the type of business or industry you're in, your workforce may include a number of employees who are
working more than one job. If this is the case you may want to consider a moonlighting policy,
particularly if it's likely that another job might interfere with an employee's job with your business or if
the employee's other job is with a competitor.
An employee's outside employment can place a burden on your business in the following ways:

 Your employee may be too tired to perform your job effectively because another job might require
the employee to work long or late hours.
 Your employee may not be able available to work the hours your schedule demands because another
-job also requires the employee to work the same hours.
 The employee may be spending working time performing activities related to another job.
 The employee's job at the other place of employment may represent a conflict of interest.
If you decide that you need a moonlighting policy, don't focus on regulating employees' off-duty
conduct. Instead, any policy against moonlighting should focus on the issue of noninterference with
your business, specifically the employee's performance at your business and the work hours required
by your job. Don't forbid employees from having other jobs altogether — it will be difficult to enforce
and could result in the loss of some good employees. As with all policies, making your requirements
too restrictive will hurt you more than help you.
Basic moonlighting policies generally contain statements addressing:

 Interference with primary job: set out expectation that employees will treat their work at your
business as their primary job and will not allow other jobs to interfere with the performance of the
primary job. Second jobs are permissible only if the employee can continue to perform his or her
normal work requirements within the scheduled workweek.

 Conflict of interest: Part of the reason for having policies is to protect your business. A conflict of
interest policy can help you ensure that employees don't start working for your competitors while
they're working for you.

 Requiring approval of employment: If you wish to work part-time for another firm, please discuss
the matter with your supervisor prior to accepting the job.

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4. Briefly describe the industry life cycle.

An industry life cycle depicts the various stages where businesses operate, progress, and slump
within an industry. An industry life cycle typically consists of five stages — startup, growth,
shakeout, maturity, and decline. These stages can last for different amounts of time – some can
be months some can be years.

Startup Stage
At the startup stage, customer demand is limited due to unfamiliarity with the new product’s
features and performance. Distribution channels are still underdeveloped. There is also a lack
of complementary products that add value for the customers, limiting the profitability of the
new product.
Companies at the startup stage are likely to generate zero or very low revenue and experience
negative cash flows and profits, due to the large amount of capital initially invested in
technology, equipment, and other fixed costs.

Growth Stage
As the product slowly attracts attention from a bigger market segment, the industry moves on
to the growth stage where profitability starts to rise. Improvement in product features increases
the value to customers. Complementary products also start to become available in the market,
so people have greater benefits from purchasing the product and its complements. As demand
increases, product price goes down, which further increases customer demand.
At the growth stage, revenue continues to rise and companies start generating positive cash
flows and profits as product revenue and costs surpass break-even.

Shakeout Stage
Shakeout usually refers to the consolidation of an industry. Some businesses are naturally
eliminated because they are unable to grow along with the industry or are still generating
negative cash flows. Some companies merge with competitors or are acquired by those who
were able to obtain bigger market shares at the growth stage.
At the shakeout stage, the growth rate of revenue, cash flows, and profit start slowing down as
the industry approaches maturity.

Maturity Stage
At the maturity stage, the majority of the companies in the industry are well-established and
the industry reaches its saturation point. These companies collectively attempt to moderate the
intensity of industry competition to protect themselves, and to maintain profitability by
adopting strategies to deter the entry of new competitors into the industry. They also develop
strategies to become a dominant player and reduce rivalry.

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At this stage, companies realize maximum revenue, profits, and cash flows because customer
demand is fairly high and consistent. Products become more commonplace and popular among
the general public, and the prices are fairly reasonable, as compared to new products.

Decline Stage
The decline stage is the last stage of an industry life cycle. The intensity of competition in a
declining industry depends on several factors: speed of decline, the height of exit barriers, and
the level of fixed costs. To deal with the decline, some companies might choose to focus on
their most profitable product lines or services in order to maximize profits and stay in the
industry. Some larger companies will attempt to acquire smaller or failing competitors to
become the dominant player. For those who are facing huge losses and that do not believe there
are opportunities to survive, divestment will be their optimal choice

5. Briefly discuss the different types of budgets that make up the master budget

A master budget is the central planning tool that a management team uses to direct the activities
of a corporation, as well as to judge the performance of its various responsibility centers. It is
customary for the senior management team to review a number of iterations of the master
budget and incorporate modifications until it arrives at a budget that allocates funds to achieve
the desired results. Hopefully, a company uses participative budgeting to arrive at this final
budget, but it may also be imposed on the organization by senior management, with little input
from other employees.

The budgets that roll up into the master budget include:

 Direct labor budget

 Direct materials budget

 Ending finished goods budget

 Manufacturing overhead budget

 Production budget

 Sales budget

 Selling and administrative expense budget

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A master budget combines all of the smaller budgets within your business and turns them into
one overall budget, so you can get a comprehensive overview of your firm’s finances. The
master budget includes the HR, marketing, and all other departmental budgets to produce an
overall single budget.

6. What are some of the tasks an accounting system should be able to perform in order to

ensure that a business's accounting information is accurate, reliable, and useful?

Accounting software is a tool to help you record the flow of your company's money and
examine your financial condition. With it, you can record transactions, generate reports,
manage customer and vendor contacts, create purchase orders, track stock levels, bill customers,
and monitor account balances.

Using accounting system can save your company time and prevent errors. Instead of copying
and pasting data from spreadsheet to spreadsheet, you have all your transaction information in
one place. You can easily see what's been spent or what's come into the business, and you
always know where to find this information." Rather than manually inputting data and
transactions, you can use the bank feed feature to connect the software to your business bank
and credit card accounts. With this in place, you have a daily update of your transactions. Most
accounting applications have a dashboard that gives you a real-time look at your most important
metrics.

The software can create a variety of reports and financial statements, including profit and loss
statements and balance sheets, which are necessary for requesting funding from an investor.
You can also compare transaction activity or statements from prior months and years to your
current ones, which can help you analyze your business's growth, sales trends, and other key
metrics that you need to make informed business decisions as you prepare for the future.

You can use the accounting software to categorize expenses and schedule and pay bills,
whether you pay online, by check, by credit card or with cash. This will help you keep track of
those transactions and manage your cash flow. You can also use the software to record the
payments you receive in cash or by check, and create and send invoices and past-due
notifications. Accounting software automates many tedious and repetitive accounting tasks,
which increases the accuracy of your data and keeps your bookkeeping efficient. If you use
cloud accounting software, you can do your accounting anywhere there's a signal.

Here are some core elements of accounting software

● Accounts receivable: Accounting software systems should be able to handle billing,

keeping track of what customers owe (accounts receivable, or A/R) and their payments.

● Invoice processing: At the very least, accounting software should be able to handle
invoicing. When money is owed to you, you need to know from whom, how much and

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 when to expect payment. All accounting systems allow you to print invoices, with most
letting you email them. Your system should remember basic customer data, such as
names, addresses, account numbers and standard terms. Most of today's software
systems also remember your standard pricing for a wide variety of products and services.

● Automatic invoicing: This ensures revenue is never delayed because you've forgotten
to send out an invoice. In addition, with automated statements and late reminders, the
accounting software acts as your collection department, reminding customers to pay
their bills.

Accounting system is a necessary for managing your company's finances. It provides a lot of
features that can help run your business more smoothly.