NSSCAS Entrepreneurship (8247) cheat sheet

Entrepreneurial mindset = opportunity recognition + calculated risk-taking + tolerance of ambiguity + internal locus of control; it is a learned pattern of thinking, not an inherited trait.

Classic entrepreneurial functions (Say, Cantillon, Schumpeter, Kirzner): Cantillon = risk-bearer; Schumpeter = innovator who creates disequilibrium via new combinations; Kirzner = alertness that moves markets toward equilibrium.

Schumpeter's five new combinations: new good, new method of production, new market, new source of supply, new industry organisation.

Locus of control: internal = attributes outcomes to own effort (associated with venture creation); external = attributes outcomes to luck or fate.

Risk typology: pure risk (only loss possible) vs speculative/entrepreneurial risk (gain or loss possible); entrepreneurs accept speculative risk they can assess.

Effectuation vs causation: causation starts with a goal and selects means; effectuation starts with available means (who I am, what I know, whom I know) and lets goals emerge.

Business life-cycle stages: seed/idea, start-up, growth, maturity, decline or renewal; financing needs and management style differ at each stage.

Difference between an entrepreneur and an intrapreneur: the intrapreneur innovates inside an existing organisation using its resources, bearing limited personal financial risk.

Idea vs opportunity: an idea is a thought; an opportunity is an idea that is attractive, durable, timely and anchored in a product or service that creates value for buyers.

Opportunity window: the limited period during which market conditions make a venture viable; it opens and closes with technology, regulation, demographics and competitor moves.

Sources of opportunity: problems and pain points, unmet needs, regulatory change, demographic shifts, technology change, supply-chain gaps, and imitation/adaptation of proven models to new markets.

Idea-generation techniques: brainstorming (defer judgement, build on others), SCAMPER (Substitute, Combine, Adapt, Modify, Put to other use, Eliminate, Reverse), mind mapping, focus groups, and problem inventory analysis.

Gap analysis compares current market supply with customer needs; a viable gap is one customers will pay to close.

Feasibility screening dimensions: market feasibility, technical/operational feasibility, financial feasibility, and legal/regulatory feasibility.

PESTLE analysis scans Political, Economic, Social, Technological, Legal and Environmental forces that create or destroy opportunities.

Five Forces (Porter) assesses industry attractiveness: rivalry, buyer power, supplier power, threat of new entrants, threat of substitutes.

Primary vs secondary research: primary is collected first-hand for the specific problem (surveys, interviews, observation); secondary uses existing data (statistics, reports) and is cheaper but less specific.

Sampling: a sample must be representative; random sampling gives every member an equal chance; convenience samples risk bias and cannot be generalised.

Market size: TAM (total addressable market), SAM (serviceable available market), SOM (serviceable obtainable market, the realistic share the venture can win).

Segmentation bases: demographic, geographic, psychographic, behavioural; a valid segment is measurable, accessible, substantial, differentiable and actionable (DAMAS).

Marketing mix 4Ps: Product, Price, Place, Promotion; services add People, Process, Physical evidence (7Ps).

Pricing approaches: cost-plus (cost + markup), value-based (price reflects perceived value), penetration (low price to win share), skimming (high launch price for early adopters).

Break-even in units = Fixed costs / (Price per unit − Variable cost per unit); the denominator is the unit contribution margin.

Promotion mix: advertising, sales promotion, personal selling, public relations, direct/digital marketing; choice depends on budget, target reach and purchase type.

Product life cycle: introduction, growth, maturity, decline; pricing, promotion and competition intensity change at each stage.

Core sections of a business plan: executive summary, company description, market analysis, product/service, marketing plan, operations plan, management team, financial plan, risk assessment, appendices.

The executive summary is written last and stands alone; it must state the opportunity, the model, the team and the funding ask in roughly two pages.

A business plan serves two audiences: internal (roadmap and control) and external (financiers, partners, regulators); emphasis differs accordingly.

SMART objectives: Specific, Measurable, Achievable, Relevant, Time-bound; vague goals such as 'grow sales' fail the test.

Milestones and timelines convert the plan into checkpoints; a plan without dates and owners is a description, not a plan.

Financial projections typically cover 3–5 years: pro-forma income statement, cash-flow statement, balance sheet and break-even analysis.

Sensitivity and scenario analysis test the plan against best-case, base-case and worst-case assumptions for price, volume and cost.

Common plan failure points: unrealistic revenue forecasts, no evidence of demand, undefined target market, weak team description, and ignored competitor response.

Accounting equation: Assets = Liabilities + Owner's Equity; it must hold after every transaction (double-entry).

Income statement (profit and loss) shows revenue − expenses over a period; the balance sheet is a snapshot of assets, liabilities and equity at a date; the cash-flow statement tracks actual cash movements.

Profit is not cash: revenue is recognised when earned, so a profitable firm can still fail from a cash shortage (liquidity failure).

Break-even revenue = Fixed costs / Contribution margin ratio, where contribution margin ratio = (Sales − Variable costs) / Sales.

Gross profit = Revenue − Cost of goods sold; net profit = Gross profit − Operating expenses − Interest − Tax.

Key ratios: gross margin = gross profit/revenue; net margin = net profit/revenue; current ratio = current assets/current liabilities (≈2:1 often cited as healthy); debt-to-equity = total liabilities/equity.

Sources of finance: equity (owner savings, angel, venture capital - dilutes control, no repayment) vs debt (bank loan, overdraft, lease - fixed repayment plus interest).

Working capital = current assets − current liabilities; it funds the day-to-day operating cycle from paying suppliers to collecting from customers.

Payback period = years to recover the initial investment from cumulative cash inflows; shorter is preferred but it ignores time value of money.

Operations transformation model: inputs (materials, labour, capital, information) → transformation process → outputs (goods/services) with feedback and control.

Productivity = Output / Input; improvements come from better process design, technology, training or reduced waste.

Inventory costs: holding (carrying), ordering, and stock-out costs; Economic Order Quantity balances ordering and holding costs.

Quality tools: quality control (inspection after production) vs quality assurance (building quality into the process); TQM, Six Sigma and kaizen are continuous-improvement approaches.

Capacity utilisation = Actual output / Maximum possible output × 100%; consistently low utilisation signals idle resources.

Risk management cycle: identify risks → assess likelihood and impact (risk matrix) → treat (avoid, reduce, transfer, accept) → monitor and review.

Risk transfer mechanisms: insurance, outsourcing, contracts, hedging; risk avoidance means not undertaking the activity at all.

Business continuity planning: identify critical functions, set recovery time objectives, and document backup systems, suppliers and data.

Lean principles: identify value, map the value stream, create flow, establish pull, pursue perfection; the seven wastes include overproduction, waiting, transport, over-processing, inventory, motion and defects.

Ethical theories relevant to business: utilitarianism (greatest good for the greatest number), deontology (duty and rules regardless of outcome), virtue ethics (character of the actor), and stakeholder theory (balance interests of all affected parties).

Code of ethics vs code of conduct: a code of ethics states values and principles; a code of conduct sets specific required and prohibited behaviours.

Corporate social responsibility (CSR) is a voluntary commitment beyond legal minimum; Carroll's pyramid orders responsibilities as economic, legal, ethical and philanthropic.

Triple bottom line reporting measures performance on Profit, People and Planet (economic, social, environmental).

Ethical decision tests: the publicity test (would I defend this publicly?), the reversibility test (would I accept this done to me?), and the stakeholder-impact test.

Common ethical dilemmas: conflict of interest, insider information, bribery and facilitation payments, misleading advertising, exploitation of labour, environmental externalities.

Legal forms of business: sole trader (unlimited liability), partnership (joint and several liability unless limited), private limited company (separate legal personality, limited liability), cooperative, and public limited company.

Intellectual property forms: patents (inventions, limited term), trademarks (brand identifiers), copyright (creative works, automatic), industrial designs, and trade secrets.

Contract essentials: offer, acceptance, consideration, intention to create legal relations, capacity, and legality of purpose.

Ansoff growth matrix: market penetration (existing product, existing market), market development (existing product, new market), product development (new product, existing market), diversification (new product, new market - highest risk).

Greiner's growth model: each growth phase ends in a crisis - leadership, autonomy, control, red tape - which must be resolved before further growth.

Organic growth (internal) vs inorganic growth (mergers, acquisitions, franchising, joint ventures, licensing); inorganic growth is faster but carries integration and culture risk.

Innovation types: incremental (small improvements) vs radical/disruptive (new markets or value networks); disruptive innovation typically starts in low-end or unserved segments.

Innovation sources (Drucker): unexpected events, incongruities, process needs, industry/market changes, demographics, changes in perception, and new knowledge.

Sustainability strategies: circular economy (design out waste, keep materials in use), resource efficiency, renewable inputs, extended producer responsibility, and sustainable supply-chain sourcing.

Technology adoption life cycle: innovators, early adopters, early majority, late majority, laggards; the gap between early adopters and early majority is the 'chasm'.

Growth risks: overtrading (growing faster than working capital allows), loss of quality control, dilution of culture, and diseconomies of scale.

Sustainable competitive advantage requires resources that are valuable, rare, hard to imitate and non-substitutable (VRIN).