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An Entrepreneurs Biggest Cost
When launching a new product or company, an entrepreneur must consider their biggest cost - the opportunity cost. Opportunity cost is an economic term that is defined as the cost of passing up the next best alternative when making a decision. For instance, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose for which the asset could have been used. In the entrepreneur's case, this asset typically includes the entrepreneur's time and money.
For an individual currently working in a corporate position, the opportunity cost of launching their own venture is typically the financial security that their corporate position affords. Fortunately, this security could be mitigated by attaining funding for the venture and setting the same salary as the prior position. However, if the venture fails, the individual may have lost the opportunity to return to the corporate position and/or does not realize the steps up the corporate ladder that they may have made had they stayed in their prior position. Likewise, if they chose to pursue one entrepreneurial opportunity rather than another, the individual may have lost the opportunity to try to launch the other opportunity.
Opportunity cost is related to the risk/reward tradeoff that is implied in entrepreneurship. The risk/reward tradeoff implies that the higher the risk, the higher the potential reward. Opportunity cost comprises a large part of the "risk" in the risk/reward tradeoff, although it doesn't include many intangible factors such as potential embarrassment caused by taking capital from friends and family and having the venture fail.
Each entrepreneur has a different opportunity cost such as the amount of their salary should they currently be employed elsewhere. Likewise, companies have different opportunity costs when determining whether to launch new products, services, etc. Identifying the opportunity costs, analyzing them, and then making the optimum decisions is a critical process for entrepreneurs and small and large companies alike, and can be a critical factor in the long-term success of a venture.
Since its inception, Growthink Business Plans has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. Growthink has become the firm of choice for venture capital firms, angel investors, corporations and entrepreneurs in the know. For more information please visit http://www.growthink.com or visit our venture capital placement site at GT Venture Capital.
The Fear Factor
I recently conducted a lil' survey asking my colleagues what were their biggest fears when thinking about starting a business or running their business. The following are the top three fears that resulted from my survey and some ways to combat them.
Making the Financial Transition
Making the financial transition from paid employment to earning a living on your own is probably the single biggest challenge facing many would be entrepreneurs. For most, the mere thought of financial insecurity holds them back from even trying.
Does It Really Take Money To Make Money (Online or Offline)? A Reality-Check of 2 Case Studies
The short and simple answer to this question is NO!Now, before you start screaming that I am crazy, out of my mind, have lost my marbles and all the other things that generally get tossed around when someone has the nerve to state something like that, let me clear a few things up.It does not take a monetary investment to get your business off the ground (aside from the everyday items you already have around your house).
Creativity & Entrepreneurship: The Secret to Discovering Your Purpose in Life!©
Hello Creative Entrepreneurs!In the second course on Creativity & Entrepreneurship we begin with a guided meditation that I created entitled: Dream Keeper-Gift Giver©. You ask: what in the world does this mean? Well, it's a very profound secret I discovered about myself fifteen years ago.
Seven Key Qualities of Successful Entrepreneurs
A recent poll conducted by Forbes magazine shows that majority of its readers would prefer to become a billionaire rather than a Nobel peace prize winner, a great scientist or a famous athlete. There is no secret that most of the average people dream about getting rich albeit very few makes any real effort to become one.
Entrepreneurial Ongoing Education Advice
I would like to give some advice to all the up and coming entrepreneurs; if you really want to be a superstar not only do you have to work harder and smarter than the competition, but you must always keep learning. I built a company from a bucket of water and a sponge into a National Car Wash Franchise System in 23 states.
Are You Ready To Be Your Own Boss?
You have this burning desire you want to be on your own. The temptation is so great that you want to quit your job.
Motivation and Commitment
Why do people start small businesses? The most frequently cited motivation for business start-ups is to allow the entrepreneur to achieve independence; money is secondary. Is this surprising? The other reasons named most often are that an opportunity presented itself, a person took over the family business, or the person simply wanted to be an entrepreneur.
The Cockroach Test
Let me ask you a question? Imagine I would offer you $10 for eating 10 living cockroaches. Would you do it? Now listen, I raise the ante and offer you $100.
How Good Is Your Big Idea
Q: I want to start my own business. I have tons of business ideas that all sound great to me, but my husband is not so sure.
Message to Prospective Franchisees for Franchisors
Many franchise companies fail to send the proper message to their prospective franchisees. This is partly due to the over regulation and intensity of litigation in the industry.
Starting Up and Keeping Going
So you had that fantastic business idea, the one that'sgoing to be wildly successful and make you a fortune - andeven better, you actually did something about it and startedyour own business. Good for you! Not everyone gets eventhat far.
From Employee to Entrepreneur: Taking the Plunge
Before you decide whether or not running your own business is right for you, start by pinpointing your area of expertise and assessing your aptitude for business.Starter Questions Ask yourself the following questions:- In what areas do people approach me for advice and assistance? From what parts of my job do I get the most satisfaction?- What do I like doing so much that I would do it even with no pay?- What hobbies or interests could I "spin off"into a small business?- Do I enjoy budgeting and financial planning?- Do I enjoy making cold calls, tele-marketing and selling?- Do I have enough self-discipline to work on my own?- How easy is it for me to bounce back from rejection & setbacks?Proceed with CautionBefore you take the plunge, it's important to "wade in gradually" or you may just find yourself swamped.
The Business and Life You Want to Build
In the early days of my first consulting business, I knew I needed some sort of plan to give me the greatest chance at success. I took many a wrong step, yet in the end I managed to put a solid business together.
Four Steps to Entrepreneurship
As more and more people start or consider starting their own business, it is important that they understand the core steps that are required to launch successful ventures. These steps include spotting, assessing, selecting and executing upon opportunities.
Raising Entrepreneurs: What to Do When Your Kid is Born to Think Differently
Adolescence brings with it many challenges - for both parents and kids. Young people, still new to the world, are embarking on a journey to discover their passions, joys, and authentic self-images.
The Danger Of Hate
As you have shown an interest in starting a business of your own it would be safe to assume that you want to changeyour life. You want more money - more control over yourlife - more respect.
Herb Filled Pillows Make Over a Million Dollars
Lauren Rosenstadt was a single mom working at a herbcompany in Bethesda, Maryland. A herb (pronounced "erb") isa plant that has medicinal, savory, or aromic qualities.
What is Entrepreneurship?
In discussing entrepreneurship and writing articles on the subject, I have found that it aids understanding when we begin by agreeing on exactly what the word means to us.Entrepreneurship is the process of creating or seizing an opportunity, and pursuing it regardless of the resources currently controlled.
10 Tips for Would-be Entrepreneurs
Every evening as the sun sets beyond the mangroves that line the shore along the western bank of Lake Myakka, Florida, herds of wild deer and wild black pigs come down to the water's edge to drink and slake their thirst.I have seen them up close and it is a beautiful, peaceful and inspiring sight!Every evening as the sun sets beyond the mangroves that line the shore a horde of hungry alligators wait just below the surface and watch for their prey.
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