Finance
Every good entrepreneur needs a business model. A business model is a statement which explains how your business will deliver value to consumers.
That's not a business model, that is a value proposition. While a good business model will have a solid value proposition, it will also have other key elements.
Marginal utility is the incremental happiness you receive for doing one more of something. For example, if you really like cookies and you eat one, you might get a certain level of happiness out of it. The second cookie you eat will make you less happy which means your marginal utility is decreasing meaning you are receiving negative happiness from the second cookie.
You likely won't experience negative happiness from just one extra cookie. Marginal utility can be negative while overall utility is still positive.
In Marketing, we learned about the four P's. These are guiding pillars of marketing strategies and are Production, Price, Promotion, and Place.
Product, not Production
Revenue minus expenses equals profit is a simplified way of understanding how businesses make money. This simple equation dictates that if we want to earn more profit, we can earn more revenue or spend less in expenses. That means that if revenue goes up, profit must also go up.
If revenue goes up and expenses go up at the same rate or faster, profit would go down.
In September, we learned about different asset classes like Bonds, Exchange Traded Funds (ETFs), and Mutual Funds which are like buying a piece of the whole market because they are made up of a basket of stocks which aren't actively managed.
Generally mutual funds ARE professionally picked and managed while ETFs are more traditionally passively selected.
When evaluating a given market for opportunity, entrepreneurs can try to understand peoples' pains and gains. Pain refers to a problem a customer might have while gain refers to something they might be motivated to achieve. While people will generally try to spend money on something to try to meet a goal, entrepreneurs try to avoid customer "pains" because they make people nervous.
Understanding pain points is crucial and shouldn't be avoided.
This is an example of DEPRECIATION
Promotion is the element of the four P's which focuses on getting your message out to customers and potential customers. Examples of promotion include posting on social media, advertising on TV, locating your stores in high traffic areas, and sponsorships.
Locating stores in high-traffic areas is an example of Place, not Promotion.
Assets equal Liabilities plus Equity, or A = L + E is the fundamental accounting equation. Assets are things that you own, liabilities are things that you owe, and equity represent the stocks that you invested in.
Equity represents the owner's share of the business.
When discussing risk, there is market risk and company risk. Market risk refers to risks that affect an entire industry or even the stock market as a whole, while company risks are specific to one specific business. For example, U.S. Government tariffs in 2025 represented a company risk to Amazon.
Increased U.S. tariffs created a MARKET risk, as it affected the stock market as a whole, as well as the industry amazon is in.
Last name is not a relevant demographic when examining a target market. It is too specific.
In the concept of supply and demand, scarcity is a factor that can affect supply. For example, in Catan when a given resource like Ore, which is useful for building cities and buying development cards, doesn't get produced often through the roles, it causes people to value it more and be willing to pay more to trade for it.
Marketers who want to sell the most product don't worry about target markets and instead focus on selling to everybody.
While some companies sell to large groups of people, they are still aiming their marketing at specific groups of people.
You don't need fixed cost to calculate contribution margin.
One hallmark of investing scams is the promise of guaranteed returns. All investments carry risk and anyone who tells you that you will definitely make a 50% return for example, is lying because they cannot actually guarantee that much legally. Something like 20% would be more reasonable.
While it is certainly possible to achieve a 20% return in one year, no advisor can promise that much either. A safe rate of return which is reasonable to expect is somewhere closer to 5%-8%, but even that is not guaranteed.
Entrepreneurs are trying to deliver value to consumers, but their products and services don't exist in a vacuum. It's not enough to make a good running shoe, it needs to be better in some way than the other shoes it is competing with (Nike, Puma, Adidas, etc.) That is why all good business ideas require an invention of something brand new, so it will have no competition.
You don't need to invent something new to start a business, you just need to provide enough value to enough people to make a profit.
The $2500 is a SUNK COST, not opportunity cost.
We practiced a marketing process in which we start by understanding the target market, their needs and wants, and providing a solution that meets those needs and wants. This process is called the marketing mix.
When using Microsoft Excel, you can use formulas to make your life easier and have values calculated for you. You can use SUM to add things up, AVERAGE to find the average, and DIFFERENCE if you want to subtract.
There is no DIFFERENCE function.
Stock exchanges are organized and recognized marketplaces where you can buy and sell things like stocks, bonds, etc. Canada's primary stock exchange is the Toronto Stock Exchange, or TSX. There are other famous stock markets around the world like the Tokyo Stock Exchange, London Stock Exchange, and many others. The U.S. has several major exchanges including the New York Stock Exchange, the NASDAQ, and the S&P 500.
The S&P 500 is an index, not a stock exchange. It is and amalgamation of the 500 largest companies on the NYSE and the NASDAQ.
A good business model will include a target market, how you will provide value to them, and how you plan on accomplishing it. This is crucial to making sure you earn a profit in the first year of business. Since many businesses fail within their first year, you must earn a profit right away.
You don't need to be profitable right away to operate so long as you have enough investment. While big companies like Uber and OpenAI can go for years losing money, most small businesses should focus on becoming profitable as soon as possible.
Demand elasticity refers to the degree to which price changes affect quantity demanded of a given product. A product whose demand doesn't significantly fall when the price rises is said to have inelastic demand, while a product whose demand increases greatly if prices drop is said to have elastic demand. By this definition we can say that things like gasoline and airline tickets can be said to have elastic demand.
Gasoline is inelastic. Even if the price goes up, people still need to drive.
The last part of the marketing process is the concept of engaging consumers and delivering value. In this step, the product or service we have sold them must live up to the promises we've made and actually add value to their lives, or they won't purchase again. When we don't deliver value users might be disappointed and might not buy again, but those are the only concerns.
Those are not the only concerns, they could leave negative reviews or tell their friends/family to stay away.
His breakeven is 2000 cups, not 200.
6000/3 = 2000