Entrepreneurship and Leadership

  Classification of Costs. Production and Operational Costs and Expenses.   Direct and Indirect Cost In any business, you have two kinds of costs:  direct costs  and  indirect costs . A  direct cost  is the cost of producing goods or services (e.g. raw materials and labor). Direct costs are only reported when the goods are sold. If the goods are not sold, the goods remain as an asset on the balance sheet. An  indirect cost  is an operating cost that remains about the same whether you make any sales or not. An example would be rent–it stays the same whether a restaurant serves 50 people or 150 people.   Fixed and Variable Cost Fixed costs are predetermined expenses that remain the same throughout a specific period. These operating costs do not vary with output or how the business is performing. To determine your fixed costs, consider the expenses you would incur if you temporarily closed your business. You would still continue to pay for ...

  Defining the investment needed   After the studies related with the market, the productive process and the resources needed to generate the good or service are done, the entrepreneur must transform this data and information into monetary terms. Among the fundamental elements, that take part of the total investment are the investment of working capital and the investment of fixed capital.   The Physical and Material Resources to start an Entrepreneurship With the information about the estimate of physical and material resources, the entrepreneur is in the capacity to express them in monetary terms. This way we can know if the financial resources available are enough to finance the business that you want to begin.    The estimate of the investment needed is an activity that helps to evaluate, at first the feasibility of what the entrepreneur wants to make, because it will be difficult to get funds for projects too ambitious in terms of investment. Also, the amou...

   Social Responsibility The activities done by an entrepreneur must be aligned to social responsibility. The main elements of social responsibility are economy, society and the environment. An entrepreneurship must be driven by good relationships with the members of society.    Social Responsibility as a Business An entrepreneur must not only search for financial stability but also for social stability. Nowadays the society is well educated in all aspects and expect more from products. The excellent quality of a product and good customer service will help them in the social aspect.   Social responsibility is shown by the owner of a business when there is a balance between the following aspects: -         Economic: Effective and efficient production -         Social: To look for the good living of the members of society -         Environment: To lower any imp...

  Basic Profit and Loss Statement Another instance that takes part of the final step is the generation of the profit and loss statement. In which it shows the profit or loss generated by the entrepreneurship according to income, cost and expenses.   Characteristics of the Profit and Loss Statement The profit and loss statement is a financial report that summarizes, only for a period of time called accounting period (month, trimester, semester or year). The accounts of income, costs and expenses that make part of this statement; at the end of the accounting period are emptied and at the beginning they will start at zero. In the case of the balance sheet, it does not restart.   Importance of the Profit and Loss Statement When the entrepreneur needs to know the value of the profit or loss that the project is generating. Also known as the result balance, it is the addition and subtraction of incomes, costs and expenses. It is important for the entrepreneur to know the develop...