Chapter 4.2 Flashcards
(20 cards)
SMART Framework
-Specific
-Measurable
-Attainable
-Relevant
-Time bound
Specific:
Provide a clear description of what needs to be achieved
Measurable:
Include a metric with a target that indicates success
Attainable
Realistic, yet it should still provide a challenge
Relevant:
Should relate to the business’s mission and strategic goals
Time bound
Should have a specific time limit
To calculate the expected market share
-Estimate the total potential market for your product or service
-Estimate what portion of the market is occupied by your competitors
-Estimate what portion you can expect to sell
Establishing your target market consists of three steps
-Market segmentation
-Evaluation and the target-market decisions
-Market positioning
A market can be divided into the following segments:
-Demographic
-Geographical
-Psychographic
-Behaviouristic
expected market share
The part of a target market that a business will be able to serve on the basis of its production capacity and the state of the economy
To calculate the expected market share, estimate:
-the total potential market for your product or service
-what portion of the market is held by your competitors
-the market portion you can expect to sell to
Variable costs
They are fixed per unit but vary in total
Fixed costs
They are fixed in total but vary per unit
Direct costs
Costs that can be allocated directly to the manufacture of the product
Indirect costs
costs that cannot be allocated directly to a product
A Statement of Comprehensive Income
a summary of the income and expenditure of a business over a specific period of time
There are 3 ways to lower the break-even volume
-Lower direct costs, which will raise the gross margin
-Exercise costs controls on your fixed expenses
-Raise prices
Cash budget
a formal plan for forecasting future receipts and payments of cash over a specific period of time,
The purpose of cash budgeting
Helps establish the in and out flows of cash
The budget can:
-Be used to plan your short term credit needs
-Be presented to your bank to show proper financial planning
-Help predicted months when there might be a cash shortfall
-Highlight problem areas in your payment schedule
