Entrepreneurship and Small Business Management

Chapter 5 Creating Business from Opportunity

-easi.ility *nalysis
Economics of One Unit of Sale /EO!01 2hat is the amount of gross profit earned on each unit of the product or ser#ice your .usiness sells3
1) 2) 5)

4efine the unit of sale) Calculate the amount of gross profit per unit) 6f one unit of sale is profita.le the 7hole .usiness is li,ely to .e profita.le)
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Entrepreneurship and Small Business Management, 1/e By Ste#e Mariotti and Caroline +lac,in

4efine the !nit of Sale

Manufacturing8one order 2holesale8multiple of the same item /e9ample1 a do:en roses0 "etail8one item Ser#ice8one hour of ser#ice time or a standard .loc, of time de#oted to a tas, Com.ination8a#erage sale per customer minus a#erage cost of sale per customer /e9ample1 restaurant meals0
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Entrepreneurship and Small Business Management, 1/e By Ste#e Mariotti and Caroline +lac,in

4etermine the *#erage Sale Per Customer

6f the .usiness sells differently priced items use the a#erage sale per customer as the unit of sale) *#erage unit of sale ; total sales di#ided .y the num.er of customers
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Calculate +ross Profit Per !nit

Gross profit per unit ; selling price per unit minus CO+S or COSS per unit

Cost Of Goods Sold1 cost of la.or and materials re<uired to ma,e one additional unit of a tangi.le item Cost Of Ser#ices Sold1 cost of la.or and materials re<uired to pro#ide one additional unit of a ser#ice
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Economics of One !nit 8 Manufacturing Business

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Economics of One !nit 8 2holesale Business

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Economics of One !nit 8 "etail Business

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Economics of One !nit 8 Ser#ice Business

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?he Entrepreneur@s Strategy1

Start a .usiness 7ith a profita.le EO! Aire others to create the units 6ncrease #olume of units .eing sold Start ne7 .usinesses or e9pand opportunities

"esult1 The entrepreneur creates jobs and wealth.

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