finance – Page 12 – The Agnostic Investor

13 Questions for the Aspiring Entrepreneur

What is an entrepreneur?

Why have you chosen your industry?

Do you want to run a business? Why?

Where is the market opportunity?

Is this endeavor your passion?

Can you afford to focus your energies solely on your business?

Would you try again if you were to fail?

How big would you like to get; annual revenue, sale price, etc…?

How much will the first three years cost?

If you need capital, where will you get it from?

Are you interested in offering investors equity and/or revenue sharing?

If you sold the company, what would you do with your money?

What would you do with your time?

Do you believe in opportunity costs/risk?

According to Merriam-Webster, opportunity cost is the added cost of using resources (as for production or speculative investment) that is the difference between the actual value resulting from such use and that of an alternative (as another use of the same resources or an investment of equal risk but greater return).

Opportunity Cost = greater rate of return – your rate of return
(investments of equal risk over some period of time)

“…reference point thinking leads people to give opportunity costs less weight than out-of-pocket costs of the same magnitude (Shefrin, 2002).”

Opportunity risk is generally defined as the probability of loss if resources are committed to an investment and a more lucrative opportunity presents itself.

Is opportunity risk a measurement of regret exposure?