Final exam intro. to entre.

Gig Guru Value Proposition

Gig Guru is a smartphone app that connects local artists to a loyal fanbase through a comprehensive interface in which users discover new music in their area and get rewarded for attending local concerts.

Runaway / months to zero cash

How long a company has before they have to quit or raise more cash

SAM

How many people can actually use your product based on model (ability to buy, platform etc.)

Burn rate

How much cash you use/consume over a given time on a NET basis (revenue - costs)

Process needs

Identifying the weak spots in your company's processes and improving upon them (standardizing the manufacture of guns so unskilled immigrants could make them)

Revenue Stream

Individual methods by which money goes into a company (differs by customer segment)

For a business that sells a product, Net Income equals

Sales minus (Cost of Goods Sold and Operating Expenses)

Revenue

Sales of your product or service

Which of the following is NOT true about patents?

Selling your product or showing it at a trade show renders the product immediately "unpatentable."

Which of the following is NOT true of corporations?

Shareholders receive a personal income tax benefit from the corporation's losses.

Minimally viable product

Sufficient features to solve a problem for a known group of customers. Something that works, satisfies customer's basest need.

Credit Cards

Pros -Less expensive than most equity investors (18% vs. 25%) -Usually not that much money -You have immediate access to it (assuming you have credit) Cons -You have to pay it back, failure to pay back will hurt -No expertise (except yours)

Government Grants

Pros -Non-dilutive (doesn't cost you anything) -Effective seed-funding for many non-profit models -Effective in some research-based models Cons -Not easy - time and labor intensive -May not be repeatable or sustainable

Incubators/Accelerators

Pros -Some money (<50k) -Space to work -Resources and mentoring -Can give access to other forms of investment (angel networks) Cons -Varying levels of expertise -Unclear path forward post "graduation"

Friends and family

Pros -They like you -Costs are lower than "professional" investors Cons -No expertise -They liked you until you lost their money -Can screw up the capitalization for later investors (getting "crammed down"

Cost structure

Refers to they types and relative proportions of fixed and variable costs that a business incurs

A grouping of similar businesses that interact, and often compete, in a common environment is the definition of

an industry

The best approach for getting a product onto the market involves

building a prototype, testing the prototype, doing initial market tests with the product, changing the product based on the feedback from the initial market tests, and then launching into mass production while considering how best to manufacture your product at as low a cost as possible

Expenses

costs incurred to operate or maintain the business/enterprise.

Effective teams

have a shared vision and shared passion for the entrepreneurial venture.

Gig Guru Costs

iTunes app store space - $1,200 Native database app development costs - $25,000 App design - $5,000 App maintenance - $5,000

A marketing plan

should create opportunities for the entrepreneur to make sales

Over the years, with regard to outsourcing overseas, entrepreneurs have learned many lessons. One of those lessons is NOT

that it is best to outsource overseas because it is always less expensive to manufacture overseas than to manufacture domestically.

With regard to stock, it is usually most advantageous to the entrepreneur that

the entrepreneur have the right of first refusal to buy the stock of his own company when such stock is being sold by his business partners

To help ensure that an independent contractor is truly independent (and cannot be reclassified by the IRS as your employee) you should

verify that the independent contractor has set up his own company and has other clients

Which legal form of business organization is correct for an entrepreneurial venture depends upon all of the following EXCEPT

which industry the business will serve

Entrepreneurs succeed by

(a) and (b) only.

When reviewing a business plan, investors

(a) and (c) only.

Impacts of insufficient resources on product development include

(a), (b) and (c)

When determining whether or not to manufacture overseas, it is important to consider

(a), (b) and (c)

Intellectual property rights are legal rights associated with

(a), (b) and (c).

You must file your (full, non-provisional) patent application within 12 months of

(a), (b) and (c).

The patent process was designed

(b) and (c) only

During an interview for employment, as a potential employer you

(b) and (c) only.

Cost of Goods Sold (COGS)

*Generally variable costs* Costs of buying raw material and producing a finished good, including hourly employees

Three types of market size

*size in dollars or units* -Total Available Market (TAM) -Served Available Market (SAM) -Target Market

Gig Guru Target Market

-3,500 UNC smartphone owning students who go to concerts -500 independent artists in the triangle -Total 4,000

Product/market fit

The relationship between your customers and your value proposition.

Which of the following is NOT TRUE regarding sole proprietorships?

The sole proprietor has limited liability with regard to any claims against the business

TAM

The total pie; how many people that could want/need the product.

What do you estimate the cost to deliver your solution will be?

Total costs in the first year will be $36,200

A feasibility analysis is primarily a test of a new concept's viability in the marketplace, whereas a business plan is more detailed and comprehensive, discusses the operational and financial aspects of the new business, and focuses on the execution of the concept and the building of a company

True

As a part of the business plan, potential investors expect the entrepreneur to present an honest assessment of the risks and challenges facing the new venture, along with a plan for mitigating such risks and challenges

True

One of the significant impacts of the ever increasing rate of technological innovation is that products tend to have a much shorter competitive life now than they did in the past

True

One of the significant impacts of the internet is that we now have more price transparency than we did in the past

True

Product warranties generally benefit a company because warranties expressly indicate what the company will and will not warranty, for how long, and how warranty claims must be handled.

True

The symbol "SM" indicates a non-registered service mark

True

When a code of ethics is clearly identified and written down, people in an organization tend to take it more seriously

True

When testing product quality, it is best to execute standardized inspections on a surprise basis

True

Which of the following is NOT an advantage of a limited liability company (LLC)?

Unless an operating agreement specifies otherwise, LLC's require the consensus of all members for most business decisions

Common entrepreneurship leadership traps include

(a) and (b) only

The four essential elements of a marketing plan include

(a) and (b) only

Why MVP?

-Determines if customer's needs are met -Prevents waste of time and resources -Keeps the focus

Purpose of a financial statement

-Make predictions about the future -Effectively allocate time energy and money -Measure and reassess progress or lack thereof

Selling, general and admin expenses (SG&A)

-Salaries for sales people -Executive salaries -Advertising and promotion -Travel and entertainment -Office expenses, -"Other"

Empathy map

-What do they think and feel? -What do they hear? (influences) -What do they see? (environment) -What do they say and do? (behavior, attitude) -Pains (fears, frustrations) -Gains (wants/needs)

Four basic market types

1. Existing market 2. Re-segmented market 3. New Market 4. Clone Market

Types of capital

1. Sweat equity 2. Friends and family 3. Incubators/accelerators 4. Credit cards 5. Angel investors 6. Government grants 7. Crowdfunding 8. Venture capital

Drucker's seven sources of opportunity

1. The unexpected 2. Incongruities 3. Process needs 4. Industry and market structure 5. Demographics 6. Changes in perception 7. New knowledge

Value Proposition

1. the product or service you're building 2. who you're building it for 3. what problem it solves for those people

Customer Archetype

A complete profile of the customer: -Environment -Behavior -Concerns -Aspirations

Which of the following is NOT true regarding copyrights?

A copyright protects the concept/idea behind a computer program

What is the problem you are solving?

A lack of exposure for local artists, and the difficulty of discovering new music for music fans

Two-sided market

A market with two customer segments which support each other (users and advertisers on Google), each with own value prop and revenue stream.

Pivot

A shift in strategy.

Customer Segment

A specific subdivision of a market, a customer group with similar characteristics (independent artists, live-music enthusiasts)

Clone Market

An existing market in a new location.

Resegmented market

An existing market where the main players can be sidestepped because you have spotted a niche or subset of demand within that market

Cash accounting vs. financial accounting

Cash accounting focuses on the inflows and outflows of actual cash. Financial accounting focuses on inflows and outflows of money regardless if it's credit or cash.

Demographics

Changes in demographics (Viagra became popular due to the growing number of elderly)

Changes in perception

Changes in perception such as the growing awareness of climate change and health problems such as cancer and diabetes (diet foods, green products etc.)

Incongruities

Conflicts between opposing functions, requirements or values (small car with leg room?)

Fixed costs

Costs that remain constant regardless of sales volume (salaried employees, facility rent etc.)

Variable costs

Costs that vary with sales volume (raw materials, labor etc.)

The unexpected

Discovering something by accident (i.e. chemical experiment that created Nutrasweet by accident.

Which of the following is NOT a component of a good business plan?

Discussion of Personal Mentor

An entrepreneur shouldn't invest too much time into the process of hiring employees because poor employees can easily be terminated and replaced.

False

During the start-up phase of a business, the goal is to create a fixed and unchangeable financial plan that will allow the venture to operate until the revenues of the business create positive cash flow

False

For the company's best protection, a warranty should not be revealed to the customer until after the time of product purchase

False

In the interest of maintaining good quality control over your product, it is best to handle warranty claims at an outside facility instead of at your own facility

False

It is generally desirable in a new venture for the founding team's skill set to be focused in one functional area, such as engineering or marketing

False

Once an entrepreneur chooses a legal form of business organization, he or she cannot change it

False

Only the CEO should answer questions from potential investors after he has presented a business plan to them.

False

Partners who put an equal amount of money into a business are required to divide the profits of the business equally.

False

Social responsibility is defined as operating a business in a way that meets the legal requirements that society has placed on business

False

The confidentiality of a trade secret is protected by federal law

False

The symbol "TM" indicates a registered trademark

False

The vendor relationships that most benefit the entrepreneur are those where the entrepreneur keeps the vendor on their toes by cultivating uncertainty about the future and vendor dependence upon the entrepreneur

False

With regard to ensuring the efficient operation of a new entrepreneurial venture, the entrepreneur has a huge disadvantage compared to older, more established companies because he has to set up all of his entity's systems and processes from scratch

False

Industry and market structure

Looking at industry and market structure for opportunities for new types of services (deregulation could mean entry into new industry is very successful, merging industries such as the computer industry merging with consumer electronics)

Target Market

Most likely buyers who will actually buy your product in year one.

Who are you solving it for?

Music fans who want to be more in touch and involved in their local music scene but don't have the time or resources, and artists who are not able to identify and connect with a loyal fanbase.

Impacts of insufficient resources on product development include

Neither (a), (b) nor (c) is an impact of insufficient resources on product development

New Knowledge

New technology, scientific breakthroughs etc.

Income statement are measured...

Over a certain period of time (month, quarter, year)

Which of the following is a common mistake made with regard to developing a business plan?

The entrepreneur not personally investing in the new venture.

Sweat equity

What you can do on your own, your time and effort Pros: -Doesn't cost anything (monetary) -Keep doing other things, work on the side -Shows your commitment to potential investors Cons -No pay -Work your ass off

When is it worthwhile to give product away as a marketing ploy?

When the cost to produce each additional item is low and the gross profit margins are high.

How much would someone pay for your solution?

While the app would initially be free to download, eventually a premium app will be developed and sold for $0.99, and artists will be charged $200 per year for our detailed analytics.

Most new product failure results from

a lack of appropriate research on the part of the entrepreneur.