ent exam 3

pivot + types of pivots

(all entrepreneurs experience many) small "fails" that need quick reaction and a change in direction -changing directions on such things as the product, customer segment, revenue model, or distribution channel.

intentional iteration

(failure should be seen as this) process that involves prototyping, testing, analyzing, and refinement. perceive failure simply as process of experimentation

two types of cost drivers

-cost of goods sold (cogs) -operating expenses

types of revenue models

-unit sales -advertising -data -intermediation -licensing -franchising -subscription -professional -utility and usage -freemium

is it better to cut down COGS or operating expenses?

. Striking the right balance in the areas of COGS and operating expenses can be tricky, but if you know your business inside out, it becomes more manageable over time. Covering your expenses depends on sales of your product and service, and successful sales require a carefully constructed pricing strategy. a.Cutting operating expenses can yield beneficial short-term gains, but it generally doesn't work in the long term. b.If you move your store to a cheaper location to save on rent, you will save money but lose out on revenue because the new location might not attract as many customers. c.You will save costs if you cut out advertising and marketing expenses; but as sales depend on marketing, you will lose customer awareness --> suffering sales. d.Another way is to reduce employee salaries or reduce the number of employees, which has an immediate positive effect on the bottom line, but it might damage customer relationships if there isn't enough skilled, knowledgeable staff to help drive sales.

questions to ask during planning

1. What is your business and how does it add value? 2. Who is your customer? 3. How big is the market? 4. How will you enter the market? 5. What do you know about the industry? 6. Who is your competition and why are you better? 7. Who is your team and what do they bring to the table? 8. What are the financial projections?

things to think about when determining pricing strategy

1. a.Don't be afraid to ask people in the business direct questions about pricing and running the business. Making connections may leads to future partnerships or collabs as well 2. a., talk to your friends and family to see how much they would pay, or have paid for this product in the past, and ask them to share their experiences of these companies. Could use surveys for all of your contacts 3. think about your customers. What can they afford to pay? 4. Competition and planning the pricing strategy: Once you have a better idea of your competition, your target market, and how your qualifications/experience measure up against others, it is time to plan your pricing strategy... If you have less experience, should consider charging lower prices to get new clients and gain real experience, but if have experience, and solid customer base + business qualifications, can charge higher rates

characteristics of people who fear failure + coping strategies

1.anxious, lack self-esteem, demonstrate reluctance to try new things 2. a.First, you can reframe specific goals so they become more achievable. b.Second, if the product failed to generate as much revenue as you would like, it is helpful to separate your personal feelings from facts. Think about the positive things that happened and what you learned from the experience c.Third, by deliberately allowing yourself to feel the fear, you are more likely to diminish the fear of failure. Take deep breaths to shift negative feelings and calm down d.Finally, a good way to deal with your fear is to seek support from the role models in your life.

Blame-free culture

: Building blame-free cultures that encourage people to share, accept, learn from, and recover from failure is needed. Employees need to feel assured of no negative reactions when admitting to a mistake: To do this, employees in a startup would also need to feel assured that they will not receive a negative reaction when they admit mistakes; only then there is an opportunity for the team to analyze what went wrong, and to explore new approaches in order to prevent the same thing from happening again. The key to building a blame-free culture is to communicate clearly what sorts of failures are acceptable and unacceptable. a.For example, lack of commitment, reckless conduct, violation of laws or standards, negligence, or wasting resources would be deemed unacceptable; whereas, small fails that tend to occur through experimentation would be regarded as acceptable. b.John Danner believes that failure in organizations should not be treated as a "regrettable reality," but as "a strategic resource that can help you make better decisions, create a more trusting and higher-performing culture, and accelerate your company's growth and innovation." Entrepreneurs also need to be open about their own knowledge limitations and admit the mistakes they have made in the past. This degree of openness encourages the rest of the team to be just as open and more willing to admit mistakes when they happen

pro forma income statement

A projection of anticipated sales, expenses, and income a company could potentially do. every entrepreneur should have this

how to figure out your business' revenue drivers + coffee shop example

Actively testing your assumptions and hypotheses is the best way of figuring out the underlying factors that will drive revenue for your business. -a.Ideally, you want your coffee shop to be in a location with a high density of shoppers, which means city centers and shopping malls. b.If your target customer base is students, then you would want to be close to a university campus. c.One of the best ways to scout suitable locations and determine the number of customers that might potentially buy from you is to go to your local shopping mall and watch customers as they go in and out of different coffee shops; do this on different days, and at different times of day. d.Record the busy and slow periods which will give you a better idea of the volume of customers you might expect to walk into your coffee shop and therefore the revenue you can expect to get. e.This in turn will allow you to determine whether the volume of traffic will justify the expense of the high rent you will need to pay for an advantageous location.

Global Entrepreneurship Monitor (GEM)

An annual assessment of the national level of entrepreneurial activity across countries that measures global fear of failure. -lowest is angola, highest is morocco, US at 35% GEM study focused on how people's perceptions influence decisions: The GEM study focused on how people's personal perceptions in these three economies have influenced their decision to start a business. a.Perceived opportunities: These perceptions include the extent to which people see opportunities around them to start a business. b.Perceived capabilities: How capable they think they are of starting a business. c.Fear of failure: How many people would feel constrained by their own fear of failing. d.Entrepreneurial intentions: The degree to which those capable of starting a business may intend to do so over the next three years. people in Africa have the highest percentage of perceived opportunities, perceived capabilities, and entrepreneurial intentions. In contrast, while perceived capabilities rank high in Latin America and the Caribbean, the same countries (along with Asia and Oceania) score the highest for fear of failure. Finally, Europe and North America score the lowest for entrepreneurial intentions. People in these economies may perceive opportunities and score relatively high in perceived capabilities, but very few intend to take the next step into entrepreneurship. The reasons for this may lie in lack of confidence, cultural differences, types of skills, the level of entrepreneurship education, and different types of businesses that exist in the economy -What makes some people act when others don't, even if their fear of failure is almost the same? The answer lies in how we manage failure and our ability and willingness to learn from it.

Inattention (Failure Spectrum)

An entrepreneur gets sidetracked by inattention, either in a new business direction or by delegating too much too soon without following up. a.Siouxsie Downs became sidetracked from her main business, STEM education accelerator IQ Co-Op, by trying to manage too many different projects at once. b.When her colleagues called her out for her lack of follow-through, Downs stepped back from some of the projects and appointed a trusted colleague to help her manage her deadlines.

vivid vision

Challenges the entrepreneur to imagine what a business could be 3 years into the future. is a reasonable amount of time to "nail down" specific, measurable goals; vivid vision is not just fantasizing so far into the future that it becomes pure speculation. Three years makes you stretch just enough to think about how to get from today to your idea of success in Year 3. Aim to create a document no more than three pages long: The best way to begin the Vivid Vision exercise is to get out of your usual working environment and go to a spot that for you is relaxing/peaceful and start sketching or writing and aim to create a document no more than three pages long. This step is simply a description of how your business might look in the future: This exercise does not involve how you are going to build the business or the steps you need to take to get there; it is simply a description of how your business might look in the future—specifically, just three years down the road. There are many types of plans available to entrepreneurs today: There are many types of plans available to entrepreneurs today, including simplified plans, plans that emphasize planning with preparation, and those that flow from planning with imagination.

planning ? 3. How big is the market?

Conduct market sizing analyses to establish the size of your market: Once you have a clear idea of your target customers, you will be able to conduct market sizing analyses to establish the size of your market, and the share of the market you intend to capture.

components of grit

Courage: no fear of failure: In the context of grit, people are courageous when they are not afraid to fail. a.For example, Amy Freeman, founder of The Spice and Tea Exchange, overcame homelessness and lack of education by creating her own franchise business. Conscientiousness: working despite challenges: It means working tirelessly in the face of challenges and toward the achievement of long-term goals. Perseverance: commitment to long-term goals: It is the commitment to long-term goals through purposeful deliberate practice. a.Serial entrepreneur Com Mirza, founder of multimillion-dollar company Mirza Holdings based in Dubai, Saudi Arabia, is a big believer in this. b.The first eight companies he set up failed to take off, but he persevered by writing down his goals and practicing his entrepreneurial skills. Resilience: recovering from failure and overcoming obstacles: It means the strength to recover from failure and overcome obstacles in order to persevere toward the achievement of long-term goals. a.Gritty people believe "everything will be all right in the end, and if it is not all right, it is not the end." Excellence: committing to activities that enhance skills: It means committing to activities that enhance skills, as well as prioritizing improvement over perfection. a.Striving for excellence is an ongoing process, as each activity highlights new opportunities.

Deviance (Failure Spectrum)

Defiance of boundaries leading to venture mismanagement: An entrepreneur defies legal and ethical boundaries leading to mismanagement of the venture. a.Blood-testing startup Theranos is a good example of a company that demonstrated deviance from social norms, as well as its defiance of legal and ethical boundaries. b.It promised to take the trauma out of blood testing by using just a single drop of blood that would run through the Theranos machine called the Edison. c.The company claimed that the Edison could run 240 different blood tests but only a few could actually be done on the Edison. d.The remaining tests were done on machines that were competitors of Theranos. e.In 2018, Elizabeth Holmes and former company president Ramesh Balwani were charged with fraud for making false claims about the effectiveness of the blood-testing product.

tips for writing a business plan

Each business plan needs to be tailored to fit customer needs: Different audiences require different plans, and each plan should be tailored accordingly. Potential investors will be keen to know more about the financials: Because they will want to know details of the return on their investment, as well as a time frame for when there is an exit event. The key to any written plan is knowledge: Showing that you have done your homework through exploration, experimentation, and market research is one of the best ways to impress your audience; if your plan does not have a solid basis in fact and research, then do not waste time writing one. *Be direct (remove fluff): Decorative language can sound nice, but do not be tempted to use it in a business plan; too much wordiness or jargon can detract from the main message. best intro to business: Describe what it is, its current location, and the target market *Define Your Target Audience: It might sound obvious, but many people neglect to properly define their target audience. This is why it is so important to specify your target market, present how and why you have drawn these conclusions, and explain how you intend to target that particular customer segment. *Be realistic (outline challenges and risks): Outline challenges ahead, risks, lessons learned, etc.: Outline the challenges ahead, potential risks, lessons you have learned, and opportunities to progress. -Everything must be based on facts: Everything you write or present must be based in fact or well-researched assumptions. *focus on your competition: There is no such thing as no competition, regardless of how unique you think your business is. Focus how you plan to compete: Focus on what your business does, but explain what differentiates your product or service from the competition, and how you plan to compete now and in the future. *understand your distribution channels: Make sure you know how your product or service will be delivered to your target customers. Any vagueness around your distribution channels will cause investors to second guess you and your business *Be conservative in financial projections/avoid the exaggerated hockey stick: A hockey stick projection is one that shows very few sales in

T/F: all companies use just one revenue model

F: Some companies operate on one primary revenue model while others use a combination of models: Different types of revenue models have different revenue streams. Each type determines different ways in which revenue is generated: It also affects who your customers will be.

selling-process revenue driver

How much time you will be able to sell, and what kind of upselling or cross-selling opportunities you can find.

frequency revenue driver

How often your customers will come into your store and on what incentives.

Path From Idea Generation to Business Plan

Idea Generation Business Model Canvas Feasibility Study Pitch Deck Business Plan other options for plans: a.LeanLaunchLab, which allows you to test hypotheses and refine your business model; b.Lean Stack, a paid service that compresses the essential parts of your business down to one page to send to investors who have little time to read through a large document; and c.Plan Cruncher that, like Lean Stack, allows you to summarize your idea in one page. The best plan for you is the one that helps gives you the clarity and direction to take action to create your future venture: When you, too, have proved your concept, and gathered the data to go with it, then you will be able to produce a solid, credible business plan.

price revenue driver

If you think your price per minute should be higher than what your competitors charge, what are the factors that increase the value of your product? If you raise or lower prices, what will be the impact on your customer base?

setting too high versus too low of a price

If your price is too high, you might drive customers away, but if your price is too low, then you run the risk of making very little profit.

exploratory experimentation (failure spectrum)

Market tests are conducted to get early feedback and acquire learning and information; some may fail a.Joelle Mertzel, founder of countertop butter dish, Butterie, tested the market for her prototype by interviewing over 1,000 people waiting to board flights in airports all over the U.S. b.The results showed that 67 percent of the respondents agreed they would use the butter dish, which was enough proof for Mertzel to develop into a viable product. c.A study carried out by CBI Insights analyzing 101 startup postmortems found that 42 percent of startups failed because they didn't solve a big enough problem.

Freemium Revenue Model

Mixing free (mainly web-based) basic services with premium or upgraded services. -Businesses create at least two versions or tiers of products or services: In this model, the company gives away the low-end version of the service for free: This "basic" version usually comes with limits on usage and functionality, and the other version offers more. -becoming more popular as a means of encouraging widespread customer adoption -The key to a sustainable revenue model involving "free" is earning enough money on some part of the business to pay for the costs of supporting the free side of the business. Ex: linkedin and the premium version, skype, zoom

benefits of small failures/ having to pivot

Small failures are the "valleys" in the journey with setbacks, missteps, ill-planned experiments, misplaced decisions: manageable events that can help you build on what you learn. -Learning from small failures can nullify the risks of big failures: Small, reversible, informative failures along the way can highlight key issues and set you on a better path to success. If we can expect and embrace the learning from the small failures, perhaps we can mitigate the risks of the big failures. The most successful ents embrace and leverage failure and pivot when they need to

cons of writing a business plan

Some say it is based on untested assumptions: Those against say that the plan is based on untested assumptions, financial projections are too far out to have validity, and the actual writing and compiling discourages action and gathering real data. a. Opponents of the business plan feel these hours could be spent on actual activities that can help shape the business idea, get customer input, make early sales, and so on. The idea that the business plan, the most formal and complex of plans, is the first step for an entrepreneur is an outdated view. The business plan is more often used for bank loans and professional investment, but many other types of plans should be generated prior to the formal business plan. Business plans may not necessarily be relevant to the new entrepreneur: In sum, although formal business plans have their place, they may not necessarily be relevant to the new entrepreneur; entrepreneurs are explorers: they take action to find answers, rather than basing their assumptions on speculation.

T/F: Very few entrepreneurs manage to get formal funding for their new ventures, especially in the early stages

T; bank loans are notoriously difficult for newly emerging businesses to access, and investments from "angels" or other investors aren't as common as people would like to believe because entrepreneurs often have difficulty proving to potential investors the value of a business that hasn't gotten off the ground yet. It can be incredibly risky to bet on the unproven and the unknown

planning question 4 How will you enter the market?

Write down your strategy for entering the market; it involves describing the needs your product or service fulfills for your customer, the problems you are solving for them, and any evidence you have to show that your potential customers will want to buy your offering.

pitch deck (plan)

a brief presentation highlighting many of the essential elements found in a feasibility study and a business plan; some call this the launch plan. Has replaced the formal business plan in most venues - is needed for collegiate competitions, applications to accelerators and incubators, and for angel and venture capital funding. a.There are no strict rules for the length or style of ____ ______. Purpose is to describe your product and get interest b.Author and entrepreneur Guy Kawasaki advises keeping pitch deck slides to a minimum of 10, while Mathilde Collin, founder email app Front, used a 25-slide presentation which earned her $66 million from investors after only five days of pitching.

skimming pricing strategy

a form of high pricing, generally used for new products or services that face very little or even no competition. a.If your product is the first on the market, then you can sell it at a higher price and retain the maximum value upfront, until you are forced to gradually reduce your prices when competitors launch rival products. Examples are the iPad and sony playstation 3 when launched

Interest Expense (income statement)

a good indicator of the company's debt: it represents interest due in the period on any borrowed money

utility and usage revenue model

a pay-as-you-go model that charges customers fees on the basis of how often goods or services are used -Some mobile phone carriers use this model by charging users a fee for the number of minutes used on calls or for the volume of text messages; the greater the number of minutes or volume of texts, the higher the payment. a.Hotels also use this model by charging customers by the night. b.Car rental companies also generate revenue through this model by charging per unit of time. (zipcar by the hour, avis weekly or daily)

introductory offer pricing

a strategy that encourages adoption of a product by offering it either for free or at a deeply discounted price for a certain # of days or for the first 100 customers -generally used for new products or services on the market.

licensing revenue model

a way of earning revenue by giving permission to other parties to use protected intellectual property (patents, copyrights, trademarks) in exchange for fees -Licensing frequently takes place in the technology industry, where technological innovations are licensed to other users; when we use our personal computers, they are under license from the developer of that software. Technological innovations are often sold to larger companies that have the financial and technical expertise to maximize their potential. Not limited to tech companies though -Many people design iPhone apps and then license them to Apple, which has the capability to market them to a wider audience. a.Stephen Key, co-founder of licensing company InventRight, began by licensing his ideas for novelty gifts to specialty items companies, including bathtub toys, puppets, and a red plastic arrow emblazoned with the words, straight from my heart.

concept statement

a written representation of your vision: A useful way to gain clarity on the type of business you are setting up, and the value it brings to your customer base is to write a concept statement, which is a written representation of your vision for your product or service. It should include all the features of your product or service, potential problems it solves, and target market. Does not have to be long, but must be clear and easy to understand. written during Q1 of planning: 1. What is your business and how does it add value? Ex: While there are lots of tea-drinkers in the world, not all of them are happy about the environmental impact of discarding teabags (many of which are made from non-biodegradable materials). Although there are loose-leaf tea options, some people are put off with the time it takes to brew, and the special equipment it requires. The Tea-In-One product combines the tea mug and the strainer into one. The product addresses environmental concerns as it is partly ceramic (the mug) and silicone (the strainer) which is dishwasher safe and designed to keep the tea warm through extra insulation.

strategy questions for revenue model

a.How much are my customers willing to pay? b.How many customers do I need? c.How much revenue can be generated through sales? d.If I have more than one revenue stream, how much does each stream contribute to the total?

planning question 8. What are the financial projections?

a.Include in your plan a concise forecast of your future revenues and expenses. This is a good exercise for taking stock of where your company is right now, the targets and milestones you hope to achieve, and any obstacles that you may need to overcome.

Removing the Stigma of Failure

a.Mobile technology nonprofit MobilActive runs an annual event called FAILFaire, which provides a forum for nonprofits all over the world to "openly, honestly, and humorously discuss [their] own failures." b.FAILFaire gives the opportunity for the participants to share their mistakes so others may understand and learn from them, in order to make better decisions in the future. c.Similar to FAILFaire, the colorfully named F***up Nights is a global movement that holds events worldwide, giving entrepreneurs the opportunities to share their failure stories in front of a room full of strangers.

planning question 5. What do you know about the industry?

a.More knowledge means you will be able to find ways to differentiate your own ideas: The more knowledge you have about your industry, the more likely you will be able to find ways to differentiate your own ideas. b.Write down research you have carried out: Write down any research you have carried out that supports your ideas and make sure it is correct and up to date.

planning question 7 . Who is your team and what do they bring to the table?

a.Note down their key duties and key skills: Note down the different members of your team, their key duties and responsibilities, and the unique skills they bring to the venture. b.Add details about new team members: If you are planning to add people to your team, write those down too, and add any details of when they will start work.

planning question 6. Who is your competition and why are you better?

a.Preparing a competitive analysis is the best way to find out more about your competition and establish the reasons why your business is better. b.Compare your venture with other competitors: The "What do you know about your Competition" Mindshift provides a competitive analysis template which allows you to compare your venture with other competitors.

Planning question 2: Who is your customer?

a.Write down who your target customers are: End users, distributors, retailers, etc., their defining characteristics and why they will buy your product or service. b.It will help you gain clarity on the right customer segments for your business: Remember to include all this information in the plan you are writing as it will help you gain clarity on the right customer segments for your business.

feasibility study (plan)

allows entrepreneurs to test the possibilities of an initial idea to see if it is worth pursuing. Solid foundation for developing a business plan at the right time. EVERY entrepreneur should conduct a feasibility study bc determines whether your idea is workable and profitable. Typically created to assess viability of a business concept It focuses on the size of the market, the suppliers, distributors, etc.: It focuses on the size of the market, the suppliers, distributors, and the skills of the entrepreneur. Info you gather for this study will help you identify the essentials to make the business work: Any problems or obstacles, the customers, marketing strategies, the logistics of delivering your product or service, your competition, and the resources you need to start your business and keep it running until it is established. Entrepreneurs can assess if they have the time, energy, abilities, and resources: From the entrepreneurs' perspective, it is useful to assess whether they have the time, energy, abilities, and resources to get their venture off the ground. A valuable exercise in answering the question, Will my venture work? This feasibility study is for your eyes only, which means you need to be as honest as possible with the conclusions you draw from the study. If there are constraints, describe them and be realistic about whether your idea is worth further investigation. written document of no more than 10 pages. It takes all of the action components we've been talking about in the book and places the learnings from the actions into a structure that can be used for decision making, such as "I do or do not want to move forward with this venture"—or, in short, a "Go/No Go" decision. The feasibility study addresses the most critical elements entrepreneurs need to consider during the initial conceptualization of the venture. Key to this study is speed, and reqs you to pursue answers to your questions and to gather real data from your interactions with potential customers, suppliers, distributors, and others. also prompts you to quickly find out the rules and regulations surrounding your startup, which could save you time and money -must include action, testing, information gathering, and analysis

purpose and types of plans

an important way to develop a vision, gain clarity, etc.: As well as answer important questions, estimate timelines, and set goals -Different plans include the business model canvas, the business brief, etc.: As well as the feasibility study, the pitch deck, and the business plan.

customer-led pricing

ask customers how much they are willing to pay, and then offer it at that price. Useful way of attracting ppl to your company and allows you some control over your pricing (bc don't have to accept customer bids) a.This is a technique used by some airlines signed up to the commercial website Priceline to offer passengers a chance to name their own price for flights.

breakeven analysis definition and formula

can also help set price: Breakeven is that point where your revenue equals your costs; anything sold beyond breakeven is considered profit. can help entrepreneurs quickly determine what they need to sell monthly or yearly, and in some cases daily or weekly, to cover the costs of running the business. Expressed in both units and dollars. formula: Breakeven units = Fixed costs / (sales price per unit - variable cost per unit) a. Fixed costs are those costs that stay the same regardless of how much revenue you are generating or how much product you produce. Like operating expenses. entrepreneurs should use their total operating costs as their fixed costs because it's closer to reality for a startup b. The sales price per unit is the selling price. if have multiple products can just use avg sales price per unit c. Variable cost per unit is the cogs of goods sold (COGS) plus any operating expenses that actually go up and down with production of product. May include shipping, inventory costs, or sales commissions

competition-led pricing

can copy the prices suggested by other businesses selling the same or very similar products and services to you. a.You need to find other ways to differentiate your product from your competitors to attract more customers. Esp if not an established brand, not the best way

key to sustaining a new business

create consistent revenue streams: Once you have acquired new customers, your goal is to hear from them again. May rely largely on referrals and WOM to get more business in one-time event type areas

revenue drivers

customers, frequency, selling process, price

franchising revenue model

describes how the owner of an existing business sells the rights to another party to trade under the name of that business (to a franchisee) -The franchisor helps the franchisee by providing support in marketing, operations, and financing: And in return, the franchisee pays the franchisor royalties based on an agreed percentage of sales. a.While familiar franchises such as Anytime Fitness, Hampton Inns, Pizza Hut, Subway, KFC, and Supercuts regularly appear on lists of the top 500 franchises in the United States, some lesser-known (and somewhat quirky) franchises are also causing a bit of a stir. b.The Christmas Décor seasonal franchise is run by professional decorators who take the burden from homeowners by putting up Christmas decorations on their behalf.

Amy C. Edmondson's failure spectrum

failures range from big to small. situations that may be perceived as failures, yet can sometimes have positive rather than negative outcomes. From worst/most blameworthy to most praiseworthy: deviance, inattention, lack of ability, process inadequacy, uncertainty, exploratory experimentation. -blameworthy: a.entrepreneurs who violate rules and regulations ("Deviance" at the top of the spectrum) are likely to have failed businesses and a tarnished reputation. -praiseworthy: a.someone without the skills to do a job can get more training, processes can be monitored and refined; "failed" hypotheses and exploratory testing can be opportunities to expand knowledge, iterate, and set the scene for better approaches.

income (profit and loss) statement

financial summary that shows performance business has made on a monthly or annual basis. -It subtracts the COGS and expenses (administrative, marketing, research, and other operating expenses) from the total revenue to give you a net income figure, which will be either a profit or a loss.

intelligent failures

good failures that provide valuable new knowledge that can help a startup to innovate, get ahead of competition, and overcome roadblocks. a.Designing a new, innovative product, or testing consumer reactions in an untapped market are all tasks that may result in intelligent failures. b.With the right kind of experimentation, entrepreneurs can produce quick failures with positive results.

benefits of making a business plan

helps you gain clarity, keeps you organized, establishes the core message, and creates alignment among team members. also helps establish legitimacy because, if nothing else, you have a business plan. Some entrepreneurs find writing a simple business plan a great exercise: Some entrepreneurs in the very early stages find the practice of writing a simple business plan just for themselves a great exercise in thinking about things they may not have thought of before. a.It allows you to understand the components of the plan and the best way to communicate these details to your team and investors. b.Practicing your plan also helps you to question the validity of ideas, the markets you intend to target, and the customers you want to attract. Others believe writing a business plan helps you shape an idea into an opportunity: Others point out that many ideas are pursued but may not be opportunities; writing a business plan helps you vet the idea and shape it into an opportunity. a.As a result, spending time writing a business plan could help save the entrepreneur a lot of time and money down the road. b.For example, it can take up to 200 hours to write a comprehensive business plan. That's about a $10,000 investment assuming you might get $50 per hour for writing a plan ($50 × 200). c.However, launching a poor idea and unproven concept could cost you millions. -It allows everyone to articulate vision: A business plan can be useful at the stage when you have partners or team members on board; it allows everyone to articulate vision and strategy, and ensures that everyone is aligned with current and future plans for the business. a.It is also a valuable benchmarking tool, as it forces you to be honest about your company's performance by showing not only areas where your business exceeded expectations but also those instances when your strategies didn't work out, and the lessons you learned from this.

customer revenue driver

how many customers will actually come into the store and how much would they be willing to pay.

you can compare your company's ____ ____ to chart trends in your company's financial performance and the trends will, in turn, help you to set future financial goals and strategies.

income statements

Cost-led pricing

involves calculating all the costs involved in manufacturing or delivering the product or service, plus all other expenses, and adding an expected profit or margin by predicting your sales volume to get the approximate price.

subscription revenue model

involves charging customers to gain continuous access to a product or service. traditionally applied to magazines and newspapers -a.Blue Apron and Home Chef earn revenue by providing subscribers with a complete set of ingredients to make a meal at home; Birchbox delivers monthly beauty products to subscribers, and Barkbox charges a subscription fee to deliver a monthly box of doggy treats to dog lovers. b. Another example = user communities like angie's list (network of reviews on local businesses)

value-based pricing

involves pricing your product based on how it benefits the customer. a.Your buyers have a major influence over your pricing strategy; think about what your product means to your buyers—is it going to save them money, or make them money? b.What if there is no monetary benefit to your buyers? c.Certainly your cupcake business will not help your customers save or make money, yet there is still a value in pleasure. d.What is it about your cupcakes in particular that could appeal to customers: you may price your cupcakes the same as your competitors in the beginning, but what makes them different enough for customers to pay more? e. would reflect whatever added value your customers perceive in your cupcakes. f.Your price also has to cover the costs of any mistakes and you might not sell 10,000 cupcakes in a year. g.How much leeway have you built in to your pricing to cover the costs of inaccurate estimates and other errors? h.Typically, you need to account for being off by a factor of two or more and still be profitable—that is, if you plan to sell 10,000 cupcakes, you need to be able to make a profit even if you end up selling only half that many, or 5,000 cupcakes.

target-return pricing

involves setting your price based on the amount of investment you have put into your business. -a.Using the cupcake business example again, you can save significant costs by working from home, but you still have expenses from investing in machinery, ingredients, paying a part-time worker, and utility and delivery costs. b.Assume you have invested $3,000 in startup costs for your business and your cupcakes cost you $2 to produce, which amounts to $20,000 in production costs to make 10,000 cupcakes in a year, leaving you with $10,000. c.Take away the $3,000 you have invested in the company, and you make a profit of $7,000 which means you make 70 cents profit on each $3 cupcake.

business model canvas (bmc) plan

is a type of visual plan especially useful for identifying any gaps in the business idea and integrating the various components. It's visual because the entire business is depicted on one page by filling in the nine blocks of the business model, which are: 1. Key partners, 2. Key activities, 3. Value proposition, 4. Customer relationships, 5. Customer segments, 6. Key resources, 7. Channels, 8. Cost structure, 9. Revenue streams By thinking through all nine components, you will be able to visualize how all the parts work together: The value created for customers, the processes you must have to deliver value, the resources you need, and the way you'll make money.

the business brief (plan)

is typically a 2- to 3-page document outlining the company overview, value proposition, customer, and milestones. Less visual and requires more detail + writing It's something that will give stakeholders an at-a-glance understanding of who you are, the business, and its potential: It's something you can easily send to stakeholders. Not too time intensive and indicates you are thinking critically about the business Points to include in a BB: 1. Description of the business idea (company overview) • Value proposition that highlights the problem being solved or need being met • Customer profile and market size • Proof of market demand and future growth • Description of the entrepreneur/team • Actions taken to date and future actions planned • Simple pro forma income statement (up to 3 years)

data revenue model

is used when they generate revenue by selling high-quality, exclusive, valuable information to other parties ; there are over 100 data brokers operating in the U.S. that buy and sell third-party data. a.Some of this data is sold to small organizations that help landlords research potential tenants, but a large portion of it is sold to big people search organizations like Spokeo, Zoominfo, PeopleSmart, Intelius, and more. -Data brokers collect third-party information with people with whom they have no relationship, but Facebook, Google, and Amazon collect data directly from users: While data brokers tend to collect third party information with people with whom they have no relationship, tech giants like Facebook, Google, and Amazon which collect enormous amounts of detailed data directly from their users.

uncertainty (failure spectrum)

lack of clarity about future events can cause entrepreneurs to take unreasonable actions. a.Keith B Nowak founder of social media instant messaging company Imercive believes that company failed because it stuck to the wrong strategy for far too long and did not pivot.

anti-failure bias

makes us avoid the learning we can gain from it/avoid failure -the concept of failure provokes an emotional reaction or anti-failure bias that inhibits us from learning from the experience rather than tackling the reasons behind it. Sometimes rather blame others or external events for failures in order to maintain our self-esteem and sense of control. It is hard to separate personal from professional failure: For entrepreneurs, failure is especially difficult because it is hard to separate personal failure from professional failure bc often closely associate identity of business to that of the entrepreneur.

revenue model

model that identifies how the company will earn and generate profits. a key component of the business model; it explains how entrepreneurs will make money and capture value from delivering on the CVP that is outlined as part of their business model.

business plan (planning)

most formal of planning tools. typically a lengthy written document discussing the business concept, product mix, marketing plan, operations plan, development plan, and financial forecast. The business plan needs to show that you are serious and that you've done your homework, given the level of detail that is necessary to complete a strong business plan. It is a work in progress: However, there is an ironic angle to this: when a business plan is created, it must be thought of as a work in progress because nothing goes according to plan. A traditional business plan usually consists of 20 to 40 pages, plus additional pages for appendices and financial statements. It also includes the organization's mission, strategy, etc.: It also includes the organization's mission, strategy, tactics, goals, financials, and objectives, together with a five-year forecast for income, profits, and cash flow; this information is divided into three main parts. a.The first part is the business concept, where you discuss the industry, business structure, products and services, and how you plan to make your business a success. b.The second part is the market section, where you describe potential customers, and the competitors in your market. c.The third part describes how you intend to design, develop, and implement the plan; and provides some detail on operations and management. d.Finally, the financial section includes details of income and cash flow, balance sheets, financial projections, and the like. e.The business plan also has a cover, title page, and table of contents Business plans are useful for established companies with a history of data and operations because this data will help the business to plan and forecast more accurately, but startups have no such history. Startups are not just smaller versions of bigger companies—a startup begins with guesswork and untested assumptions. Nevertheless, in order to get later-stage funding, a business plan will likely be needed

is there a right way to determine pricing strategy?

no, and long-term fixed pricing does not exist. prices will adjust based on demand, and best way to set a price is to base it on the information you have already gathered. -The positioning and brand of your product or service will affect how much it sells for: Understanding your brand is important when defining your business. -Think of 3 to 5 words to describe your business: A useful exercise is to think of three to five words to describe your business that sets it apart from other competitors. -Carry the theme through your packaging, website, etc.: Once you have defined your brand, you can carry the theme through your packaging, website, marketing materials, and other communications with potential customers.

Bundle Pricing Strategy

packaging a set of goods or services together: They are then sold for a lower price than if they were to be sold separately. a. The customers feel they are getting a bargain, and the increased sales generate more profit for the company. Example: fast-food value meals, prix fixe meals and restaurants, cable tv packages, etc

The origins of the fear of failure, according to researchers, may be found in ______.

parent-child relationships. a.A child is likely to have a higher fear of failure if he or she is punished for failures and receives little or neutral praise for successful achievements. b. Studies suggest a connection between high parental expectations and a child's fear of failure, plus maternal irritability and paternal absence. People raised to believe that failure is unacceptable will avoid it at all costs: Studies show that individuals raised to believe that failure is unacceptable and has negative consequences, will go out of their way to avoid failure. a.This means that rather than seeing mistakes as opportunities to learn and improve skills, or to compete against others, they will view them as threatening and judgment-oriented experiences. Here failure is associated with shame. This stunts the maturity and growth of such individuals: Avoiding the potential to make mistakes stunts the growth and maturity of such individuals and leads only to more mistakes and failures over time.

brokers

people who organize transactions between buyers and sellers: These "middlemen" play important roles in connecting people to different services. a.For example, eBay acts as an auction broker as it manages the transaction between seller and buyer, and generates revenue by charging a listing fee or commission on a sale. Also real estate brokers who take commission and credit card companies

Direct Cross-Subsidies (freemium/from free model) + examples

refers to pricing a product or service above its market value to pay for the loss of giving away a product or service for free or below its market value. Cell phone companies lose money by giving away the phone handsets for free, but then cover the loss by charging monthly service fees: a.Some airlines advertise amazingly low fares, but then add fees for amenities like checked bags, additional legroom, or the ability to choose one's seat. b.Hotels may offer a low nightly rate but then add a mandatory "resort fee"—even if the guest doesn't use any of the hotel's "resort" facilities. c. attracts customers by eliminating, or reducing, the up-front cost of a product or service. It then makes up the loss with subsequent charges, which the company expects customers to be willing to pay because they are pleased with the product or service and don't want to go through the hassle of switching. The added business gained by attracting customers with the below-market price generates more revenues for the organization through the cross-subsidy fees

advertising revenue model

relies on the amount of revenue gained through advertising products and services. It depends on developing a niche: Meaningful advertising revenue generated in the digital world is dependent on attracting traffic or developing a dominant niche. a.For example, Google AdWords is not only Google's main advertising product but also its main source of revenue. b.The AdWords service is a type of advertising revenue model called cost-per-click (CPC) which charges the advertiser a fee every time a user clicks on the ad. c.The model is intended to attract traffic to the advertiser's business while generating income for providing the AdWords service. also includes the cost-per-action (CPA) advertising model, whereby advertisers pay only when the click converts to an actual sale of a product or service Another form is called promoted content: Also known as "sponsored" or "suggested" content, which works by having ads appear in the flow of the content that the users are reading. a.Often, these ads are blended in so neatly to the content that users may not even realize that they have been paid for. (native adv) b.In 2018, Amazon became the third biggest online advertising platform behind Facebook and Google. c.For example, hand-dyed yarn startup Expression Fiber Arts uses Facebook to advertise by offering free products and downloads, discounts and coupons; this advertising strategy has earned the company over $1 million in annual sales over a two-year period.

operating profit (income statement)

represents the amount left over from revenue: Once all costs and expenses are subtracted.

Cost of Goods Sold (COGS) + t-shirt store example

the cost of the merchandise inventory that the business has sold to customers a.With regard to a T-shirt store, the cost is in how much money it takes to produce each T-shirt: the material, the design, the manufacturing, the packaging, and so on. b.Once you know how much goes into producing your T-shirts, you can think about ways to reduce costs if you need to. c.Lowering the COGS means you could potentially sell your T-shirts at a lower price to your customers. d.Needs to be balance btwn reducing costs and satisfying customer. if your customers are attracted to your T-shirts because of their great quality, it would be unwise to use cheaper material to save costs; if you can get the balance right, you can use the savings you make to invest in other areas such as marketing, or reducing debt.

irl examples of freemium revenue model/revenue from free

skype: earns its revenue by charging for Skypeout that charges users low rates for calling landlines and cell phones: It earns its revenue by charging for Skypeout, a premium service that charges users low rates for calling landlines and cell phones the metro: gives away a free product yet still makes huge profits; it was first circulated in Stockholm, Sweden, before being made available all over the world. b.In Britain in particular, the Metro has become the nation's most profitable newspaper. c.its readership is aimed at wealthy commuters, on average around 37 years old (coined as "urbanites")—a demographic that attracts advertisers such as large supermarket chains and businesses that pay generously to reach this target audience. Also paid to feature major events like Wimbledon tennis and other annual occasions d. keeps its editorial costs low by keeping its content short, punchy, and easy to read—just engaging enough for a quick 20-minute read on the train or bus to or from work. e. has developed its own distribution network by controlling news racks in train and bus stations where commuters can help themselves to the free publication

operating expenses

the costs of running your business, including your rent, utilities, administration, marketing/advertising, employee salaries, and so forth that are more difficult to reduce.

fair pricing strategy

the degree to which both businesses and customers believe that the pricing is reasonable. a.Having done your financial homework as an entrepreneur, you might think your product or service is priced fairly—but that doesn't mean your customers will. Using market testing can help to define what ppl perceive as a fair maximum price vs and unfair one

Intermediation Revenue Model

the different methods by which third parties such as brokers (or "middlemen") can generate money In recent years, various entrepreneurial ventures have emerged to put a new creative spin on the role of the middleman: In recent years, various entrepreneurial ventures have emerged to put a new creative spin on the role of the middleman in an effort to connect people with services in a more efficient and less expensive way. a.Well-known examples include Airbnb, which offers short-term accommodation that private homeowners rent out to visitors, usually tourists, at a fraction of the price of hotels; and Uber which connects customers with drivers to provide a faster, more efficient ride-sharing service.

lack of ability (failure spectrum)

the entrepreneur lacks the skillset to get the job done: the entrepreneur is overextended and lacks the skillset to get the job done. a.It is common for companies to outgrow their founders because they lack the skills and abilities to get the company to the next level. Founders may step aside as a result of not being able to or not wanting to get necessary skills needed b.Eddie Lou founder of workforce technology company Shiftgig stepped down as CEO in favor of new CEO Wade Burgess. c.While Lou had the most suitable skills to set up the company, raise capital and bring it to market, Burgess had a better skillset for growing the company to its next stage.

planning

the future you envision for your business, including what you plan to do and how you plan to do it. -includes taking action in the real world: Collecting data, gathering feedback, and testing business models are the most beneficial ways to develop a product or service that people actually want as well as build a scalable business. It helps you see your idea for what it is: Plans help you to get out of your head and see your idea for what it really is—the good, the bad, and even the ugly! Plans help crystalize your thoughts: They allow you to articulate where you want your business to go, and can be the foundation for an overall business strategy. A plan helps you organize your actions: If planning pushes you to move forward and take action, then a plan helps you organize those actions in some way. Planning = implies action, while plan helps to organize the action and therefore is different from planning

revenue

the income gained from sales of goods or services. Diverse though the businesses may appear to be, they all have one very important thing in common: The ability to generate _____.

taxes (income statement)

the last expense item before net income—this line item includes all federal, state, and municipal taxes (if any) that are due for the period.

Loss Leader Pricing Strategy

the practice of offering a product or service at a below-cost price in an attempt to attract more customers. a.This involves giving special discounts and reducing prices; loss leaders can be an effective way of competing with an established brand offering similar products and services. Examples are Walmart and amazon b.there has to be some kind of consistency to raising and lowering prices; for example, a customer who has just bought a product at full price the previous day will not be pleased if that same product is being sold at a deep discount the next day. Therefore, it is important to know how long the lower price can be sustained and to know when to readjust pricing before the business begins to lose money.

angela duckworth's grit research and definition

the quality that enables people to work hard and sustain interest in their long-term goals. Grit = best predictor of achievement. also relates to the growth mindset (successful ppl develop their abilities through dedication, effort, and hard work). deliberate practice = key to success

when to write a business plan

the right time to write a business plan is when your business is more established, you have a fully functioning team, and you have the data to prove your concept. Write if you are expanding the business: If you are considering expanding the business and seeking funding, now would be a good time to write a business plan.

business failure + benefits and costs of failing

the termination of a commercial organization that has missed its goals and failed to achieve investors' expectations, preventing the venture from continuing to operate and resulting in bankruptcy or liquidation. +Entrepreneurs who see failure as a part of the journey bounce back quicker: Any type of failure, however, can intensify the cognitive processes involved in learning, resulting in improvements in future performance and increasing the probability of future success. For this reason, many entrepreneurs see failure as part of the journey. In the case of business failures, having learned from failure, entrepreneurs often feel more confident, prepared, and motivated to attempt another startup venture. - A business failure can be quite traumatic for an entrepreneur: The failure of a venture can be financially costly and emotionally painful, even traumatic, not too different from ending a long relationship or losing a loved one. a.It leaves the entrepreneur guilty and even ashamed while wondering what exactly went wrong and how could it have been avoided. b.California-based peer-to-peer used car startup Beepi is a good example of an epic fail; it had raised over $150 million from investors but burned through the money too quickly. c.Reports showed the founders were overspending on their own salaries and expensive office furniture and laid off almost 200 employees before closing their doors for good in 2017.

process inadequacy (failure spectrum)

the wrong processes are set up in the organization so communication breaks down among employees and things begin to fall through the cracks. a.Paul Biggar and Nathan Chong are the founders of NewsTilt, a news website for independent, professional journalists. b.Biggar believes lack of communication was one of the reasons that the startup failed to last any longer than two months.

psychological pricing strategy

to encourage customers to buy based on their belief that the product or service is cheaper than it really is. a.Flash sales, "buy one get one free," and bundled products are all methods of psychological pricing. Other examples are specific prices ending in $0.99 bc more appealing sound. Often used in fast food restaurants and at grocery stores

multiparty markets (freemium/from free model)

type of free model that involves giving a product or service to one party for free, but charging the other party or parties. It is the ad-supported free content model so common on the Internet: The classic example of a multiparty market is the ad-supported free content model so common on the Internet: consumers get access to content for free while advertisers pay for access. a.Other examples include allowing job seekers to post résumés for free while charging employers for posting jobs, or giving children free admission while charging adults. The challenge is to prevent costly overuse by those who get the service for free, as well as making the business valuable enough to the party that does pay. It is often a viable option for web-based companies: Financially, the freemium model is often a viable option for web-based companies because of the low marginal cost of providing the service for free users; online storage and bandwidth are cheap. companies running freemium models need to be constantly focused on the average cost of running the service for free users, as well as the rates at which free users convert to paying users. If the costs of supporting free customers grows too high or the number of paying customers is too low, the freemium business model will not work

how to generate as much value (profit) for your company

understand what is truly driving your revenue and your costs

net income (income statement)

what is left after all costs, expenses, and taxes have been paid: It shows the company's real bottom line.

case study invento robotics

•Balaji Viswanathan, lifelong entrepreneur from India, starts Invento Robotics. •Invento Robotics employed a unique revenue model that kept the cash flowing. •This model allowed R&D to continue and prevent Invento from becoming obsolete as it pursues ultimate goal of putting millions of robots in businesses around the world. •Launches Invento Robotics in 2016 with his wife, who brings complementary skill sets (ops., mgmt., finance) •Piloted at banks, cinemas, hospitals and retail outlets to handle customer interactions •Leverages early-adaptor at Canara Bank to establish the prototype model that would propel Invento's growth revenue generation and building a scalable business model. -from day 1 focused on revenue generation (using utility and usage model rented out raw prototypes of robots) and building a scalable business model. -•Balaji took advantage of the fact that businesses were always looking to add a wow factor to their corporate events. Invento robots were marketed as rentals that could be used at these events for a fee. provided Balaji with a very consistent flow of revenue, which is exactly what he needed to fund the capital-intensive research and development and talent sides of his business. •The operating expenses often scared off investors from this industry, but as the consistency of Invento's influx of revenues became clear, investors flocked. -priming the pump: •Balaji warns that the challenges of a capital-intensive operation can seriously hinder its ability to grow and advance. In a business where technological advancement is the main offering, Invento had to maintain a revenue stream if it wanted to remain competitive. -creative approach: •During times of profitability, Invento would actively invest profits back into the business. This brought the company back down to zero or even negative cash flow, but it enabled further development of new products and offerings. With the company always sitting near negative cash flows, it is constantly pushing Balaji and his team to find new sources of revenue. This ultimately facilitates further revenues and an expansion of operations. critical thinking questions 1. What is unique about renting "prototypes" of robots that don't have complete function

unit sales revenue model

•Measures the amount of revenue generated by the number of items sold. •Retail businesses: Rely on the unit sales model by selling directly to consumers (f2f and online). -Includes physical goods and intangibles like digital products or software support or apps and games (2 types of unit sales). -The razor and razor-blade model (another variation coined by Gillette which generates huge revenue from offering a physical product like razors at no or low cost to encourage sales of the more expensive razor blades. Aka printers and ink model)

professional revenue model

•Provides professional service on a time and materials contract.. -Consultants, lawyers, and accountants often charge by the hour for their services: a. Websites like Get a Freelancer, PeoplePerHour, and Elance also use this model by allowing freelancers to charge a fixed fee for projects posted online by other companies.

IOMOB case study

•follows Boyd Cohen and IoMob, a decentralized mobility network and platform built on blockchain technology. Boyd had a PhD, venture experience, consulting experience, and authorship under his belt when he started. •Hired very experienced team and used their collective knowledge as a platform to expand IoMob's solution. •Today, widely known for dedication to building open and fair mobility marketplace. •inspired by book Natural Capitalism and dedicates his career to this cause. •Authors a number of books and academic papers on capitalism and shared mobility and launches a startup focused on sustainability and smart cities. •Meets Jamie Burke, a blockchain investor, who inspires him to leverage the technology in smart city solutions through platform cooperativism. •business was built around a vision, and he had all the experience and knowledge he needed to formulate this great vision: a fair, open, sustainable mobility marketplace enabled by blockchain. But rather than detailing exactly how he would achieve his desired results, Boyd had a very clear understanding of what he wanted the future to look like and exactly what his company's vision would be. iomob critical thinking questions 1. How do you begin planning for a venture when the technology is so new? : •Defining the vision as clearly as possible is the first step for any entrepreneur. •By focusing on how exactly a new technology would add value, even if it is theoretical, an entrepreneur would give himself/herself something to work with to use in a vision statement. 2. What evidence in the case did you see of Boyd Cohen planning? : •Boyd was very intentional in his hiring tactics. By hiring Josup and Victor, he filled the voids that his own weaknesses caused in the business. •Wrote 3 white papers and then moved on to proof-of-concept testing in real-world settings, working with Portland, Oregon, the Netherlands and Singapore as well as Hyundai. •Also validated with Ford Motor Company Pilot Competition.

Petwell Supply case study

•follows Emily Lagasse's journey through the ups and downs she experienced as the founder of Fedwell Pet Food, ultimately leading her to focus on a similar but different venture called Petwell Supply Co. •The barriers Emily faced forced her to adjust her business strategies time and time again, often almost killing her business. She had a great concept, but the difficulty she experienced getting others in the industry to support what she was trying to do, specifically manufacturers, drastically slowed the growth of her company. •After making a couple pivots and changing the strategies of her business, Petwell has broken through those barriers and maintains a legitimate business operation. the need: normal dog food making dogs sick, so all natural food needed, launches fedwell pet food •Sold locally but 80% of revenue came from online sales. However, the pushback Emily received from manufacturers (lack of scale) led to multiple undeniable failures, even though they weren't necessarily Emily's fault. And cash flow became a problem! -was a praiseworthy failure: •continued uncertainty surrounding Fedwell's mfg. capabilities not worth the risk. Emily learned from past failures and pivoted to reduce her exposure to the incompetency and deviance of her manufacturing partners. new value proposition: •experiments and test a new concept in the local market providing health supplement bundles to meet the local need for a holistic solution to preventative and long-term health •Based on the results she pivots away from food and launches Petwell Supply Co., serving local market through boutique offering where pet owners get same-day solutions! •She takes community-based approach to marketing and manages cyclicality with traditional offerings (grooming, walking, etc.) -the future: •Looking at considering a franchise model for growth of the boutique. •Considering reformulating the pet food for national distribution as natural alternative to a prescription diet. •Evaluating expansion back into ecommerce. •Continuing to expand and strengthen her network, which she points to as the reason for her success. critical thinking questions: 1.How did Emily Lagasse learn from and rebound from failure? -displayed and leveraged grit:

FUBU case study

•highlights the path followed by Daymond John and his world-famous fashion line: FUBU. -The path was not smooth: the company would often fail and start-up again. -Only after taking even larger risks, did the company find some stability and become the powerhouse it is known to be today -the need: Daymond John heard rumors that clothing companies, apparel companies did not want rappers, African Americans, inner-city kids, anybody wearing their clothes. Got fed up hearing about all these types of brands and wanted to create a brand that loved and respected the people that loved and respected hip-hop. -effectuation: •Daymond bootstrapped FUBU with his own cash (starting the business with virtually no capital). •Tested and experimented with shirt and hat concepts and as demand grew, he would invest more and produce more •But cash is king! And on multiple occasions, FUBU ran out of cash and all operations would cease. •All it took to start again was someone on the street asking for more product. -new direction: needed additional capital to expand his operation. After leveraging friends and credit cards, Daymond took out money on his mother's house, compounding the risk of failure. -payoff: •Samsung Textiles arrives just in time and came to an agreement.. With Samsung's investment, FUBU reaches $30 million in revenue in 3 months. The big retailers return and FUBU reaches $350 million in revenue 2 years after the Samsung investment critical thinking ?s 1. Identify and evaluate all of Daymond John's bootstrapping methods. •bought his first products with his own cash and he reinvested the cash he made selling the products. •Made all the product himself and sold on consignment...while working. •Leveraged about $50K in cc debt, borrowed from several friends, then $100K from his mom. •Creative approaches to marketing (bouncers), selling (Las Vegas) and mfg. (house). $5 million from Samsung...from classified ad! 2. If FUBU was being started today, would it be a good candidate for crowdfunding? •would be a great candidate for crowdfunding, especially in today's environment where responses to certain prevalent attitudes gain support quickly. •The meaning behind FUBU, For Us By Us, would have certainly attracted attention of in