Entrepreneurship V2

Customer Acquisition Cost (CAC)

(Marketing expenses + sales expenses) / (#of new customers for period)

Customer retention rate

(number of customers at end of period - number of new customers during period) / (number of customers at start of period) x 100

prebuilt

- has subscription fee to use software - saves user time

build your own

- offers users more control - user is responsible for the maintenance of the software - provides more functionality for specific needs

what might one have to do when listening to feedback from customers

-change markets -create new products

what is the purpose of customer service

-create customer satisfaction -generates business through word-of-mouth referrals

direct distribution channel

-ecommerce sales -door to door sales

set quality standards

-local health and safety inspectors - a government regulatory agency -industry leaders

options for determining what services customers need

-survey customers -talk with individuals interested in the service - place phone calls

lean canvas

1 page document Covers problems and solutions, value propositions, marketing channels, key metrics, costs, and revenue without all of the business plan details

5 elements of design thinking process

1. Empathize 2. Ideate 3. Prototype 4. Test

4 data segments

1. demographic 2. geographical 3. behavioral 4. psychographic

business plan contains

1. executive summary 2. marketing plan 3. organizational structure 4. financial plan

MVPs test...

1. functionality 2. ease of use

5 determinations of business opportunity viability

1. market size 2. relationships 3. cash flow management 4. management skillsets 5. passion

7 sales process steps

1. prospecting 2. preparation 3. approach 4. presentation 5. objection 6. closing 7. follow up

steps of quality control testing process

1. set quality standards 2. establish the product quality testing method 3. review internal quality testing results 4. refine and improve quality methods and measures as needed

executive summary

2 pages, creates first impression of a business plan Summarizes what one wants to accomplish with a business, the products and services one sells, financial outlook, the funding needed, one's goals, and one's achievements.

Business Life Cycle

7 stages

business plan

A written document that details how a business will be structured, managed, run, and grown.

resiliency

Adapting to change, loss, and disappointment

Secondary data

Articles or academic journals that interpret primary data; often includes bias

Indirect competitor

Business that sells different products or services but is similar enough to be competitive with another business

Direct competitor

Business that sells similar products or services as another business

ethical practices

Decision-making based on morals and doing the right thing

marketing plan

Determines the size of a market with marketing analysis and describes potential customers to provide a customized plan to reach them.

Primary data

First hand accounts, such as interviews and surveys, and is more accurate and reliable

Target market

Group of customers that will buy a product or service, which helps the business determine the price of products and services

financial plan

Includes a budget, a 12-month profit and loss projection, cash flow statements, a breakeven analysis, and capital requirements to show investors how their money will be spent.

prototype stage

MVP is created

social responsibilities

Preventing and removing any corruption and unethical behavior that could harm a business, the community, or the environment could harm a business, the community, or the environment.

Which data is more reliable: primary or secondary

Primary

organizational structure/management bios

Provides an overview of the employees and others that are part of a business.

critical thinking

Solving problems in the best way by considering a variety of potential solutions to the problem

value proposition

Statement that explains why a customer should do business with a company; conveys the value of products and services to customers

SWOT analysis

Strengths, weaknesses, opportunities, threats

grit

Tackling goals with courage and perseverance, even when it is challenging

opportunity recognition

The way one approaches new ideas and ventures

piecework

a compensation system in which employees are paid a set rate for each item they produce

distribution channel

a method used to get a product from the manufacturer to the end user

newspaper marketing

allows companies to easily target certain locations

value hypothesis

articulates why you believe customers are likely to use your product; promotes product features, pricing, and business model

growth mindset

believing one can accomplish anything through hard work

C corporation

best for international business even with being double-taxed

pitch deck

brief overview of business plan, funding needed, and financial projections; typically slideshow A brief overview of a business plan, the products and services that will be provided, the funding needed, and financial projections.

success

business is economically healthy

existence

business is up and running

monetization stage

company starts to earn revenue

direct channel

consumer purchases directly from manufacturer

founder

creates the company

business to customer transaction

customer purchases from business

launch stage

develop value hypothesis

sole proprietorship

easy to create but comes with unlimited liability

small business

focuses on generating profits and deals with known risks

entrepreneur

grow fast & take on new opportunities + risks

stakeholder

has a vested interest in the success of the company; might serve board of directors

cost price

how much money it costs a business to make or obtain the products or service

LLC

ideal for a single owner seeking low risk; has a personal tax rate

minimum viable product

inexpensive version of the product

franchise

licensed business that has established operations, products, and branding; requires more money upfront

S corporation

lower tax rate that prevents company from being double-taxed

exit plan

make a profit from selling ownership

product/market fit

making a product or service that many people want

profit margin

net profit the company wants to make from the sale; represented as percentage

non-profit

no ownership, no US federal taxes

equity

non cash compensation

idea stage

one develops a concept for a product

before creating a product

one should research what it takes to produce the product

CFO

oversees company finances

COO

oversees daily operational and administrative functions

resource maturity

owner can separate financially and operationally from business

pivot or persist

owner decides whether to continue to grow business into large company or pivot into new project or, either to continue strategies or use new ones

stockholder

owns stock in company; pay for part of ownership; can select CEO

growth stage

product/market fit is found

trademark

protects brand names and logos

trade secret

protects company's practice, process, or formulas from being shared

copyright

protects creative works, such as art and music

patent

protects inventions

minimum viable product

prototype used to test ease-of-use and functionality to help determine the user's experience and ultimately improve the user's experience with the product

vision and value proposition

provides a brief overview of a business where one talks about the company's mission and the value provided to customers

distribution center

receives and temporarily stores goods before fulfilling the customer's order and is often used for retail stores -Kohls, dicks sporting goods

survival

regularly generating income; customers grow

CEO

reports to board of directors

traction stage

sales gain momentum

salary

set amount of pay in a given period

hourly

set rate of pay for hours worked

partnership

shared financial backing

balance sheet

shows assets, liabilities, and equity

financial plan

specifically directed to investors and lenders

take-off

still economically healthy, owner decides whether/how to expand or to sell business

distribution & fulfillment centers

store and ship products for businesses

fulfillment center

strategically stores products so that when a customer places an order, the product can be quickly picked up and sent out -wayfair, amazon

physical product

tangible items that require pick-up of delivery

most dominant medium for marketing

television

risk tolerance

the amount of loss one is willing to take when making an investment decision

test a prototype...

to ensure that a company is creating a high quality product

international standard organization's definition of quality

totality of features and characteristics of a product or service that bear on its ability to satisfy needs

indirect distribution channels

use intermediaries, like wholesalers, retailers, and agents 1 level- purchased from manufacturer, sold to consumer 2 level- wholesaler purchases products in bulk, sell to resalers, sell to end users 3 level- agent involved on top of wholesalers and retailers

value engineering

used to cut down on costs or to improve product's function

commission

usually found in sales roles