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.
