AHBETE

[miniMBA_01] Entrepreneurship & Innovation

What is Entrepreneurship?

• Entrepreneurs can be anyone, anywhere.
• Entrepreneurs create new things.
• Entrepreneurs figure out how to make an idea into a viable opportunity.
• Entrepreneurs add value to the world.

The Entrepreneurial Method: What Entrepreneurs Actually Do

The 5 Principles of Effectuation

1. Start With Your Means - start with what you already possess
2. Affordable Loss - move forward without ending work when problems arise
3. Leverage Contingencies - find new opportunities in your failures
4. Forming Partnerships - join with others to share resources and co-create opportunities
5. Control Not Prediction - deal with uncertainty by focusing on what you can control

The Business Model: A Framework For Building Your New Venture

• Your business model is like a blueprint of your venture.
• Expert entrepreneurs fully understand every aspect of their business model.
• Tools, such as the Lean Canvas, are available to clarify your business model.

Anatomy of a Business Model

Basic components that business models share:

• Customer Segment & Early Adopters - description of the narrowed down, specific customers you will target
• Problem & Existing Alternatives - the issues in your customers lives that, if changed, would be a significant improvement in their lives
• Unique Value Proposition - why a solution to the customer problem is important
• Solution - your idea to solve the customer problem
• Unfair Advantage - why you should be the one to solve the problem
• Channels and Key Metrics - how you will connect to your customers and what you need to measure as you make strategic decisions
• Cost Structure - startup and operation costs - how money goes out of your business
• Revenue Streams - the money you make - how money comes into your business

The Value Proposition: The Heart of Any New Venture

• The value proposition is what the company offers to its customers and other stakeholders.
• It is the basis for the entire business model.
• It is used to find the right fit between your problem and a workable solution

Components of the Value Proposition Canvas

Customer Segment:

• Customer Jobs - functional, social, and emotional jobs of the customer
• Pains - difficult, frustrating or scary aspects of customer jobs
• Gains - rewarding, fun, positive aspects of customer jobs

Solution and Fit:

• Products & Services - products and services that directly map to customer jobs
• Pain Relievers - features of the product or service that relieves customer pain points
• Gain Creators - features of the product or service that enhances customer gains

The Financial Model: How To Know If Your Business Is Sustainable

• An entrepreneur must have a solid financial model in order to have a financially sustainable business.
• An entrepreneur should know and fully understand every aspect of the financial model and how it will react to changes.
• A financial model is not a replacement for key areas such as managerial or tax accounting.

Basic Components of the Financial Model

• Revenue - money that you earn from operating your business
• Gross Margin - money earned that you keep after paying the cost it takes to sell your product or service
• Operating Model - money it takes to run your business that is NOT related to the cost of producing your goods or services
• Working Capital - timing of money coming into your business and money being paid out of your business
• Investment Model - money coming into your business from outside sources
• Break Even & Profitability - the point where you bring in enough money to justify running your business
• Customer Acquisition & Lifetime Value - money it takes to attract and engage customers to make a purchase and how much we can expect to make over the entire time they are a customer

The Pitch: Sharing Your Ideas

• A pitch is a short way to share essential information about your business to potential partners.
• The pitch is an early conversation that will be followed by additional in-depth conversations before partners invest in your business.

An All-Purpose Pitch

1. 1. The Problem
   2. Introduction and Value Proposition
   3. Solution
   4. How Do We Make Money?
   5. Unfair Advantage
   6. Call to Action