Introduction to Entrepreneurship: Financial Planning Recap

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Questions and Answers

What can be achieved according to the text?

The vision

Value for the customer (correct)

SMART goals

Strategy

What determines the resources needed for a business?

The vision of the company

The plans themselves (correct)

The financial situation of the company

The customer's needs

What is the meaning of 'SMART' as used in the context of the text?

Specific, Measurable, Achievable, Relevant, Timely (correct)

Strategic, Measurable, Achievable, Realistic, Transparent

Simple, Managed, Achievable, Relevant, Transparent

Strategic, Meaningful, Adaptable, Realistic, Timely

Which of these are NOT directly addressed in the text?

Human resources Signup and view all the answers

What does the 'left side' of the diagram represent?

Expenses and costs Signup and view all the answers

What is the core focus of the 'Key Resources' section of the Business Model Canvas?

Defining the resources and infrastructure needed to offer the product/service Signup and view all the answers

Which section of the Business Model Canvas directly addresses how the customer is reached and interacts with the product/service?

Distribution Channels Signup and view all the answers

What is the purpose of the 'Revenue Streams' section in the Business Model Canvas?

To understand how and in what form the business will generate revenue Signup and view all the answers

According to the provided text, what is the primary purpose of the 'Customer Relationships' section?

To determine the best ways to build long-lasting relationships with customers Signup and view all the answers

In the Business Model Canvas, what is the main link between the 'Key Activities' section and the 'Key Resources' section?

Both sections focus on identifying the resources required to execute key activities Signup and view all the answers

How is the concept of 'cost structure' related to the Business Model Canvas?

The cost structure highlights the most important costs associated with operating the business Signup and view all the answers

What is the significance of understanding how 'Key Activities' contribute to overall revenue?

It clarifies the relationship between operational tasks and revenue generation Signup and view all the answers

Which section of the Business Model Canvas directly addresses the question: 'For what value are our customers truly willing to pay?'

Value Propositions Signup and view all the answers

What do revenue streams clarify in a business model?

How and in what form revenue will be generated Signup and view all the answers

Which question addresses customer needs in a business model?

What resources create value for the customer? Signup and view all the answers

What is essential for integrating distribution channels?

The alignment with customer routines Signup and view all the answers

Which component is most likely to be the most expensive in a business model?

Key Activities Signup and view all the answers

Which question explores the concept of customer relationships?

Which customer relationships work best? Signup and view all the answers

What aspect of financial planning is highlighted by understanding revenue streams?

Understanding pricing strategies Signup and view all the answers

What is a crucial question to ascertain regarding payment preferences of customers?

How much do they currently pay? Signup and view all the answers

What do key resources contribute to in a business model?

Satisfaction of customer needs Signup and view all the answers

Which type of assumptions should you gather first when using Assumption Mapping?

Assumptions related to the problem and customer segment Signup and view all the answers

What are the three critical types of assumptions that should be identified?

Desirability, Feasibility, and Viability Signup and view all the answers

What is the primary goal of testing risky assumptions in a business model?

To increase the odds of success of the business idea Signup and view all the answers

In Assumption Mapping, which type of post-it should be used for assumptions about Desirability?

Red post-its Signup and view all the answers

Which of the following statements about Assumption Mapping is true?

It prioritizes critical assumptions based on their risk. Signup and view all the answers

Why is it important to find out early whether your assumptions are valid?

To prevent the potential failure of the entire business model Signup and view all the answers

Which assumption type addresses whether customers want a product?

Desirability Signup and view all the answers

What is the first step in the Assumption Mapping process?

Gather your critical assumptions Signup and view all the answers

What do Key Partners typically provide in the context of a business model?

External resources and activities Signup and view all the answers

Which of the following best describes Customer Relations?

The variety of relationships established with customers Signup and view all the answers

What is the primary purpose of Key Activities in a business model?

To deliver the value proposition effectively Signup and view all the answers

What do Revenue Streams represent in a business model?

The ways the company generates income Signup and view all the answers

Which aspect involves understanding customer needs and tailoring offerings accordingly?

Value Propositions Signup and view all the answers

Identifying who are the most important customers falls under which category?

Customer Segments Signup and view all the answers

What can be included in the 'Channels' section of a business model?

Methods of reaching customers Signup and view all the answers

What represents the costs associated with running a business model?

Cost Structure Signup and view all the answers

What is the primary focus of the cost structure in a business model?

Identifying key resources and activities Signup and view all the answers

Which resource is likely to be one of the most significant costs for a breakfast delivery service?

Employee salaries Signup and view all the answers

What aspect of financial planning does the cost structure inform?

Profit margin calculations Signup and view all the answers

Which of the following could represent the customer acquisition cost (CAC) in a breakfast delivery business?

Costs associated with marketing efforts Signup and view all the answers

What is a potential financial metric to assess the efficiency of acquiring customers?

Customer Lifetime Value (CLV) Signup and view all the answers

In the context of a breakfast delivery service, which of the following would be considered a key activity?

Delivering orders to customers Signup and view all the answers

How does the choice of packaging affect the cost structure?

It directly influences packaging costs. Signup and view all the answers

Which marketing measure is vital for engaging young professionals with a breakfast delivery service?

Social media campaigns Signup and view all the answers

What role does the customer database play in the cost structure of a delivery service?

It streamlines the order process. Signup and view all the answers

What is a common misconception about key resources in a business model?

Only physical assets are considered key resources. Signup and view all the answers

Which of the following best describes the impact of delivery charges on the cost structure?

They contribute to the overall service cost. Signup and view all the answers

What is a primary benefit of understanding the cost structure for a breakfast delivery service?

It aids in strategic planning and resource allocation. Signup and view all the answers

What is an example of a key resource that may incur high costs in a delivery business?

Delivery vehicle maintenance Signup and view all the answers

Study Notes

Course Information

Course Title: Introduction to Entrepreneurship
Academic Year: WS 2024/2025
Instructor: Dr. Dinah Murad
University: Eberhard Karls Universität Tübingen

Semester Schedule

15/10/24: Introduction and Business Ideas
29/10/24: Business Models and Value Proposition
12/11/24: Customer: Market Research and Validation
26/11/24: Business Planning and Strategy
10/12/24: Financial Planning and Fundraising
7/1/25: Operations and Execution
21/1/25: Innovation, Risk Management, and Scaling
30/1/2025: Exam (60 minutes, multiple choice) - 12:00-13:00

10.12.24 Financial Planning and Fundraising - Recap

Recap
Financial Planning
Fundraising
Task for next time
Key Learnings

Important Considerations from the Lecture

Customer Value: Focus on creating value for the customer.
Vision: The vision is a constant striving, but never attainable target.
SMART Goals: Goals should be Specific, Measurable, Achievable, Relevant, and Time-bound.
Strategic Planning: Strategy dictates the plans for execution.
Resource Dependence: Resources depend on personnel, infrastructure, timing, and financial requirements.

Business Model Canvas Elements

The Business Model Canvas is a tool for describing a business model.
Key Partners: Outside suppliers or outsourcing support are needed
Value Proposition: Describes the value created for customers
Customer Segments: Target customer groups
Customer Relationships: Defines the relationship with customers
Channels: Channels for reaching customers (e.g., websites, social media).
Revenue Streams: Defines how revenue is generated (different pricing models).
Key Activities: Shows all the required activities for offering products/services.
Key Resources: Shows needed resources and infrastructure
Cost Structure: All the costs involved in operating the business
Note: The Business Model Canvas elements relate to each other in a well-defined, interdependent system.

Understanding Key Financial Metrics

CAC (Customer Acquisition Cost): Cost of acquiring a customer.
LTV (Lifetime Value): Total revenue a customer will generate over their lifetime.
Burn Rate and Runway: Rate at which funds are used and length of time funds will last.
Examples: During growth phases of a company, focusing on CAC is important. The mobile segment, for example, generates a majority of profits for Uber.

CAC (Customer Acquisition Cost) Breakdown

Marketing Costs: Includes paid advertising, content creation, SEO, events, and marketing salaries.
Customer Support (pre-purchase): Includes chat support for leads and demo/trial costs.
Sales Costs: Includes sales team salaries, commissions, CRM software, travel expenses, lead generation tools, sales training.
Customer Support (pre-purchase): Includes chat support for leads and demo and trial costs.

Marketing Budget Percentage

New Companies: 12-20% of gross revenue
Established Companies: 6-12% of gross revenue

Sales Costs Breakdown

Advertising expenses
Shipping expenses
Sales team (Compensation and commissions)
Social media
Promotional expenses
Tradeshow expenses

LTV (Lifetime Value) Components

Customer Retention Costs: Loyalty programs, retargeting campaigns, email marketing for existing customers.
Product Costs: Manufacturing or service delivery costs, software, maintenance and updates.
Customer Support (post-purchase): Support team salaries, customer success tools, refunds, and returns.
Expansion Costs: Upselling, cross-selling, new feature or product development.

Product Cost Components

Direct product costs: (Prime cost).
Indirect product costs: (Manufacturing overhead).
Direct material, direct labor, direct expenses.
Indirect material, indirect labor, indirect expenses

Expansion Costs Components

Rent/Lease payments
Training and development
Equipment/supplies
Licenses/permits
Insurance
Moving expenses
Miscellaneous expenses

Costs Contracting to Burn Rate (Part 1 and 2)

Operational Costs: Office rent, utilities, employee salaries, benefits, equipment, software licensing, general and administrative costs.
Development Costs: Research and development (R&D) expenses, prototyping, and testing.
Marketing and Sales Costs: Overlap with CAC, brand-building, and strategic marketing efforts.
Financial Costs: Loan repayments, interest on debt.
Miscellaneous Costs: Taxes, insurance, and unexpected one-offs.

Assumption Mapping

Assumptions: Use post-its, various colors (desirability, feasibility, viability).
Map Assumptions: Prioritize assumptions based on availability of evidence/importance.
Testing: Focus on testing risky assumptions.

Funding Options for Startups

Bootstrap: Relying on personal finances to fund the company.
Angel Investors: Individuals investing their own capital.
Crowdfunding: Raising funds via online platforms (e.g., Kickstarter).
VC (Venture Capital) companies: Professional investors investing pooled funds.

VC Negotiation Details

Valuation: Determines company worth pre/post-investment, affecting investor stakes/ownership.
Negotiation: Key for structuring a fair deal.
Growth Potential: Linked to projections and market sizing.
Term Sheets: Outlining deal terms, including valuation, and equity.

Equity Stakes and Dilution

Equity Stakes: Ownership percentage, share in the company, and voting power.
Dilution: Impact on existing shareholders in new funding rounds, impacting valuation based on valuation.
Mitigation: Anti-dilution clauses can mitigate such impacts.

Additional Information

Tasks for 7/1/2025: Download template from Strategizer, fill in Key Activities, Key Resources and Revenue Streams.
Teamwork is limited to 3 persons max per team.

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Description

This quiz recaps the key concepts of financial planning and fundraising discussed in the Introduction to Entrepreneurship course. It focuses on the importance of customer value, setting SMART goals, and developing a clear vision for business success. Prepare to assess your understanding of these essential entrepreneurial skills.