Entrepreneurship WS 2024/2025 Past Paper PDF

Introduction to Entrepreneurship WS 2024/2025 Dr. Dinah Murad 1   Plan for the Semester Date Topic 15/10/24 Introduction and Business Ideas 29/10/24 Business Models and Value Propositio...

Introduction to Entrepreneurship WS 2024/2025 Dr. Dinah Murad 1   Plan for the Semester Date Topic 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 med2market – scientific marketing consulting 2 10.12.24 Financial Planning and Fundraising ¤ Recap ¤ Financial Planning ¤ Fundraising ¤ Your task for next time ¤ Key Learnings 3 10.12.24 Financial Planning and Fundraising ¤ Recap ¤ Financial Planning ¤ Fundraising ¤ Your task for next time ¤ Key Learnings 4 What do you remember? ¤ Focus on what is creating value for the customer ¤ The vision is what you are forever striving for but will never achieve ¤Your goal has to be defined SMART ¤The strategy determines the plans that are executed ¤The resources depend on the plans in terms of personnel, infrastructure, timing and financial requirements 5 10.12.24 Financial Planning and Fundraising ¤ Recap ¤ Financial Planning ¤ Fundraising ¤ Your task for next time ¤ Key Learnings 6  left side: expenses and costs right side: value creation and revenue You can't cover everything yourself. The key activities show what you really Every product/service creates value and is Customer relations represent the type of This includes your users and Key partners like external suppliers or need in order to offer your product/ perfectly tailored to your customer relationship that you build with your paying customers. These are all outsourcing of activities may help you service. segment. customers. people for whom you create value here. What type of relationship does each with your offer. What Key Activities do our Value What value do we deliver to the of our Customer Who are our Key Partners? Propositions require? customer? Segments expect us to establish and For whom are we creating Who are our key suppliers? Our Distribution Channels? Which one of our customer’s problems maintain with them? value? Which Key Resources are we Customer Relationships? are we helping to solve? Which ones have we established? Who are our most important acquiring from partners? Revenue streams? What bundles of products and services How are they integrated with the rest customers? Which Key Activities do partners are we offering to each Customer of our business model? 7 4 perform? Segment? How costly are they? Which customer needs are we satisfying? It defines what resources and create value for the customer This is where the channels and contact infrastructure are needed to offer your the "why" you are doing it points, with which your customers interact, product/service. provide at the same time added value. Through which Channels do our Custo- What Key Resources do our Value mer Segments want to be reached? Propositions require? How are we reaching them now? Our Distribution Channels? How are our Channels integrated? Customer Relationships? Which ones work best? Revenue Streams? Which ones are most cost-efficient? How are we integrating them 8 6 2 with customer routines? 3 1 Once you understand how your business model infrastructure works, you will also know what your The revenue streams or revenue models make it clear how and in what form you want to generate cost structure and financial planning should look like. revenue. A pricing strategy is important. What are the most important costs inherent in our business model? For what value are our customers really willing to pay? Which Key Resources are most expensive? For what do they currently pay? Which Key Activities are most expensive? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? 9 5 Business Model Canvas. Source: Osterwalder et al. (2010), p. 17ff. Cost Structure - the left side of the BMC Once you understand how your business model infrastructure 7 works, you will also know what your cost structure and financial planning should look like. What are the most important costs inherent in our business model? 8 6 Which Key Resources are most expensive? Which Key Activities are most expensive? Business Model Canvas. Source: Osterwalder et al. (2010), p.  Example Breakfast Delivery Service persona, TIM; TAM: SOM you need to be found somewhere; nowadays: website social media Developing a platform Live tracking of the Cafés & bakeries 20-35 year old delivery Choice of good students & young breakfast as desired Marketing professionals Processing Storage of customer data to Packaging orders from simplify the ordering process companies order to delivery Partner Convenient delivery to Offices and agencies aquisition your home/ in the city centre Other delivery to the office service providers Motivated Website Posters & employees Families living in the Simple order Flyers city centre process City Platform influencer Press Trendy, high quality cafés Newsletter Social media Employees: management, delivery, Packaging 30% margin on Vouchers website development, marketing, Office rent & breakfast value administration equipment Server, If applicable subscription internet, model / breakfast flat rate Delivery charges Marketing measures domain  Understanding Key Financial Metrics CAC (Customer Acquisition Cost). LTV (Lifetime Value). Burn rate and runway. Runway: Time until funds run out at current burn rate Example: Uber’s focus on CAC during its growth stage. Source: "Uber’s Financial Strategy" (Forbes) https:// www.investopedia.com/ask/answers/ 013015/how-do-ridesharing- companies-uber-make-money.asp med2market – scientific marketing consulting 11      CAC include customer acquisition costs Marketing Costs Sales Costs Paid advertising (e.g., Google Ads, Sales team salaries and social media) commissions Content creation (blogs, videos, CRM software (e.g., Salesforce) etc.) Travel and meeting expenses SEO and SEM expenses Lead generation tools and Event sponsorships and trade databases shows Sales training Marketing team salaries Customer Support (pre-purchase) Chat support for leads Customer Support (pre-purchase) Demo and trial costs Chat support for leads Demo and trial costs med2market – scientific marketing consulting 12 How much would you spend on Marketing? https://nuphoriq.com/ create-a-marketing-budget/ Sales Costs interacting with the customer creating more offers in smaller businesses, you don't differentiate between sales and https://www.universalcpareview.com/ marketing (promotional) expenses ask-joey/what-are-selling-expenses/  LTV - Lifetime Value 1.Customer Retention Costs 3.Customer Support (post- ◦ Loyalty programs purchase) ◦ Retargeting campaigns ◦ Support team salaries ◦ Email marketing for existing ◦ Customer success tools and customers platforms 2.Product Costs ◦ Refunds and returns ◦ Manufacturing or service 4.Expansion Costs delivery costs ◦ Upselling and cross-selling ◦ Software hosting or cloud e orts service fees ◦ New feature or product ◦ Maintenance and updates development med2market – scientific marketing consulting 15 ff  Customer Retention, Product Costs https://www.custify.com/blog/customer-retention- cost/ https://www.double-entry-bookkeeping.com/ costing/product-and-period-costs/ #google_vignette Expansion Costs https://fastercapital.com/topics/the-costs-of- expansion.html  Costs contracting to Burn Rate - 1 Operational Costs O ce rent and utilities Employee salaries and bene ts Equipment and software licensing General and administrative (G&A) costs (e.g., HR, legal) Development Costs Research and development (R&D) expenses Prototyping and testing med2market – scientific marketing consulting 18 ffi fi Development and Operation https://www.wallstreetmojo.com/research- https://getedara.com/blog/en/operating- and-development-costs/ costs-calculation/  Costs contracting to Burn Rate - 2 Marketing and Sales Costs Overlap with CAC but also includes brand-building campaigns Long-term strategic marketing Financial Costs Loan repayments Interest on debt Miscellaneous Costs Taxes and insurance Unexpected one-o expenses med2market – scientific marketing consulting 20 ff  making an educated guess Quantification of Costs - Assumption Mapping you have to put a price tag on things, not necessarily at first but eventually you will need to With Assumption Mapping you can identify the most important risks of your business model. Your business model is based on many assumptions that you do not yet know if they really apply. If important assumptions turn out to be wrong, the entire business model may fail. Therefore you should find out early whether these assumptions are valid. With Assumption Mapping you can make such risks visible and prioritize them. In this way, you can find out which assumptions you should test next. By testing risky assumptions, you can reduce risks and increase the odds of success of your business idea. med2market – scientific marketing consulting 21  Step 1: Gather your critical assumptions The critical assumptions are typically related to the problem and the customer segment at the beginning, then to the solution and finally to growth. Desirability Take a post-it for each assumption. Use different- colored post-its for assumptions about Desirability: Do customers want this? formulate a smart Viability Feasibility: Can we do this? Feasibility Viability: Should we do this? (from an economic point of view) med2market – scientific marketing consulting https://www.strategyzer.com/blog/how-assumptions-mapping-can-focus-your-teams-on-running-experiments-that-matter 22  Step 1: Gather your critical assumptions med2market – scientific marketing consulting https://www.strategyzer.com/blog/how-assumptions-mapping-can-focus-your-teams-on-running-experiments-that-matter 23  Step 2: Map out your assumptions Important Test these first! Evidence No evidence available Assumption Mapping. Source: Bland/Osterwalder (2020), p. 29ff. Unimportant med2market – scientific marketing consulting 24  Hints Take a post-it for each assumption. Use different- colored post-its for assumptions about desirability, feasibility and viability. Your assumptions should be specific and testable. The critical assumptions are typically related to the problem and the customer segment at the beginning, then to the solution and finally to growth. med2market – scientific marketing consulting 25  Example The Assumption Map of Airbnb in its initial phase (2007) might have looked like this. Important Homeowners let Travellers are looking for Airbnb is strangers live with them alternative experiences to hotels legal for a short time It is possible to compete Travellers are prepared to pay with cheap hotel rooms for accommodation with Travellers are strangers willing to rent from strangers Evidence Professional images lead No evidence available Travelers want to a higher booking rate clean apartments Unimportant med2market – scientific marketing consulting 26 You can't cover everything yourself. The key activities show what you really Every product/service creates value and is Customer relations represent the type of This includes your users and Key partners like external suppliers or need in order to offer your product/ perfectly tailored to your customer relationship that you build with your paying customers. These are all outsourcing of activities may help you service. segment. customers. people for whom you create value here. What type of relationship does each with your offer. What Key Activities do our Value What value do we deliver to the of our Customer Who are our Key Partners? Propositions require? customer? Segments expect us to establish and For whom are we creating Who are our key suppliers? Our Distribution Channels? Which one of our customer’s problems maintain with them? value? Which Key Resources are we Customer Relationships? are we helping to solve? Which ones have we established? Who are our most important acquiring from partners? Revenue streams? What bundles of products and services How are they integrated with the rest customers? Which Key Activities do partners are we offering to each Customer of our business model? 7 4 perform? Segment? How costly are they? Which customer needs are we satisfying? It defines what resources and This is where the channels and contact infrastructure are needed to offer your points, with which your customers interact, product/service. provide at the same time added value. Through which Channels do our Custo- What Key Resources do our Value mer Segments want to be reached? Propositions require? How are we reaching them now? Our Distribution Channels? How are our Channels integrated? Customer Relationships? Which ones work best? Revenue Streams? Which ones are most cost-efficient? How are we integrating them 8 6 2 with customer routines? 3 1 Once you understand how your business model infrastructure works, you will also know what your The revenue streams or revenue models make it clear how and in what form you want to generate cost structure and financial planning should look like. revenue. A pricing strategy is important. What are the most important costs inherent in our business model? For what value are our customers really willing to pay? Which Key Resources are most expensive? For what do they currently pay? Which Key Activities are most expensive? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? 9 5 Business Model Canvas. Source: Osterwalder et al. (2010), p. 17ff. 10.12.24 Financial Planning and Fundraising ¤ Recap ¤ Financial Planning ¤ Fundraising ¤ Your task for next time ¤ Key Learnings 29  Potential Income - 1 Revenue from Sales customer traction, expand market, re-purchase, broader portfolio price increase med2market – scientific marketing consulting 30    5. Revenue Streams 4 The revenue streams or revenue models define how and in what form you want to generate revenue. 2 3 For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? Business Model Canvas. Source: Osterwalder et al. (2010), p. 17ff.  Example Breakfast Delivery Revenue Stream The revenue streams or revenue models ¤ Delivery Charges make it clear how and in what form you want to generate revenue. A pricing strategy ¤ Exceptional Service is important. ¤ Vouchers For what value are our customers really ¤ If applicable: prescription willing to pay? model / breakfast flat rate For what do they currently pay? How are they currently paying? ¤ 30% margin on breakfast value How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?  Balance between Expenses and Income What will you do if your revenue stream does not fund your costs and investments? ask investors med2market – scientific marketing consulting 33  Potential Income - 2 Investors: Upscaling with VC Going Public Partnerships med2market – scientific marketing consulting 34      Funding Options for Startups Bootstrap example: investors from shark tank Agel Investors Crowdfunding; Example: Pebble (Smartwatch) raised $10M via Kickstarter VC companies https://www.kickstarter.com/?ref=nav med2market – scientific marketing consulting 35      Funding Options for Startups Bootstrap When an individual bootstraps, they rely on money other than outside investments. An individual is said to bootstrap when they attempt to establish and build a company from personal finances or the operating revenues of the new company. Bootstrapping also describes a procedure used to calculate the zero-coupon yield curve from market figures. Agel Investors Crowdfunding; Example: Pebble (Smartwatch) raised $10M via Kickstarter VC companies med2market – scientific marketing consulting 36       Bootstrap - Very likely for small business and startups When an individual bootstraps, they rely on money other than outside investments. An individual is said to bootstrap when they attempt to establish and build a company from personal finances or the operating revenues of the new company. Bootstrapping also describes a procedure used to calculate the zero- coupon yield curve from market figures. even after the project ends, the responsibility is there https:// https://www.pitchdrive.com/academy/ www.kickstarter.com/? exploring-pros-and-cons-bootstrap-vs- ref=nav venture-capital-for-startup-financing  interested in an exit strategy, because they want to get their money back at a greater amount and at a specific time Angel Investors / Business Angels you have to describe precisely why you want their money and how you are going to use it, because they invest with heir personal money when is the right time to ask angel investors for money? --> when companies ¤ Key Characteristics: want to expand their business / when they want to improve a product ¤ Personal Funds: Angel investors use their own money to fund businesses, unlike venture capitalists, who invest pooled money from a group of investors. ¤ Early-Stage Investments: They usually invest in the early stages of a company's development, often when the startup has little to no revenue or track record. ¤ High Risk, High Reward: Angel investments carry a high risk of failure but can yield substantial returns if the company succeeds. ¤ Mentorship and Guidance: Many angel investors offer their expertise, network, and advice to help startups succeed, beyond just financial support. ¤ Typical Investment Range: ¤ Angel investments can range from a few thousand to a few million dollars, depending on the investor's resources and the needs of the startup. ¤ Angel investors play a critical role in fostering innovation and entrepreneurship by providing the necessary capital and support for startups to grow.  Crowdfunding a method of raising small amounts of money from a large number of people, typically via online platforms, to fund a project, business, or cause. Good for: Creative Projects: Films, music, art, or games. Consumer Products: Gadgets, fashion, or unique items with broad appeal. Social Causes: Nonprofits or community-driven initiatives. Early-Stage Startups: Seeking funding for product development or market testing. Downs: Intense Effort: Requires a strong campaign, marketing, and community engagement. No Guarantees: Success depends on public interest; many campaigns fail. Fees: Platforms take a percentage of funds raised. Reputation Risk: Failure to deliver promised outcomes can damage credibility. https://www.kickstarter.com/?ref=nav med2market – scientific marketing consulting 39           VC Companies - professional investors Characteristics: Professional Investors: Invest pooled funds for high returns. High Growth Focus: Target startups with rapid scaling potential. Stage-Specific: Focus on seed, early, or growth stages. Active Involvement: Provide guidance and networks. Equity-Based: Gain ownership in exchange for funding. Exit-Oriented: Aim for IPOs, mergers, or acquisitions. For Startups: VC funding is ideal for startups with scalable business models and high growth potential but requires giving up significant equity and control. VC - Negotiating with Investors: Control aspects Balance Valuation Startup Worth: Determines Term Sheets company value pre/post- investment. Investment Agreement: Outlines deal terms. Investment Basis: Affects investor stakes and Key Clauses: Includes ownership. valuation, equity, and rights. Negotiation: Critical for fair Non-Binding: Initial step in deal structuring. negotiation. Growth Potential: Linked to Investor Protection: Ensures projections and market size. rights and exit options.  VC - Negotiating with Investors - your shares Dilution Equity Stakes Ownership Reduction: Happens in new funding Ownership Percentage: rounds. Share in the company. Impact on Stakeholders: Control: Determines voting Existing shareholders lose power. percentage. Profit Sharing: Access to Valuation Dependent: High dividends or sale proceeds. valuation reduces impact. Dilution Risk: Can decrease Mitigation Options: Anti- with future funding rounds. dilution clauses in agreements. 10.12.24 Financial Planning and Fundraising ¤ Recap ¤ Financial Planning ¤ Fundraising ¤ Your task for next time ¤ Key Learnings 44  Your task for 7/1/2025 ¤ Download this template from stretegizer ¤ Fill in ¤ Key Activities, ¤ Key Resources ¤ Revenue Streams ¤ You can use your own business idea, a known brand, product or company or use your example from the pyramid ¤ You can work in teams of max. 3 persons per team ¤ send me your work until 3/1/2025 45 10.12.24 Financial Planning and Fundraising ¤ Recap ¤ Financial Planning ¤ Fundraising ¤ Your task for next time ¤ Key Learnings 46  Take Home Messages ¤ Focus on understanding customer needs, preferences, and behaviors to create tailored products and services. ¤ Identify essential resources and activities needed to deliver value and align them efficiently with business goals. ¤ Leverage strategic partnerships to fill capability gaps, enhance scalability, and optimize key processes. ¤ Define clear revenue streams and pricing strategies to monetize value effectively across different customer segments. ¤ Plan and manage cost structures by understanding key cost drivers and optimizing operational efficiency. ¤ Explore diverse funding options like bootstrapping, crowdfunding, and venture capital to support growth and financial stability. ¤ Continuously test and validate assumptions about customers, solutions, and market needs to mitigate risks and improve success chances. 47 Next time - 7.1.2025 ¤ Operations & Execution 48