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Key Concepts Entr Mindset Final

Terms in this set (51)

Elevator Speech
A quick pitch/speech about a product, service, or project to attract potential employee's, buyers, and investors
Short enough that its a 2 minute elevator ride
Dilution of Ownership
A reduction in each previous shareholder's percentage of ownership once you pull in more and more investors
Customer Evangelists
Customers who support a product/service with their money and praise just because they love it so much (no benefit to themselves)
Why is It beneficial? free advertising
Who most likely to tell? friends/fam (reliable, loyal)
Venture Capital
Money that investors will provide to small business and startup companies that they believe have long-term growth potential (usually not their own $$$)
(put in a lot of money hoping to get more money back in couple years)
Corporate Venture Capital
Venture capital provided by big big corporate companies (EX: google, facebook)
^less pressure cause they aren't looking for much in return, usually just to competitive advantage
Angel Investor
a very wealthy individual who invests in a small business or start up company with long-term growth potential in order to gain more money out of it in the long run
Three F's
Friends, Family, Fools
"Good" or "Smart" Money
Smart/Good money refers to investments made by "expert" investors who provide a great deal of knowledge for the company and money that can move markets
IPO
(Initial Public Offering) when a company/cooperation decides to "go public" and offer shares for sale to the public for the first time
Value Based Pricing
setting the price of your product at what you think your customers are willing to pay for it (equilibrium price)
^depends on quality of product etc etc
Business Incubator
organizations that offer startup companies a shared operation space were they can share knowledge and material
Start-up Valuation
simply the value of a startup company taking into account the market they are in and which sector in business they belong too
Boom Productions
the movie we watched
Intrapreneur
an employee or someone who works inside of a company and creates some sort of product for the company
^easier because you have more funding but harder because you don't have as much motivation
Burn Rate
the rate at which a company is spending its capital (money) until it reaches profitability
Bootstrapping
most effective and inexpensive way to ensure a business positive cash flow (use your own personal savings, borrow friends materials instead of buying your own)
Board of Directors
a corporations governing body-- a group of individuals elected by share holders that are responsible for overseeing the company's management (EX: can vote the CEO out if not doing good)
Board of Advisors
don't have legal responsibility like directors but they provide strategic advice on the management, organization, funding of a company
Scientific Advisory Board
help create the product, strictly scientific, do not help with business decisions or selling the product
Skin in the Game
you as a founder use your own money to put into the company and buy stocks (to show your all in)
Serial Entrepreneur
entrepreneur who starts one business and then moves on to start another (comes up with multiple new ideas and business which is different from an entrepreneur who just comes up with a single idea)
LLC
(Limited Liability Company) owners of a corporate company are not personally liable for the companies debt or liabilities (EX: if you start a company and it goes downhill the investors can't/won't come after you cause they are made aware ahead of time)
Business Plan (purposes)
a comprehensive document that serves as a flight plan and sales tool for your company
Letter of Intent
a letter from a customer basically saying that they intend to use your company; no contract and not binding but can show it to the bank to get money from you business (more likely to get a lone)
Intellectual Property
unique creations, inventions, names, symbols, images (etc) that are your own. Makes something more valuable and cannot be replicated by others
^ includes patents
Patent
protection under the government for your product (others cannot replicate)
Noncompete Agreement
a contract between employees and an employee in which the employee agrees to not enter into a competing company during or after employnment
Confidentiality Agreement
a legally binding contract in which a business or person makes people sign saying they are not allowed to disclose certain information without proper authorization
Social Entrepreneurship
a company who works for the community rather than for their own personal gain (uses the money made to fund social, cultural or environmental issues)
EX: tom's shoes
Ethnographic Research
immersing themselves into the lives, culture, and situation they are studying; talk to potential customers and competitors
Competitive Intelligence
information collected by a company about rival business and markets so they can make more effective business strategies moving forward
Scaling the Business
basically growing the business
Lifestyle Business
usually started by families; run by an individual to serve the purpose of sustaining a particular level or income; (not skateboards or swimwear, little shops on the highway and such)
^ not serial entrepreneurs
Term Sheet
a nonbonding agreement that sets the basic terms and conditions under which an investment will be made
Pro Forma Statements
financial statements that calculate future presumptions or potential earnings in that company.
Seed Stage
a very young company; can just be a business idea
Shooting Star / One Trick Pony
something that is only good for one particular purpose; hard to build company off of it but can fit into a certian market
Operating Agreement
a contract among founders how much money each person puts in and such
Due Diligence
the investigation and analysis a investor does entering into agreement or contract with another party
Performance Contingencies
a negative event that may occur in the future if founders don't do what they say they were gonna do
The 5 C's
Concept, Customer, Competitors, Competence, Cash
Concept
refers to the product or service you are going to provide
- need to determine and define what your offering is going to be and what its not going to be
- need to make sure you are developing a range or family of offerings; not just a single product
- need to determine what customers "want" and "need"
- specific the pain point that your offering resolves
- accept the fact that your offering needs only to be "good enough" not necessarily perfect to introduce it into the market
Customer
refers to the people who will buy your product(s)
- specific the people who need or want what you have to offer
- interact with, observe, and intensely study these people
- capture information about customers you should be armed with a camera, audio recorder, and note taking materials at all times
- need to determine which customers are most likely to be "early adaptors" and figure out how to get them
- you should validate and revalidate your market by going through a cycle of iterations whereby you: present customers with your product, capture their suggested improvements, make improvements, and present an updated version back to them again
Competitors
refers to alternative providers of your product or service
- need to determine who is currently providing the same product or service you intend to bring into the market
- need to research who competitors current customers are
- need to pinpoint and study competitors strength and weaknesses
- need to explore what other companies may try to enter the market you are pursuing
- need to develop a strategic plan to sustain and increase your competitive advantage
Competence
refers to the composition of the founding management team
- need to determine who is your leader, person who has final say
- need to determine what the most appropriate roles are for the other founders
- need to see where you have talent and expertise holes that need to be filled
- need to ascertain what outside help and support you need
- need to determine what will incentivize everyone on the team to work for the common good
Cash
deals with sources and uses of funds
- need to determine what capital investment need for the first 2 years
- need to determine your fixed and variable expenses by month for the first 2 years
- need to estimate your revenues by the month for the first 2 years
- need to consider doubling the amount of $$ and time you initially think will take to get started
- need to figure out where you are going to obtain the funds required and what it is going to cost you to satisfy the investment goals of your investors
Value Proposition
focuses on your competitive advantage
- need to determine your offering can be a dramatic improvement over what others are offering
- need to objectively quantify how much better, faster, and cheaper your product or service is
- need to determine how you will make customers totally aware of your superiority
- need to asses the ever present threats to your market leader status
- need to plan out what you will need to do to maintain your market leader status
Business Model
focuses on a too often neglected, simple issue: profit
- need to determine and allocate the fixed costs for your start-up, including a cushion for unforeseen expenses
- you need to compute your variable costs per unit
- you need to set a price per unit and then calculate your per unit prodits
- need to predict the number of units you will sell and then calculate your daily, weekly, monthly and yearly rev
- need to subtract out taxes and other legally mandated expensies
- need to make sure starting your new venture is worth your time, effort, and financial resources (now and in the future)
First Customer
focuses on who you can get to take a chance on you and become your paying customer
- need to think about who is the logical choice to become your first customer
- need to determine how to contact, persuade, and get a binding contract from this first customer
- need to determine how to get useful feedback from this first customer
- need to determine how tog et a testimonial sales and assistance from this first customer
- need to determine and pursue customers 2, 3, 4, and 5
First Million
focuses on setting growth targets for revenue
- need to divide 1,000,000 $ by your per unit price to determine how many units you will need to sell to get to the million dollar sales level
- need to predict which customers will buy what number of units to get to the million dollar sales level
- need to project the month and year you will attain the million dollar sales level
- need to project how many units you will need to sell to get to $5, $10, and $50 million sales
- you need to predict which customers will buy the required number of units to get you to $5, $10 and $50 million in sales
Exit Strategy
focuses on weather you will run the business indefinitely or relinquish control
- need to figure our if you will be satisfied to merely grow the venture to a level that provides you with a comfortable life style or whether you are going to build and sell it for a profit
- need to list our what companies you compete with might be interested in buying your business someday
- need to list our what companies you collaborate with might be interested in buying your business someday
- need to consider the opposite alternative: acquiring your competitors or collaborators to expand
-need to consider another alternative: franchising to expand
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