Entrep Study Guide

What is a Channel?

A channel is how your product gets to the customer. It includes distribution, marketing, and sales touchpoints.

Channel Steps

Each step is a middleman:
0-step: Direct (company → customer)
1-step: Retailer
2-step: Wholesaler → Retailer
More steps mean less control and lower margins but more reach.

Channel Costs

Costs include marketing, logistics, commissions, and retailer margins. Selling is expensive beyond just producing.

Channel Strategies

Physical: stores, reps, distributors (high trust, high cost)
Digital: websites, social media, e-commerce (scalable, lower cost)
Most companies use both.

Channel Risks

Loss of control, dependence on third parties, margin loss, and channel conflict.

Customer Acquisition Cost (CAC)

CAC = Total sales and marketing costs ÷ number of new customers
Shows how much it costs to get one customer.

Sales Funnel

1. Awareness – people see your brand
2. Interest – they engage or click
3. Consideration – they evaluate
4. Conversion – they buy
Goal: reduce drop-off between stages.

Paid vs Earned Media

Paid = ads you pay for
Earned = organic sharing, word of mouth

Objectives of Good Selling

Acquire customers and retain/grow them.

Key Metrics

Conversion rate: % moving forward
Velocity: speed through funnel
Churn: % leaving

Sales Forecast

Estimate of future sales based on demand, price, and market size.

Big Pricing Mistake

Pricing too low signals low value and reduces profit.

Revenue Models

Subscription, transactional, freemium, advertising.

Objective vs Perceived Value

Objective = actual function
Perceived = what customers think it's worth

Customer Lifetime Value (CLV)

Total profit from a customer over time.
Basic: average revenue × lifespan
Important rule: CLV must be greater than CAC.

Contribution Margin
Dollar:

price − variable cost

Contribution Margin

Percentage:

(price − variable cost) ÷ price

Break-even Quantity

Fixed costs ÷ contribution margin per unit

Types of Costs

Fixed, variable, and semi-variable.

Why CAC Matters

Determines if business is profitable. If CAC > CLV, the business loses money.

Funnel Optimization

Low CTR: improve ads
Low conversion: improve product/site
High churn: improve retention

Subscription Pricing Behavior

Low price = more users, less commitment
High price = fewer users, higher expectations
Mid-tier often maximizes revenue

Pitch purpose

Convince investors to fund your business by reducing risk and showing opportunity

Main goal of a pitch

Show problem, solution, market, execution ability, and profit potential

What a pitch must do

Clearly explain the problem, present a strong solution, show a large opportunity, prove execution ability, and demonstrate how money will be made

Big market importance

Investors want large markets because they offer high growth and return potential

Clear problem importance

A strong business must solve a real and meaningful problem

Differentiation

What makes your product or business better or different from competitors

Traction

Proof that the business is working, such as users, revenue, or growth

Why traction matters

It reduces risk and shows real demand

Strong team importance

Investors invest in people who can execute the idea successfully

Investor red flag: no clear problem

If the problem is weak, the business has little value

Investor red flag: weak differentiation

If competitors can easily copy the idea, it is risky

Investor red flag: unrealistic projections

Overly optimistic financials signal lack of understanding

Investor red flag: no traction

No proof that customers care about the product

Investor red flag: confusing pitch

If it is hard to understand, investors lose interest quickly

Clarity principle

Simple and easy-to-understand pitches are more effective than complex ones

Storytelling in pitches

A pitch should follow a logical flow: problem, solution, opportunity, execution

Why conciseness matters

Investors have limited time, so pitches must be brief and impactful

Confidence in pitching

Present with confidence but avoid exaggeration or false claims

Pitch deck purpose

A visual tool used to support and structure a business pitch

Problem slide

Explains the issue being solved and why it matters

Solution slide

Shows how the product or service solves the problem

Market opportunity slide

Demonstrates the size and potential of the target market

Product/demo slide

Shows how the product works or what it looks like

Business model slide

Explains how the company makes money

Traction slide

Provides proof of growth or customer interest

Competition slide

Identifies competitors and explains why your business is better

Go-to-market strategy

Explains how the business will attract and acquire customers

Team slide

Highlights the experience and strengths of the founders/team

Financials/ask slide

Shows how much money is needed and how it will be used

Paid media (in pitching context)

Marketing channels that require payment, like ads

Earned media (in pitching context)

Organic exposure such as press coverage or word of mouth