Entrepreneurship Fall Final

Value creation

making something useful that solves a real customer problem

value delivery

how you actually get that value into the customer’s hands (channels, operations, service)

value capture

how the business gets paid and stays alive (revenue and profit)

Standard forms of value

• Product: Create a single tangible item or entity, then sell and deliver it for more than what it cost to make.

• Service: Provide help or assistance then charge a fee for the benefits rendered.

• Subscription: Offer a benefit on an ongoing basis, and charge a recurring fee.

• Shared resource: Create a durable asset that can be used by many people, then charge for access.

Design thinking steps:

• Empathize

• Define

• Ideate

• Prototype

• Test

Core Human Drives (as used in class for marketing & value):

• Drive to Acquire

• Drive to Bond

• Drive to Learn

• Drive to Defend

• Drive to Feel

Minimum viable product / offer (MVP/MVO)

smallest test version that still gives real value and lets you learn

Desireable

(Is there a real customer problem? Are there enough customers?)

Feasible

(Can you build it with tools, skills, labor available to you?)

Viable

(Will they pay enough, often enough, to cover costs and profit?)

Marketing

getting people’s attention and interest; communicating your value

Sales

turning interest into an actual commitment to pay

Value delivery & customer service

keeping promises, solving problems, building loyalty

Market segmentation

• dividing the big market into smaller groups:

  • Demographic – age, income, grade level, etc.

  • Psychographic – values, attitudes, lifestyle

  • Behavioral – how often they buy, when they buy, patterns of use

  • Geographic – location

Target market / ideal customer profile

who you most want to reach

Price discrimination

charging different prices to different customer groups (legally)

Value stream

the full chain of steps from raw inputs to the final customer experienc

Distribution channels

how the product gets from you to the customer (in-person, online, delivery apps, etc.)

• Lean thinking and waste (be able to recognize examples):

• Overproduction

• Waiting

• Motion

• Transportation

• Overprocessing

• Excess inventory

• Defects

• Unused Talent

Throughput

how many units you can produce/deliver per hour or per day

Fixed costs

costs that stay the same no matter how many units you sell (e.g., rent per week)

Variable cost

costs that change with each unit (e.g., cost of ingredients per drink)

Total cost

fixed + variable

Break-even point

number of units you need to sell so revenue = total cost (zero profit)

Inventory

the stock of goods and supplies you have on hand

Inventory management

how you decide when and how much to reorder

Quality control

checking that products/service meet your standards before they reach customers

Revenue

total money earned from sales (before costs are subtracted)

Expenses

 costs paid to run the business

Profit / net income

what’s left after expenses: Profit = Revenue – Expenses

Assets

what the business owns (cash, inventory, equipment)

Liabilities

what the business owes (loans, accounts payable)

Owner’s equity

the owner’s claim on the business (Assets – Liabilities)

Accounting equation

Assets = Liabilities + Owner’s Equity

Income statement

shows revenues and expenses over a period (month, quarter, year)

Balance sheet

shows assets, liabilities, and equity at one point in time (a “snapshot”)

Cash flow statement

shows cash inflows and outflows over a period

Cash-basis accounting

record revenue/expense when cash is actually received/paid

Accrual accounting

record revenue when earned and expenses when incurred (even if cash hasn’t moved yet

Inventory (as an asset)

unsold products or unused supplies you still own

Accounts payable

money you owe suppliers (a liability)

Retained earnings

part of owner’s equity that comes from past profits kept in the business