Entrep Finals
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Lyrics Lyrics6/22/23, 4:56 PM PRELIMINARY EXAM: Attempt review
Started on Tuesday, March 21, 2023, 6:01 PM
State Finished
Completed on Tuesday, March 21, 2023, 7:03 PM
Time taken 1 hour 2 mins
Grade 48.00 out of 60.00 (80%)
Question 1
Incorrect Mark 0.00 out of 1.00
Which of the following is NOT TRUE regarding systems thinking?
a. Moves from identifying patterns of behavior into a more in-depth observation of events or data.
b. Recognize that all things are interrelated.
c. Understand the changing structures or situation more fully.
d. Adopt a more circular and interconnectedness perspective.
e. None of the choices
f. Expands the choices available and create more satisfying, long-term solutions to chronic problems.
The correct answer is: Moves from identifying patterns of behavior into a more in-depth observation of events or data.
Question 2
Correct Mark 1.00 out of 1.00
All of the following defines hypothesis, EXCEPT:
a. Customer
b. Problem
c. Solution
d. Riskiest assumption/hypothesis
The correct answer is: Riskiest assumption/hypothesis
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Question 3
Correct Mark 1.00 out of 1.00
It is a methodology used to solve complex problems and find desirable solutions for
clients.
a. Empathy design
b. Creation of Persona
c. Problem statement
The correct answer is: Empathy design
Question 4
Correct Mark 1.00 out of 1.00
Problem statement is usually short which explain the problem your process improvement
project will address. This outline both the positive and negative points of the current
situation.
a. First statement is true. Second statement is false.
b. Both statements are false.
c. Both statements are true.
d. First statement is false. Second statement is true.
The correct answer is: First statement is true. Second statement is false.
Question 5
Correct Mark 1.00 out of 1.00
Design thinking must include the following, EXCEPT:
a. benefits of target-users
b. break-through of negative thinking
c. innovation of activities
d. human-centered design
The correct answer is: benefits of target-users
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Question 6
Correct Mark 1.00 out of 1.00
Systems thinking requires the following, EXCEPT:
a. mental models
b. perceptions
c. None of the choices
d. actual models
The correct answer is: actual models
Question 7
Incorrect Mark 0.00 out of 1.00
“Affordable, eco-friendly, and sustainable power supply” should be written under ____ of
HMW statement.
a. Subject
b. All of the choices
c. Outcome
d. Action
The correct answer is: Outcome
Question 8
Correct Mark 1.00 out of 1.00
All of the following are members of the Entrepreneurial team, EXCEPT:
a. Chief Executive Officer
b. Chief Financial Officer
c. Chief Marketing Officer
d. Chief Technology Officer
e. Chief Production Officer
The correct answer is: Chief Production Officer
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Question 9
Correct Mark 1.00 out of 1.00
Last phase of Build–Measure–Learn feedback loop:
a. Build
b. Product
c. Ideas
d. Data
e. Learn
f. Measure
The correct answer is: Learn
Question 10
Correct Mark 1.00 out of 1.00
When validating a problem statement among the target users in order to get a very
detailed view of the problem, questions that are answerable by yes/no is better that an
open-ended question?
a. False
b. True
The correct answer is: False
Question 11
Correct Mark 1.00 out of 1.00
True about Build–Measure–Learn feedback loop, EXCEPT:
a. It is a learning cycle which turn the ideas into products.
b. It offers one solution to the existing problem.
c. It measures customers' reactions and behaviors against built products.
d. It is a deciding factor whether to persevere or pivot the idea.
e. None of the choices
The correct answer is: It offers one solution to the existing problem.
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Question 12
Correct Mark 1.00 out of 1.00
Which of the following is NOT an example of low-fidelity MVP?
a. Blogs
b. Explainer videos
c. Piecemeal
d. Landing pages
e. Advertising campaigns
The correct answer is: Piecemeal
Question 13
Correct Mark 1.00 out of 1.00
It provides clearer picture of combined industry research and consumer research:
a. Competition close-up
b. Consumer close-up
c. Industry information
The correct answer is: Competition close-up
Question 14
Correct Mark 1.00 out of 1.00
The issue to be solved requires history, external factors, and social and cultural norms.
a. Mind maps
b. Trend maps
c. Impact maps
The correct answer is: Trend maps
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Question 15
Correct Mark 1.00 out of 1.00
Current sales volume in the area for the type of product or service you are about to sell are
part of:
a. Competition close-up
b. Consumer close-up
c. Industry information
The correct answer is: Consumer close-up
Question 16
Incorrect Mark 0.00 out of 1.00
Which of the following DOES NOT belong to the group?
a. Actor mapping
b. Timeline mapping
c. Ecocycle mapping
d. Trend mapping
e. Appreciative mapping
The correct answer is: Appreciative mapping
Question 17
Correct Mark 1.00 out of 1.00
It is a tool used to validate ideas through experimentation.
a. Pivot
b. Mind Map
c. MVP
d. Systems thinking
e. Javelin Board
f. Empathy Map
The correct answer is: Javelin Board
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Question 18
Correct Mark 1.00 out of 1.00
Accepting diverse perspectives and inter-relationships are part of which systems thinking
tools?
a. Generating system solutions
b. Final solution
c. Narrowing down
d. Problem recognition
The correct answer is: Generating system solutions
Question 19
Correct Mark 1.00 out of 1.00
World Café method is part of which tools that support systems thinking and practice?
a. None of the choices
b. Visual tools
c. Conversational tools
d. Both choices
The correct answer is: Conversational tools
Question 20
Correct Mark 1.00 out of 1.00
TRUE about problem statement:
a. It must outline the positive points of the current situation.
b. It must be clear and precise.
c. It should focus on the process of activities to be done.
d. All of the choices
e. The scope of the project must be broad.
The correct answer is: It must be clear and precise.
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Question 21
Correct Mark 1.00 out of 1.00
High-fidelity MVP is used for the following, EXCEPT:
a. Defining potential strategies for growth
b. Defining and optimizing a marketing strategy
c. Learning the demand in the product
d. Learning the practical value of the product
e. Testing the value proposition, communication channels, and CTA
The correct answer is: Learning the practical value of the product
Question 22
Correct Mark 1.00 out of 1.00
When determining whether or not the problem is worth solving should apply:
a. High-fidelity MVP
b. Low-fidelity MVP
c. Both choices
The correct answer is: Low-fidelity MVP
Question 23
Correct Mark 1.00 out of 1.00
Which of the following is an example of high-fidelity MVP?
a. Crowdfunding campaigns
b. Concierge
c. Forums
d. Idea spotting networks
e. Surveys/questionnaires
The correct answer is: Concierge
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Question 24
Incorrect Mark 0.00 out of 1.00
Which of the following is NOT part of an impact map?
a. Shareholders alignment
b. Strategies
c. None of the choices
d. Product innovation
e. Process development
f. Solution
The correct answer is: Shareholders alignment
Question 25
Correct Mark 1.00 out of 1.00
Systems thinking provide an opportunity to solve the presented problem with visible
success.
a. False
b. True
The correct answer is: False
Question 26
Correct Mark 1.00 out of 1.00
TRUE about lean startup methodology:
a. All of the choices
b. It eliminates expensive product launches and failures.
c. It reduces the market risks.
d. It manages the desired products of the customers immediately.
e. It prevents large amounts of initial project funding.
The correct answer is: All of the choices
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Question 27
Incorrect Mark 0.00 out of 1.00
Aims of problem statement, EXCEPT:
a. focus the process improvement activities.
b. steer the scope of the project.
c. create communication tools to help get buy-in the product.
d. None of the choices
The correct answer is: create communication tools to help get buy-in the product.
Question 28
Correct Mark 1.00 out of 1.00
True about Empathy Design, EXCEPT:
a. None of the choices
b. solution-focused
c. futuristic
d. problem-focused
e. action-oriented
The correct answer is: problem-focused
Question 29
Incorrect Mark 0.00 out of 1.00
Solutions to the customers need should utilize:
a. Low-fidelity MVP
b. High-fidelity MVP
c. Both choices
The correct answer is: Low-fidelity MVP
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Question 30
Correct Mark 1.00 out of 1.00
Systems thinking are used for:
a. Both choices
b. one-time problem
c. recurring problems
The correct answer is: recurring problems
Question 31
Incorrect Mark 0.00 out of 1.00
True about market research, EXCEPT:
a. It provides data for market plan.
b. It helps to identify the best geographic location.
c. It creates the identity of a specific product or service of the competitors.
d. It collects information necessary to solve the problem.
e. None of the choices
The correct answer is: It creates the identity of a specific product or service of the competitors.
Question 32
Incorrect Mark 0.00 out of 1.00
Problem statement is usually written in narrative form. It serves as a great communication
tool to help get buy-in the product and support from others.
a. First statement is false. Second statement is true.
b. Both statements are true.
c. Both statements are false.
d. First statement is true. Second statement is false.
The correct answer is: First statement is false. Second statement is true.
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Question 33
Correct Mark 1.00 out of 1.00
Market survey is necessary for:
a. Industry information
b. Competition close-up
c. Consumer close-up
The correct answer is: Consumer close-up
Question 34
Incorrect Mark 0.00 out of 1.00
Which of the following is CORRECT when formulating problem statement?
a. It must include the customers and stakeholder’s perspective.
b. All of the choices
c. It must have common themes and wording among the group.
d. Quantify the problem by indicating the time frame in which it can be solved.
e. It should focus on the previous and existing problems.
The correct answer is: It must have common themes and wording among the group.
Question 35
Incorrect Mark 0.00 out of 1.00
Lean startup methodology is designed to determine whether or not the product is
interesting among producers and prospective customers.
a. False
b. True
The correct answer is: False
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Question 36
Correct Mark 1.00 out of 1.00
True about the use of MVP, EXCEPT:
a. None of the choices
b. It allows testing of fundamental business hypotheses.
c. It helps the entrepreneurs begin the learning process as quickly as possible.
d. It collects the minimum amount of validated learning regarding customers with the least effort.
e. It allows new product version.
The correct answer is: It collects the minimum amount of validated learning regarding customers with the least effort.
Question 37
Incorrect Mark 0.00 out of 1.00
In lean startup methodology, which experimental question should be answered?
a. Can this product be built?
b. Should this product be built?
c. All of the choices
d. To whom this product be built?
The correct answer is: Should this product be built?
Question 38
Correct Mark 1.00 out of 1.00
MVP stands for:
a. Most Valuable Product
b. Most Visible Product
c. Maximum Viable Product
d. Minimum Viable Product
The correct answer is: Minimum Viable Product
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Question 39
Correct Mark 1.00 out of 1.00
Customer satisfaction should be placed under which part of the empathy map?
a. Feels
b. Says
c. Does
d. Thinks
The correct answer is: Feels
Question 40
Correct Mark 1.00 out of 1.00
Marketing strategy should utilize:
a. Low-fidelity MVP
b. Both choices
c. High-fidelity MVP
The correct answer is: High-fidelity MVP
Question 41
Correct Mark 1.00 out of 1.00
Which of the following can simplify complex system?
a. Outsourcing
b. All of the choices
c. None of the choices
d. Downsizing
e. Privatizing
The correct answer is: All of the choices
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Question 42
Correct Mark 1.00 out of 1.00
NOT TRUE about system:
a. a complex whole
b. an interconnecting network
c. set of things working independently as part of a mechanism
d. None of the choices
The correct answer is: set of things working independently as part of a mechanism
Question 43
Correct Mark 1.00 out of 1.00
Generally used to view multiple, non-linear relationships in a system.
a. Trend maps
b. Impact maps
c. Mind maps
The correct answer is: Mind maps
Question 44
Correct Mark 1.00 out of 1.00
System thinking approach must have a visible success when applied to the problem.
Problem identified must be one-time only.
a. Both statements are false.
b. First statement is true. Second statement is false.
c. Both statements are true.
d. First statement is false. Second statement is true.
The correct answer is: Both statements are false.
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Question 45
Correct Mark 1.00 out of 1.00
Latest trends and technological developments affecting the industry are part of:
a. Industry information
b. Competition close-up
c. Consumer close-up
The correct answer is: Industry information
Question 46
Correct Mark 1.00 out of 1.00
It is a structured course of correction designed to test the new fundamental hypothesis
about the product, its strategy, and the engine of growth.
a. Systems thinking
b. Empathy Map
c. Pivot
d. MVP
e. Javelin Board
f. Mind Map
The correct answer is: Pivot
Question 47
Correct Mark 1.00 out of 1.00
Systems thinking adopt a more circular and interconnectedness perspective. It merely
involves observation of events or data.
a. Both statements are true.
b. First statement is true. Second statement is false.
c. First statement is false. Second statement is true.
d. Both statements are false.
The correct answer is: First statement is true. Second statement is false.
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Question 48
Correct Mark 1.00 out of 1.00
“Create a sustainable energy source” should be written under ____ of HMW statement.
a. All of the choices
b. Subject
c. Outcome
d. Action
The correct answer is: Action
Question 49
Correct Mark 1.00 out of 1.00
Which of the following is NOT considered when writing a problem statement?
a. None of the choices
b. It should focus on existing problems.
c. Customer’s perspective must be included.
d. It must have time frame.
e. It should have common themes and wording.
f. It should be qualitative.
The correct answer is: It should be qualitative.
Question 50
Correct Mark 1.00 out of 1.00
Type of questioning that is NOT applied when formulating problem statement:
a. Where
b. When
c. Who
d. How
e. Why
The correct answer is: How
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Question 51
Correct Mark 1.00 out of 1.00
The question “Which brand is better?” can be written in which part of the empathy map?
a. Feels
b. Says
c. Thinks
d. Does
The correct answer is: Says
Question 52
Correct Mark 1.00 out of 1.00
Lean startup methodology adopts the following product development cycles, EXCEPT:
a. iterative product releases
b. validated learning
c. assumptions/hypothesis
d. business-hypothesis-driven experimentation
e. None of the choices
The correct answer is: assumptions/hypothesis
Question 53
Correct Mark 1.00 out of 1.00
Low-fidelity MVP is used for the following, EXCEPT:
a. Niche analysis – whether or not the problem is worth solving
b. Finding out the most effective solutions the customers are in need of
c. Acquiring early adapters and asserting a product on the market
d. Getting a better understanding of customer’s needs
The correct answer is: Acquiring early adapters and asserting a product on the market
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Question 54
Correct Mark 1.00 out of 1.00
Third phase of Build–Measure–Learn feedback loop:
a. Build
b. Learn
c. Measure
d. Data
e. Product
f. Ideas
The correct answer is: Product
Question 55
Correct Mark 1.00 out of 1.00
System thinking tool that can provide possible solutions:
a. Divergent thinking
b. Convergent thinking
c. Both choices
d. None of the choices
The correct answer is: Both choices
Question 56
Correct Mark 1.00 out of 1.00
Suggested solution must be identified in the problem statement.
a. False
b. True
The correct answer is: False
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Question 57
Correct Mark 1.00 out of 1.00
Comparison of all the products available in the market shall be placed under which part of
the empathy map?
a. Does
b. Feels
c. Says
d. Thinks
The correct answer is: Does
Question 58
Incorrect Mark 0.00 out of 1.00
The question “What is the advantages of this product as compared with the existing
product?” can be written in which part of the empathy map?
a. Does
b. Feels
c. Says
d. Thinks
The correct answer is: Thinks
Question 59
Correct Mark 1.00 out of 1.00
Validation of problem statement requires the target users to think possible future solution.
a. False
b. True
The correct answer is: False
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Question 60
Correct Mark 1.00 out of 1.00
Build–Measure–Learn loop emphasizes ____ as a critical ingredient to product development.
a. process
b. strategies
c. speed
d. approaches
e. methods
The correct answer is: speed
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Home / My Courses / BATANGAS / AY 2022 - 2023 / COLLEGE - 2ND SEMESTER / ENTREP - Entrepreneurship (BSMLS 2-E) / MAJOR EXAMS / MIDTERM EXAM
Started on Thursday, April 20, 2023, 6:00 PM
State Finished
Completed on Thursday, April 20, 2023, 7:59 PM
Time taken 1 hour 59 mins
Grade 88.00 out of 100.00
Question 1
Correct Mark 1.00 out of 1.00
Business Model Canvas (BMC) was initially proposed by _____.
a. Alexander Cowan
b. Alexander Osterwalder
c. Michael Lewis
d. Peter Drucker
The correct answer is: Alexander Osterwalder
Question 2
Correct Mark 1.00 out of 1.00
Which of the following is NOT TRUE regarding the advantages of customer segmentation
(groupings) according to their needs?
a. to identify the most and least profitable customers.
b. to improve products to meet customer needs.
c. to focus your marketing on those customers who will not most likely to buy your products or services.
d. to avoid the markets which will not be profitable for you.
e. to improve customer service.
The correct answer is: to focus your marketing on those customers who will not most likely to buy your products or
services.
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Question 3
Correct Mark 1.00 out of 1.00
Twitter (who sells or license the data of its users to third parties) is an example of which
type of business model?
a. Data licensing / Data Selling
b. Subscription
c. Aggregator
d. Freemium
The correct answer is: Data licensing / Data Selling
Question 4
Correct Mark 1.00 out of 1.00
Apparel companies like Penshoppe and Guess which offers both online and offline selling
are examples of which type of business model?
a. Ecommerce
b. Bricks-And-Clicks
c. Distributor
d. Retailer
The correct answer is: Bricks-And-Clicks
Question 5
Incorrect Mark 0.00 out of 1.00
The company is seeking customers experiences in the form of comments/suggestions in
order to improve their product/services. This is an example of which type of customer
relationships?
a. Automated Services
b. Communities
c. Self-service
d. Co-creation
The correct answer is: Co-creation
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Question 6
Correct Mark 1.00 out of 1.00
The Uber and Airbnb whose earnings are coming from commissions are examples of
which type of business model?
a. Aggregator
b. Brick-And-Mortar
c. Franchise
d. Retailer
The correct answer is: Aggregator
Question 7
Correct Mark 1.00 out of 1.00
The question “How can we integrate relationship into our business in terms of cost and
format?” should be written under which element of BMC?
a. Channels
b. Value Proposition
c. Customer Segmentation
d. Customer Relationships
The correct answer is: Customer Relationships
Question 8
Correct Mark 1.00 out of 1.00
All of the following are considered types of revenue streams, EXCEPT:
a. subscription fees.
b. usage fee.
c. licensing.
d. advertising.
e. patent fee.
The correct answer is: patent fee.
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Question 9
Correct Mark 1.00 out of 1.00
The question “How can we integrate channels with our customers’ routines?” should be
written under which element of BMC?
a. Value Proposition
b. Customer Relationships
c. Customer Segmentation
d. Channels
The correct answer is: Channels
Question 10
Correct Mark 1.00 out of 1.00
The question “What key activities do our value propositions require?” should be written
under which element of BMC?
a. Revenue Streams
b. Key Partners
c. Key Activities
d. Key Resources
e. Costs Structure
The correct answer is: Key Activities
Question 11
Correct Mark 1.00 out of 1.00
The question “What resources are the most important in the customer relationships?”
should be written under which element of BMC?
a. Costs Structure
b. Key Activities
c. Key Partners
d. Key Resources
e. Revenue Streams
The correct answer is: Key Resources
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Question 12
Correct Mark 1.00 out of 1.00
General Electric (GE) is an example of which type of business model?
a. Distributor
b. Manufacturer
c. Retailer
d. Franchise
The correct answer is: Manufacturer
Question 13
Correct Mark 1.00 out of 1.00
The question “Who are our key suppliers?” should be written under which element of BMC?
a. Costs Structure
b. Key Activities
c. Key Partners
d. Revenue Streams
e. Key Resources
The correct answer is: Key Partners
Question 14
Incorrect Mark 0.00 out of 1.00
Which of the following is a component of revenue model which elaborates the financial
and how the business makes money?
a. Revenue Streams
b. Cost Structure
c. Both choices
d. None of the choices
The correct answer is: Both choices
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Question 15
Incorrect Mark 0.00 out of 1.00
The question “How do we interact with the customer through their journey?” should be
written under which element of BMC?
a. Channels
b. Value Proposition
c. Customer Segmentation
d. Customer Relationships
The correct answer is: Customer Relationships
Question 16
Correct Mark 1.00 out of 1.00
Food Panda is a type of E-commerce business with no product or inventory, but only
physical store is an example of which type of business model?
a. Dropshipping
b. Crowdsourcing
c. Agency-Based
d. Affiliate Marketing
e. Network Marketing
The correct answer is: Dropshipping
Question 17
Correct Mark 1.00 out of 1.00
The question “What activities are the most important in the revenue streams?” should be
written under which element of BMC?
a. Revenue Streams
b. Key Partners
c. Costs Structure
d. Key Activities
e. Key Resources
The correct answer is: Key Activities
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Question 18
Correct Mark 1.00 out of 1.00
Which of the following is NOT an example of online marketplace?
a. Lazada
b. Alibaba
c. Shopee
d. None of the choices
e. Amazon
The correct answer is: None of the choices
Question 19
Incorrect Mark 0.00 out of 1.00
Youtube’s free plan (which comes with advertisements) is a great marketing tool and also
a cost-effective way to scale up and attract new users is an example of which type of
business model?
a. Franchise
b. Freemium
c. Subscription
d. Premium
The correct answer is: Freemium
Question 20
Correct Mark 1.00 out of 1.00
Business Model Canvas (BMC) is a visual chart which describe the following elements,
EXCEPT:
a. finances.
b. customers.
c. firms or product's value proposition.
d. infrastructure.
e. potential trade-offs.
The correct answer is: potential trade-offs.
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Question 21
Correct Mark 1.00 out of 1.00
Product customization is a characteristic of:
a. customer segmentation.
b. customer relationships.
c. value propositions.
d. channels.
The correct answer is: value propositions.
Question 22
Correct Mark 1.00 out of 1.00
The question “For what value are our customers willing to pay?” should be written under
which element of BMC?
a. Key Activities
b. Costs Structure
c. Key Partners
d. Revenue Streams
e. Key Resources
The correct answer is: Revenue Streams
Question 23
Correct Mark 1.00 out of 1.00
In BMC, all of the following focuses on the internal (business) factors, EXCEPT:
a. key resources.
b. channels.
c. key partners.
d. key activities.
The correct answer is: channels.
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Question 24
Correct Mark 1.00 out of 1.00
The question “How do we help customers evaluate our organization’s value proposition?”
should be written under which element of BMC?
a. Customer Relationships
b. Customer Segmentation
c. Channels
d. Value Proposition
The correct answer is: Channels
Question 25
Correct Mark 1.00 out of 1.00
In order to reduce the risk in business operations, key partner relationships must be
created. Once key resources have been listed, key activities for each of them must be
identified which addresses the question "Why should we partner with you?”.
a. Both statements are false.
b. First statement is false. Second statement is true.
c. Both statements are true.
d. First statement is true. Second statement is false.
The correct answer is: First statement is true. Second statement is false.
Question 26
Correct Mark 1.00 out of 1.00
The question “What activities are the most important in the distribution channels?” should
be written under which element of BMC?
a. Key Resources
b. Key Activities
c. Costs Structure
d. Revenue Streams
e. Key Partners
The correct answer is: Key Activities
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Question 27
Correct Mark 1.00 out of 1.00
McDonalds and Pizza Hut are examples of which type of business model?
a. Retailer
b. Distributor
c. Ecommerce
d. Franchise
The correct answer is: Franchise
Question 28
Correct Mark 1.00 out of 1.00
The company offers personalized services based on their individual customers according
to his/her preferences. This is an example of which type of customer relationships?
a. Personal Assistance
b. Co-creation
c. Automated Services
d. Dedicated Personal Assistance
The correct answer is: Automated Services
Question 29
Incorrect Mark 0.00 out of 1.00
Value proposition is included in the _____ of the entire business model.
a. pivot point
b. business strategy
c. All of the choices
d. brand strategy
The correct answer is: All of the choices
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Question 30
Correct Mark 1.00 out of 1.00
The question “What resources are the most important in the distribution channels?” should
be written under which element of BMC?
a. Costs Structure
b. Key Activities
c. Key Partners
d. Revenue Streams
e. Key Resources
The correct answer is: Key Resources
Question 31
Correct Mark 1.00 out of 1.00
In business, identification of key resources is integral to which of the following?
a. Human
b. Intellectual
c. Financial
d. Value Proposition
e. All of the choices
The correct answer is: All of the choices
Question 32
Correct Mark 1.00 out of 1.00
The question “What activities are the most important in the customer relationships?”
should be written under which element of BMC?
a. Revenue Streams
b. Costs Structure
c. Key Activities
d. Key Partners
e. Key Resources
The correct answer is: Key Activities
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Question 33
Correct Mark 1.00 out of 1.00
The question “For whom are we creating value?” should be written under which element of
BMC?
a. Channels
b. Customer Segmentation
c. Value Proposition
d. Customer Relationships
The correct answer is: Customer Segmentation
Question 34
Correct Mark 1.00 out of 1.00
The Netflix which keeps the customers over a long-term contract and get recurring
revenues from them through repeat purchases is an example of which type of business
model?
a. Subscription
b. Nickel-And-Dime
c. Distributor
d. Freemium
The correct answer is: Subscription
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Question 35
Correct Mark 1.00 out of 1.00
eBay is a business model which involves the listing of an offering by the seller and the
buyers making repeated bids to buy that offering while fully aware of other bids by other
buyers. This is an example of _____.
a. Blockchain
b. On-Demand
c. Auction-Based
d. Crowdsourcing
e. Reverse-Auction-Based
The correct answer is: Auction-Based
Question 36
Correct Mark 1.00 out of 1.00
The question “How would our customer prefer to pay?” should be written under which
element of BMC?
a. Revenue Streams
b. Costs Structure
c. Key Partners
d. Key Activities
e. Key Resources
The correct answer is: Revenue Streams
Question 37
Incorrect Mark 0.00 out of 1.00
Which of the following is an example of customer segmentation?
a. Networking
b. Multi-sided platform
c. Communities
d. Existing platforms
The correct answer is: Multi-sided platform
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Question 38
Correct Mark 1.00 out of 1.00
The question “What core value do we deliver to the customer?” should be written under
which element of BMC?
a. Customer Relationships
b. Customer Segmentation
c. Value Proposition
d. Channels
The correct answer is: Value Proposition
Question 39
Correct Mark 1.00 out of 1.00
This type of business model builds its business around by promoting the partner’s product
and directs all its efforts to convince its followers and users to buy the same
product/service.
a. Crowdsourcing
b. Network Marketing
c. Agency-Based
d. Affiliate Marketing
e. Dropshipping
The correct answer is: Affiliate Marketing
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Question 40
Correct Mark 1.00 out of 1.00
Which of the following DOES NOT elaborate the business operating model?
a. Key Partners
b. Key Activities
c. Customer Relationships
d. Value Proposition
e. Channels
f. Key Resources
The correct answer is: Value Proposition
Question 41
Incorrect Mark 0.00 out of 1.00
The advertisement business model like Youtube is evolving due to:
a. increasing demand for free products and services on the internet.
b. All of the choices
c. increasing number of sellers which provide same product/service at competitive prices.
d. increasing number of customers who are willing to pay.
The correct answer is: increasing demand for free products and services on the internet.
Question 42
Correct Mark 1.00 out of 1.00
The question “Who are our key partners?” should be written under which element of BMC?
a. Revenue Streams
b. Key Activities
c. Key Resources
d. Key Partners
e. Costs Structure
The correct answer is: Key Partners
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Question 43
Correct Mark 1.00 out of 1.00
Which of the following can be included in customer segmentation?
a. Channel preferences
b. Customer needs
c. All of the choices
d. Interest in specific product features
e. Customer profitability
The correct answer is: All of the choices
Question 44
Correct Mark 1.00 out of 1.00
The question “What are the most important costs inherent in our business model?” should
be written under which element of BMC?
a. Key Activities
b. Costs Structure
c. Key Partners
d. Revenue Streams
e. Key Resources
The correct answer is: Costs Structure
Question 45
Correct Mark 1.00 out of 1.00
Those products that are protected by intellectual property rights can produce which type of
revenue streams?
a. Licensing
b. Leasing
c. Usage fee
d. Subscription fees
The correct answer is: Licensing
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Question 46
Correct Mark 1.00 out of 1.00
The question “How are these propositions promoted, sold and delivered?” should be
written under which element of BMC?
a. Value Proposition
b. Customer Relationships
c. Channels
d. Customer Segmentation
The correct answer is: Channels
Question 47
Correct Mark 1.00 out of 1.00
Overtime payment among employees are examples of which of the following cost
structures?
a. Economies of scale
b. Variable costs
c. Economies of scope
d. Fixed costs
The correct answer is: Variable costs
Question 48
Incorrect Mark 0.00 out of 1.00
The question “What do customer think? See? Feel? Do?” should be written under which
element of BMC?
a. Value Proposition
b. Channels
c. Customer Relationships
d. Customer Segmentation
The correct answer is: Customer Segmentation
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Question 49
Correct Mark 1.00 out of 1.00
Identifying the key activities will allow you to see the most important value within your
product or service which the customer buys. An efficient supply chain will reduce the costs
and ensure that all deliveries are timely.
a. Both statements are false.
b. Both statements are true.
c. First statement is true. Second statement is false.
d. First statement is false. Second statement is true.
The correct answer is: Both statements are true.
Question 50
Correct Mark 1.00 out of 1.00
Which of the following is NOT considered as fixed pricing?
a. Customer segment dependent
b. Discount (Promo)
c. Volume dependent
d. Product feature dependent
e. Price list
The correct answer is: Discount (Promo)
Question 51
Correct Mark 1.00 out of 1.00
Communities is an example of:
a. channels.
b. key partners.
c. customer relationships.
d. customer segmentation.
The correct answer is: customer relationships.
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Question 52
Incorrect Mark 0.00 out of 1.00
The Business Model Canvas (BMC) is a strategic management and entrepreneurial tool. It
describes how to organize a company around its functional organizations.
a. First statement is true. Second statement is false.
b. Both statements are false.
c. First statement is false. Second statement is true.
d. Both statements are true.
The correct answer is: Both statements are true.
Question 53
Correct Mark 1.00 out of 1.00
Motivating factors like risk reduction and uncertainty and optimizing the economy are very
important in:
a. cost structure.
b. key resources.
c. key partners.
d. revenue streams.
e. key activities.
The correct answer is: key partners.
Question 54
Correct Mark 1.00 out of 1.00
The question “What key resources do our value propositions require?” should be written
under which element of BMC?
a. Key Resources
b. Key Activities
c. Revenue Streams
d. Costs Structure
e. Key Partners
The correct answer is: Key Resources
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Question 55
Correct Mark 1.00 out of 1.00
The question “How can relationship be integrated with the rest of our business model?”
should be written under which element of BMC?
a. Value Proposition
b. Customer Relationships
c. Channels
d. Customer Segmentation
The correct answer is: Customer Relationships
Question 56
Correct Mark 1.00 out of 1.00
The question “Why do customers buy or use this product?” should be written under which
element of BMC?
a. Customer Relationships
b. Value Proposition
c. Channels
d. Customer Segmentation
The correct answer is: Value Proposition
Question 57
Correct Mark 1.00 out of 1.00
Product design is a characteristic of:
a. key activities.
b. key partners.
c. key resources.
d. value propositions.
The correct answer is: value propositions.
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Question 58
Correct Mark 1.00 out of 1.00
It is where the company’s product offer intersects with the customer’s desires.
a. Channels
b. Value Proposition
c. Customer Segmentation
d. Customer Relationships
The correct answer is: Value Proposition
Question 59
Correct Mark 1.00 out of 1.00
A sales representative was assigned to handle all the needs and questions of a special set
of clients. This is an example of which type of customer relationships?
a. Dedicated Personal Assistance
b. Co-creation
c. Automated Services
d. Personal Assistance
The correct answer is: Dedicated Personal Assistance
Question 60
Correct Mark 1.00 out of 1.00
The question “Which key resources are we acquiring from our partners?” should be written
under which element of BMC?
a. Key Partners
b. Key Resources
c. Revenue Streams
d. Key Activities
e. Costs Structure
The correct answer is: Key Partners
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Question 61
Correct Mark 1.00 out of 1.00
The question “How do we raise awareness about our company’s products and services?”
should be written under which element of BMC?
a. Customer Relationships
b. Customer Segmentation
c. Value Proposition
d. Channels
The correct answer is: Channels
Question 62
Correct Mark 1.00 out of 1.00
The question “For what and how do our customers recently pay?” should be written under
which element of BMC?
a. Key Partners
b. Key Resources
c. Key Activities
d. Revenue Streams
e. Costs Structure
The correct answer is: Revenue Streams
Question 63
Correct Mark 1.00 out of 1.00
The question “Which key activities do our partners perform?” should be written under
which element of BMC?
a. Costs Structure
b. Key Partners
c. Key Resources
d. Key Activities
e. Revenue Streams
The correct answer is: Key Partners
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Question 64
Correct Mark 1.00 out of 1.00
The question “What type of relationship does each of our target customer expect us to
establish?” should be written under which element of BMC?
a. Channels
b. Customer Segmentation
c. Customer Relationships
d. Value Proposition
The correct answer is: Customer Relationships
Question 65
Correct Mark 1.00 out of 1.00
The question “Which key activities are the most expensive??” should be written under
which element of BMC?
a. Costs Structure
b. Key Partners
c. Key Resources
d. Revenue Streams
e. Key Activities
The correct answer is: Costs Structure
Question 66
Correct Mark 1.00 out of 1.00
Business Model Canvas (BMC) allows an entrepreneur to _____ the business model.
a. describe
b. pivot
c. All of the choices
d. design
e. challenge
f. invent
The correct answer is: All of the choices
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Question 67
Correct Mark 1.00 out of 1.00
Imitated products like shoes, bags, wallets, perfume, etc., which are found in Lazada and
Shopee are examples of:
a. cost-driven.
b. Both choices
c. value-driven.
The correct answer is: cost-driven.
Question 68
Correct Mark 1.00 out of 1.00
In BMC, all of the following focuses on the external (customer) factors, EXCEPT:
a. key partners.
b. customer segments.
c. channels.
d. customer relationships.
The correct answer is: key partners.
Question 69
Incorrect Mark 0.00 out of 1.00
Risk reduction is a characteristic of:
a. customer relationships.
b. key Activities.
c. distributing channels.
d. value propositions.
The correct answer is: value propositions.
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Question 70
Correct Mark 1.00 out of 1.00
The question “Who are our most important customers?” should be written under which
element of BMC?
a. Customer Segmentation
b. Value Proposition
c. Customer Relationships
d. Channels
The correct answer is: Customer Segmentation
Question 71
Correct Mark 1.00 out of 1.00
Networking is an example of:
a. channels.
b. customer relationships.
c. customer segmentation.
d. key Activities.
The correct answer is: key Activities.
Question 72
Correct Mark 1.00 out of 1.00
Which of the following is an example of business-to-business (B2B) customer segment?
a. All of the choices
b. Buying patterns
c. Technology
d. Industry sector (public or private)
e. Patterns of behavior (loyalty and attitude to risk)
The correct answer is: All of the choices
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Question 73
Incorrect Mark 0.00 out of 1.00
A business model is how a company creates value for itself while delivering products or
services for its customers. It is the most effective way to think how all the parts are being
organized.
a. Both statements are true.
b. First statement is false. Second statement is true.
c. First statement is true. Second statement is false.
d. Both statements are false.
The correct answer is: First statement is true. Second statement is false.
Question 74
Correct Mark 1.00 out of 1.00
Amazon is an example of which type of business model?
a. Brick-And-Mortar
b. Distributor
c. Ecommerce
d. Retailer
The correct answer is: Retailer
Question 75
Correct Mark 1.00 out of 1.00
Unlike in retail price, wholesale price is much cheaper because it applies _____.
a. fixed costs
b. variable costs
c. economies of scale
d. economies of scope
The correct answer is: economies of scale
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Question 76
Correct Mark 1.00 out of 1.00
Which of the following revenue streams is NOT COMMONLY used among online products?
a. Subscription fees
b. Licensing
c. Advertising
d. Leasing
e. Usage fee
The correct answer is: Leasing
Question 77
Correct Mark 1.00 out of 1.00
In value proposition canvas, which of the following DOES NOT belong to the group?
a. Products & Services
b. Gain creators
c. Customer Job/s
d. Pain relievers
The correct answer is: Customer Job/s
Question 78
Correct Mark 1.00 out of 1.00
The question “What resources are the most important in the revenue stream?” should be
written under which element of BMC?
a. Revenue Streams
b. Costs Structure
c. Key Activities
d. Key Resources
e. Key Partners
The correct answer is: Key Resources
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Question 79
Correct Mark 1.00 out of 1.00
The question “Which key resources are the most expensive??” should be written under
which element of BMC?
a. Revenue Streams
b. Costs Structure
c. Key Partners
d. Key Activities
e. Key Resources
The correct answer is: Costs Structure
Question 80
Correct Mark 1.00 out of 1.00
Which of the following is NOT an example of business-to-customer (B2C) customer
segment?
a. Profiles
b. Location
c. None of the choices
d. Buying behavior
The correct answer is: None of the choices
Question 81
Correct Mark 1.00 out of 1.00
Which of the following is NOT considered as dynamic pricing?
a. Discount (Sale)
b. Negotiation
c. Bargaining
d. Yield management
e. Real-time-Market
The correct answer is: Discount (Sale)
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Question 82
Correct Mark 1.00 out of 1.00
Which of the following DOES NOT contain questions pertaining to distribution channels,
customer relationships and revenue streams?
a. Key Resources
b. None of the choices
c. Key Partners
d. Key Activities
The correct answer is: Key Partners
Question 83
Correct Mark 1.00 out of 1.00
This type of business model handles the non-core business activities of the partner
company like advertising, digital marketing, PR, ORM, etc.
a. Affiliate Marketing
b. Dropshipping
c. Crowdsourcing
d. Agency-Based
e. Network Marketing
The correct answer is: Agency-Based
Question 84
Correct Mark 1.00 out of 1.00
The question “How much does each revenue stream contribute to the overall revenues?”
should be written under which element of BMC?
a. Key Partners
b. Key Resources
c. Key Activities
d. Revenue Streams
e. Costs Structure
The correct answer is: Revenue Streams
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Question 85
Correct Mark 1.00 out of 1.00
Which of the following is an example of customer relationships?
a. Affiliates
b. Diversified
c. Customization
d. Self-service
The correct answer is: Self-service
Question 86
Correct Mark 1.00 out of 1.00
The question “Through which channels do our customers want to be reached?” should be
written under which element of BMC?
a. Channels
b. Value Proposition
c. Customer Relationships
d. Customer Segmentation
The correct answer is: Channels
Question 87
Correct Mark 1.00 out of 1.00
Mass market is an example of:
a. distributing channels.
b. customer segmentation.
c. key activities.
d. value propositions.
The correct answer is: customer segmentation.
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Question 88
Correct Mark 1.00 out of 1.00
The newly opened medical company decided to sell some of their stocks to those
prospective shareholders. This is an example of which revenue streams?
a. Advertising
b. Subscription fees
c. Usage fee
d. Leasing
e. Asset sale
The correct answer is: Asset sale
Question 89
Correct Mark 1.00 out of 1.00
Blogs and trade shows are examples of:
a. customer relationships.
b. key activities.
c. channels.
d. key Resources.
The correct answer is: channels.
Question 90
Correct Mark 1.00 out of 1.00
Wikipedia and reCAPTCHA which involves the users to contribute to the value provided are
examples of which type of business model?
a. Crowdsourcing
b. Affiliate Marketing
c. Agency-Based
d. Network Marketing
e. Dropshipping
The correct answer is: Crowdsourcing
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Question 91
Correct Mark 1.00 out of 1.00
An effective channel will distribute the company’s value proposition in a fast, efficient and
cost-effective way. An organization can reach its clients either through its own channels,
partner channels or a combination of both.
a. First statement is false. Second statement is true.
b. Both statements are false.
c. Both statements are true.
d. First statement is true. Second statement is false.
The correct answer is: Both statements are true.
Question 92
Correct Mark 1.00 out of 1.00
Customer segmentation is basically the grouping together of all the customers based on
their shared similarities and differences with respect to any dimensions of your
business. The only best way to segment your customers is to define first what is your
objective for the segmentation.
a. Both statements are true.
b. First statement is false. Second statement is true.
c. First statement is true. Second statement is false.
d. Both statements are false.
The correct answer is: First statement is false. Second statement is true.
Question 93
Correct Mark 1.00 out of 1.00
Patents and copyrights are types of:
a. key resources.
b. value propositions.
c. key activities.
d. revenue streams.
The correct answer is: key resources.
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Question 94
Correct Mark 1.00 out of 1.00
The questions you need to ask regarding key resources like distribution channels,
customer relationships and revenue streams are similar with those found in key partners.
Key resources are considered assets of the company.
a. Both statements are false.
b. Both statements are true.
c. First statement is true. Second statement is false.
d. First statement is false. Second statement is true.
The correct answer is: First statement is false. Second statement is true.
Question 95
Correct Mark 1.00 out of 1.00
The question “Which customer needs are we satisfying?” should be written under which
element of BMC?
a. Customer Relationships
b. Value Proposition
c. Customer Segmentation
d. Channels
The correct answer is: Value Proposition
Question 96
Incorrect Mark 0.00 out of 1.00
Search Engine Marketing (SEM) is an example of:
a. revenue streams.
b. channels.
c. key activities.
d. key partners.
The correct answer is: channels.
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Question 97
Correct Mark 1.00 out of 1.00
The question “Which one of our customer’s problems are we helping to solve?” should be
written under which element of BMC?
a. Value Proposition
b. Customer Segmentation
c. Channels
d. Customer Relationships
The correct answer is: Value Proposition
Question 98
Correct Mark 1.00 out of 1.00
The question “How do we provide post-purchase customer support?” should be written
under which element of BMC?
a. Value Proposition
b. Customer Relationships
c. Customer Segmentation
d. Channels
The correct answer is: Channels
Question 99
Correct Mark 1.00 out of 1.00
The question “What bundles of products and services are we offering to each customer
segment?” should be written under which element of BMC?
a. Channels
b. Value Proposition
c. Customer Relationships
d. Customer Segmentation
The correct answer is: Value Proposition
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Question 100
Correct Mark 1.00 out of 1.00
Lazada and Shopee are both selling their products by creating a webstore on the internet.
These are examples of which type of business model?
a. Distributor
b. Franchise
c. Ecommerce
d. Retailer
The correct answer is: Ecommerce
◄ PRELIMINARY EXAM
Jump to...
SEMI FINAL EXAM ►
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Started on Tuesday, May 23, 2023, 6:00 PM
State Finished
Completed on Tuesday, May 23, 2023, 7:29 PM
Time taken 1 hour 28 mins
Grade 45.00 out of 75.00 (60%)
Question 1
Correct Mark 1.00 out of 1.00
Advantages of prototypes:
a. It makes it possible to test the performance of various materials.
b. It enables to test and refine the functionality of the design.
c. All of the choices
d. It helps you to describe your product more effectively with your team.
e. It will encourage others to take your product more seriously.
The correct answer is: All of the choices
Question 2
Correct Mark 1.00 out of 1.00
There is a required or specific material when creating a prototype.
a. False
b. True
The correct answer is: False
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Question 3
Correct Mark 1.00 out of 1.00
It is a toolbox that allows you to create a mobile app for free without needing to code.
a. Marvel App
b. AppSheet
c. Oneweb.tech
d. Just In Mind
e. Miro
The correct answer is: AppSheet
Question 4
Incorrect Mark 0.00 out of 1.00
Building an MVP requires:
a. assessment.
b. experimentation.
c. validation.
d. All of the choices
The correct answer is: experimentation.
Question 5
Correct Mark 1.00 out of 1.00
When creating a prototype, the entrepreneur must consider other alternatives when
choosing the materials.
a. False
b. True
The correct answer is: True
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Question 6
Correct Mark 1.00 out of 1.00
From the list of accredited companies, Mr. Dee Moon is comparing which company is
offering the best services when it comes to online delivery. This stage of customer journey
is called:
a. review.
b. purchase.
c. inquiry.
d. installation.
e. comparison.
f. investigate.
The correct answer is: comparison.
Question 7
Correct Mark 1.00 out of 1.00
Mary Kitt wants to create two folders full of customer journey maps. The BEST toolbox to
used is:
a. Uxpressia.
b. Visual paradigm.
c. All of the choices
d. Behavioral response.
The correct answer is: Uxpressia.
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Question 8
Incorrect Mark 0.00 out of 1.00
Based on the feedbacks received, majority of the customers buy the same product for the
nth times. This stage of customer journey is called:
a. installation.
b. review.
c. inquiry.
d. purchase.
e. comparison.
The correct answer is: installation.
Question 9
Incorrect Mark 0.00 out of 1.00
All of the following are possible means for product inquiry, EXCEPT:
a. word of mouth.
b. advertisement.
c. subscription.
d. social media.
e. None of the choices
The correct answer is: subscription.
Question 10
Incorrect Mark 0.00 out of 1.00
It determines how easy or difficult it is to interact with the user interface elements.
a. User Experience design
b. Both choices
c. User Interface design
The correct answer is: User Experience design
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Question 11
Correct Mark 1.00 out of 1.00
When hiring a professional that will help build your MVP, which of the following should be
considered?
a. All of the choices
b. Budget allocation
c. Services offered
d. Complexity and materials to be used
The correct answer is: All of the choices
Question 12
Correct Mark 1.00 out of 1.00
Which of the following details should be included in the MVP?
a. Color
b. Instructions
c. Packaging
d. All of the choices
e. Graphics
The correct answer is: All of the choices
Question 13
Correct Mark 1.00 out of 1.00
When building a prototype which materials can be used?
a. All of the choices
b. Plastic
c. Chemicals
d. Metal
e. Textiles
The correct answer is: All of the choices
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Question 14
Incorrect Mark 0.00 out of 1.00
They make sure the visual language they choose fits the class of application they are
writing. A
a. Both choices
b. UX designers
c. UI designers
The correct answer is: UI designers
Question 15
Incorrect Mark 0.00 out of 1.00
For the user experience designer, customer journey map helps to identify all of the
following gaps, EXCEPT:
a. gaps between channels (where the experience of going from social media to the website could be better).
b. gaps between departments (where the user might get frustrated).
c. gaps between devices (when a user moves from one device to another).
d. None of the choices
e. gaps between services (when the user compares one service to another).
The correct answer is: gaps between services (when the user compares one service to another).
Question 16
Correct Mark 1.00 out of 1.00
They determine the structure of the interface.
a. UI designers
b. UX designers
c. Both choices
The correct answer is: UX designers
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Question 17
Incorrect Mark 0.00 out of 1.00
It includes user expectations.
a. Both choices
b. User Experience design
c. User Interface design
The correct answer is: Both choices
Question 18
Correct Mark 1.00 out of 1.00
Key assumptions in concept poster can be describe in terms of:
a. desirability.
b. feasibility.
c. viability.
d. All of the choices
The correct answer is: All of the choices
Question 19
Correct Mark 1.00 out of 1.00
Which of the following professionals can help an entrepreneur when creating an MVP?
a. Engineers
b. Machinist
c. All of the choices
d. Designers
e. Handyman
The correct answer is: All of the choices
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Question 20
Correct Mark 1.00 out of 1.00
Validation of MVP is done in order to:
a. understand which features create value.
b. understand which materials is best suited.
c. All of the choices
d. understand the functionality of the design.
The correct answer is: understand which features create value.
Question 21
Correct Mark 1.00 out of 1.00
It is an online whiteboard app that allows you to build templates of samples and navigation
steps for your website or mobile app prototype.
a. Just In Mind
b. Oneweb.tech
c. AppSheet
d. Marvel App
e. Miro
The correct answer is: Miro
Question 22
Incorrect Mark 0.00 out of 1.00
It is used to note down problems, ideas, projects on the roadmap or anything else that is
relevant in every step of the customer journey.
a. Lines
b. Channels
c. Text lanes
d. Arrows
The correct answer is: Text lanes
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Question 23
Incorrect Mark 0.00 out of 1.00
Graphic designers are concerned with application’s interface which include the following,
EXCEPT:
a. match with the personality of the app.
b. match with the purpose.
c. match with the needs of the users.
d. visually-stimulating.
e. attractiveness.
The correct answer is: match with the needs of the users.
Question 24
Correct Mark 1.00 out of 1.00
Which of the following BEST describe the customer journey map?
a. It helps your customer understand what drives your organization.
b. It helps the customer understand the product.
c. It helps you understand what drives your customer.
d. It helps you explain your product to your customer.
The correct answer is: It helps you understand what drives your customer.
Question 25
Correct Mark 1.00 out of 1.00
It is used to add rich information and highlight the most important facts of each step of the
customer journey.
a. Channels of communications
b. Images
c. Emotions
d. Text descriptions
The correct answer is: Text descriptions
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Question 26
Correct Mark 1.00 out of 1.00
In customer journey map which of the following can change customer behavior when
buying products or services?
a. Mobile
b. All of the choices
c. Social Media
d. Web
The correct answer is: All of the choices
Question 27
Incorrect Mark 0.00 out of 1.00
They decide how the interface efficiently serves up the information user’s need.
a. UX team
b. UI team
c. Both choices
The correct answer is: UX team
Question 28
Incorrect Mark 0.00 out of 1.00
They determine how the user interface operates.
a. UX designers
b. UI designers
c. Both choices
The correct answer is: UX designers
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Question 29
Incorrect Mark 0.00 out of 1.00
In the stages of customer journey, it is vital in building customer loyalty and brand
retention.
a. Purchase
b. Comparison
c. Inquiry
d. Review
e. Installation
The correct answer is: Installation
Question 30
Correct Mark 1.00 out of 1.00
Customer journey map should contain _____ evidence.
a. Both choices
b. anecdotal
c. None of the choices
d. statistical
The correct answer is: Both choices
Question 31
Incorrect Mark 0.00 out of 1.00
Customer journey map provides a clear picture of customer relationship and what they are
trying to achieve. It also shows how enhanced customer service can differentiate the
organization’s digital experience.
a. First statement is false. Second statement is true.
b. Both statements are true.
c. Both statements are false.
d. First statement is true. Second statement is false.
The correct answer is: First statement is false. Second statement is true.
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Question 32
Correct Mark 1.00 out of 1.00
They want their interface designs to stand out and be memorable.
a. Both choices
b. UI designers
c. UX designers
The correct answer is: UI designers
Question 33
Correct Mark 1.00 out of 1.00
Customer journey maps consider which of the following?
a. User’s feelings
b. User’s questions
c. All of the choices
d. User’s needs
The correct answer is: All of the choices
Question 34
Incorrect Mark 0.00 out of 1.00
They assure that the final user interface looks good as it can, while also operating efficiently
and intuitively.
a. UX designers
b. Both choices
c. UI designers
The correct answer is: Both choices
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Question 35
Incorrect Mark 0.00 out of 1.00
Ms. Dely Cado is interested to buy Air Fryer thru online market. Currently, she is searching
those brands that offers this product. This stage of customer journey is called:
a. purchase.
b. comparison.
c. investigate.
d. review.
e. inquiry.
f. Installation
The correct answer is: inquiry.
Question 36
Correct Mark 1.00 out of 1.00
They use research to guide the steps designers take as they build their contributions.
a. Both choices
b. UX team
c. UI team
The correct answer is: Both choices
Question 37
Incorrect Mark 0.00 out of 1.00
The text that the users read is part of the:
a. User Interface design
b. User Experience design
c. Both choices
The correct answer is: User Interface design
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Question 38
Incorrect Mark 0.00 out of 1.00
In order to understand each situation of the persona experiences, it is important to
categorize their journey map into different:
a. steps.
b. touchpoints.
c. stages.
d. All of the choices
The correct answer is: stages.
Question 39
Incorrect Mark 0.00 out of 1.00
They adapt their designs to fit the new layout.
a. Both choices
b. UI team
c. UX team
The correct answer is: UI team
Question 40
Correct Mark 1.00 out of 1.00
When building a prototype, the original thoughts of the entrepreneur must be set aside.
a. True
b. False
The correct answer is: True
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Question 41
Incorrect Mark 0.00 out of 1.00
The customer journey map should be change always.
a. False
b. True
The correct answer is: False
Question 42
Correct Mark 1.00 out of 1.00
When validating an MVP, it is important to asked among target users what additional
features should be added.
a. False
b. True
The correct answer is: False
Question 43
Incorrect Mark 0.00 out of 1.00
It determines how customer will interact with the design.
a. User Experience design
b. Both choices
c. User Interface design
The correct answer is: User Experience design
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Question 44
Correct Mark 1.00 out of 1.00
Interface animation is part of the:
a. Both choices
b. User Interface design
c. User Experience design
The correct answer is: User Interface design
Question 45
Incorrect Mark 0.00 out of 1.00
The customer journey map tells the story about customer’s relationship starting from the
initial contact until utilization. It allows the entrepreneur to identify which part of the
journey does the customer needs attention.
a. Both statements are false.
b. First statement is false. Second statement is true.
c. Both statements are true.
d. First statement is true. Second statement is false.
The correct answer is: First statement is false. Second statement is true.
Question 46
Correct Mark 1.00 out of 1.00
It includes navigation of an app.
a. User Experience design
b. Both choices
c. User Interface design
The correct answer is: User Experience design
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Question 47
Incorrect Mark 0.00 out of 1.00
In Building an MVP the last phase is:
a. Prototype Potential Solution
b. Define Features’ List
c. Iterate Constantly
d. Define a Problem Statement
e. Conduct Market Research
The correct answer is: Iterate Constantly
Question 48
Incorrect Mark 0.00 out of 1.00
Screen layout and transitions are part of the:
a. User Interface design
b. Both choices
c. User Experience design
The correct answer is: User Interface design
Question 49
Incorrect Mark 0.00 out of 1.00
Product inquiry can be done through:
a. product site.
b. Both choices
c. None of the choices
d. third-party.
The correct answer is: Both choices
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Question 50
Correct Mark 1.00 out of 1.00
Button’s users click on is part of the:
a. Both choices
b. User Interface design
c. User Experience design
The correct answer is: User Interface design
Question 51
Correct Mark 1.00 out of 1.00
They create wireframe rendering customer interface interactions.
a. Both choices
b. UX designers
c. UI designers
The correct answer is: UX designers
Question 52
Correct Mark 1.00 out of 1.00
Customer journey map can be presented using all of the following, EXCEPT:
a. survey and interview.
b. None of the choices
c. infographic with timeline of user’s experience.
d. video.
e. storyboard.
The correct answer is: survey and interview.
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Question 53
Correct Mark 1.00 out of 1.00
Prototype must be _____ version.
a. three-dimensional
b. two-dimensional
c. Both choices
d. None of the choices
The correct answer is: three-dimensional
Question 54
Correct Mark 1.00 out of 1.00
Prototypes are designed for initial _____ of the product.
a. demonstration purposes
b. All of the choices
c. testing
d. representation
The correct answer is: demonstration purposes
Question 55
Correct Mark 1.00 out of 1.00
Bee Boo wants to present among the stakeholders the benefits of the concept poster it
offers both functionally and emotionally.
a. Basic Concept
b. Background & Insights
c. Key Assumptions & Anticipated Issues
d. All of the choices
The correct answer is: Basic Concept
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Question 56
Correct Mark 1.00 out of 1.00
Ms. Kally Moot is making a follow-up regarding the product that she ordered 2 weeks ago
via online. This stage of customer journey is called:
a. review.
b. purchase.
c. comparison.
d. inquiry.
e. installation.
The correct answer is: purchase.
Question 57
Correct Mark 1.00 out of 1.00
They have a holistic understanding of how users prefer to interact with their applications.
a. UX designers
b. UI designers
c. Both choices
The correct answer is: UX designers
Question 58
Incorrect Mark 0.00 out of 1.00
It is a toolbox which provides domains, web hosting, e-commerce design, business emails
with WordPress hosting.
a. Wix
b. Weebly
c. Exabytes
The correct answer is: Exabytes
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Question 59
Incorrect Mark 0.00 out of 1.00
True about UI designers, EXCEPT:
a. They choose the width of the lines and the fonts used for text.
b. They decide what the application is going to look like.
c. They create the look and feel of an application’s user interface.
d. They decide how the application will work.
e. They choose the color schemes and the button shapes.
The correct answer is: They decide how the application will work.
Question 60
Correct Mark 1.00 out of 1.00
In customer journey map, ____ is placed in front and at the center of the organization’s
thinking.
a. seller
b. user
c. producer
d. buyer
The correct answer is: user
Question 61
Incorrect Mark 0.00 out of 1.00
The following are the main questions to be answered when creating an MVP, EXCEPT:
a. Is it monetizable?
b. Does it solve the problem?
c. Is the product feasible?
d. Is there a need for your product?
The correct answer is: Is the product feasible?
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Question 62
Incorrect Mark 0.00 out of 1.00
It determines the structure of the interface and its functionality.
a. Both choices
b. User Experience design
c. User Interface design
The correct answer is: User Experience design
Question 63
Correct Mark 1.00 out of 1.00
The graphic presentation in customer journey is meant to map every aspect of the
customer’s experience. It tells a simple story that focus people’s attention on the
customer’s needs.
a. Both statements are false.
b. First statement is true. Second statement is false.
c. First statement is false. Second statement is true.
d. Both statements are true.
The correct answer is: First statement is false. Second statement is true.
Question 64
Correct Mark 1.00 out of 1.00
When presenting the prototype with other professionals the entrepreneur will be viewed as
a/an:
a. inventor with a potentially good idea.
b. inventor with solutions.
c. professional with a purpose.
d. professional with good idea.
The correct answer is: professional with a purpose.
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Question 65
Correct Mark 1.00 out of 1.00
The main priority of validating an MVP is to know how to sell the product in the market.
a. True
b. False
The correct answer is: False
Question 66
Correct Mark 1.00 out of 1.00
MVP stands for:
a. Minimum Viable Product
b. Minimum Visible Product
c. Most Viable Product
d. Maximum Viable Product
The correct answer is: Minimum Viable Product
Question 67
Incorrect Mark 0.00 out of 1.00
The following are the main reasons why you need to develop an MVP, EXCEPT:
a. Build a product that people use
b. Get attention from the consumers
c. Get a better understanding of the domain
d. Have a place for low-risk experiments
e. Validate idea fast and cheap
The correct answer is: Get attention from the consumers
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Question 68
Correct Mark 1.00 out of 1.00
They get user feedback.
a. UX designers
b. Both choices
c. UI designers
The correct answer is: UX designers
Question 69
Incorrect Mark 0.00 out of 1.00
When launching the MVP in the market, all necessary features must be complete such that
no revision is needed.
a. True
b. False
The correct answer is: False
Question 70
Correct Mark 1.00 out of 1.00
They organized and described how different parts of the design are related to one another.
a. Both choices
b. UX designers
c. UI designers
The correct answer is: UX designers
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Question 71
Correct Mark 1.00 out of 1.00
MVP is a ____ of the product that is about to be manufactured.
a. replica
b. prototype
c. Both choices
d. None of the choices
The correct answer is: Both choices
Question 72
Correct Mark 1.00 out of 1.00
They determine how the user interface looks like.
a. UI designers
b. UX designers
c. Both choices
The correct answer is: UI designers
Question 73
Correct Mark 1.00 out of 1.00
Created prototype is/are dependent on the following, EXCEPT:
a. None of the choices
b. budget
c. needs
d. goals
e. ideas
The correct answer is: needs
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Question 74
Correct Mark 1.00 out of 1.00
Examples of MVP, EXCEPT:
a. Buffer
b. Amazon
c. Airbnb
d. Google
e. Dropbox
The correct answer is: Google
Question 75
Correct Mark 1.00 out of 1.00
This section of concept poster includes the pain points, behavioral archetypes, design
principles, and key stakeholders.
a. Basic Concept
b. Key Assumptions & Anticipated Issues
c. All of the choices
d. Background & Insights
The correct answer is: Background & Insights
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What is a Business Model?
One of the interesting things about thinking about a start-up is how is your company is
going to be organised? What we now know is the most efficient way to think about all
the pieces, just all the parts, is by a business model. A business model is how a
company creates value for itself while delivering products or services for its customers.
In the old days we used think about how to organise a company around functional
organisations. A company is about its sales department or its engineering department
and you would draw an org chart but now we're going to draw a very different diagram.
The Business Model Canvas, is a strategic management and entrepreneurial tool. It
allows you to describe, design, challenge, invent, and pivot your business model.
It is a visual chart with elements describing a firms or product's value proposition,
infrastructure, customers, and finances. It assists firms in aligning their activities by
illustrating potential trade-offs. The Business Model Canvas was initially proposed by
Alexander Osterwalder.
With his “Business Model Design Template” [As shown below], a company can easily
describe their business model by classifying it into:
Value Proposition
Customer Segmentation
Channels
Customer Relationships
Revenue Streams
Key Partners
Key Activities
Key Resources
Costs
Customer segmentation is simply the grouping together of customers based on
similarities they share with respect to any dimensions you deem relevant to your
business. Dimensions could include customer needs, channel preferences, interest in
specific product features, customer profitability – the list goes on.
The key is for you to determine how to segment (or group) your customers in a way that
will have the biggest impact on your business. You could decide to segment your
customers by hair colour – brunettes here, blondes there, red heads over there… but to
what end? How would segmenting your customers by hair colour help your business?
(Hair salons notwithstanding) Goal-directed segmentation is the only segmentation
worth pursuing. It’s purely a means for achieving your business ends.
The only way to answer the question of how to best segment your customers is to first
define what your objective is for the segmentation. In other words, you must first define
what you want the segmentation to “do for your business”. Examples of common
segmentation objectives include:
Develop new products;
Create segmented ads & marketing communications;
Develop differentiated customer servicing & retention strategies;
Target prospects with the greatest profit potential;
Optimise your sales-channel mix.
Segmenting your customers into groups according to their needs has a number of
advantages. It can help you to:
identify your most and least profitable customers;
focus your marketing on the customers who will be most likely to buy your products or
services;
avoid the markets which will not be profitable for you;
build loyal relationships with customers by developing and offering them the products
and services they want;
improve customer service;
get ahead of the competition in specific parts of the market;
use your resources wisely;
identify new products;
improve products to meet customer needs;
increase profit potential by keeping costs down, and in some areas enabling you to
charge a higher price for your products and services;
group your customers by factors such as geographical location, size and type of
organisation, type and lifestyle of consumers, attitudes and behaviour.
How you segment your customers will depend on whether you are marketing your
products and services to:
businesses or organisations - business-to-business or B2B;
individual consumers or households - business-to-consumer or B2C.
B2B
If you are segmenting business markets, you could divide the market by:
what they do - industry sector, public or private, size and location;
how they operate - technology, use of your products;
their buying patterns - how they place orders, their size and frequency;
how they behave - loyalty and attitude to risk.
B2C
If you are segmenting consumer markets, you could group customers by:
location - towns, regions and countries;
profiles - such as age, gender, income, occupation, education, social class, attitudes
and lifestyles;
buying behaviour - including product usage, brand loyalty and the benefits they seek
from the product or service.
VALUE PROPOSITION
A value proposition is where your company’s product offer intersects with your
customer’s desires. It’s the magic fit between what you make and why people buy it.
Your value proposition is the crunch point between business strategy and brand
strategy.
The value proposition sits at the pivot point of the entire business model. Mapping the
business model of a new product or service is one of the most important parts of
building a business strategy.
Use the Value Proposition Canvas to build a strong Value Proposition for your
customers and users
https://www.oberlo.com/blog/market-segmentation
https://www.feedough.com/what-is-a-business-model/
https://youtu.be/kiWkRiynPAo HOW TO USE VALUE PROPOSITION CANVASS
https://youtu.be/cLYccezAENA CUSTOMER SEGMENTS
https://youtu.be/TihGC1Dmlb4 VALUE PROPOSITION
Weekly Assignment
As a team, complete the following tasks BEFORE progressing to the next week's
lesson:
1. Continuing from last week's lesson, define the Customer Segments for your business.
You could have more than one Customer Segment.
2. Using the Value Proposition Canvas, build a Value Proposition for EACH of your
Customer Segments.
3. Conduct a face to face interviews with a MINIMUM of 5 target users who face the
problem and validate the solution with them. However, use the Javelin Board to validate
your Customer Segments and the Value Propositions.
4. Once done, collate all the responses and create a validation analysis and explain why
and where have you pivoted and what will be the next step to the pivot.
5. Upload this in LMS.
6. Presentation next meeting.
BMC II
Customer Relationships
To ensure the survival and success of any businesses, companies must identify the
type of relationship they want to create with their customer segments. Various forms of
customer relationships include:
Personal Assistance: Assistance in a form of employee-customer interaction. Such
assistance is performed either during sales, after sales, and/or both.
Dedicated Personal Assistance: The most intimate and hands on personal assistance
where a sales representative is assigned to handle all the needs and questions of a
special set of clients.
Self Service: The type of relationship that translates from the indirect interaction
between the company and the clients. Here, an organisation provides the tools needed
for the customers to serve themselves easily and effectively.
Automated Services: A system similar to self-service but more personalised as it has
the ability to identify individual customers and his/her preferences. An example of this
would be Amazon.com making book suggestion based on the characteristics of the
previous book purchased.
Communities: Creating a community allows for a direct interaction among different
clients and the company. The community platform produces a scenario where
knowledge can be shared and problems are solved between different clients.
Co-creation: A personal relationship is created through the customer’s direct input in the
final outcome of the company’s products/services.
One aspect of Customer Relationships you have to consider is the strategies you want
to follow for customer acquisition and retention - also referred to as GET-KEEP-GROW
strategies. This is where the integration with other building blocks of the business model
is very important.
Some examples:
Apple uses data integration as a retention strategy by making it very difficult to shift your
information out of Apple's environment - that links to the cross product patents and
design and works everything through iTunes as a platform.
Kiva (the social lending platform) relies on the network effect for acquiring in new
lenders, i.e. lenders engaging other lenders to be involved. This makes the community
of lenders a critical. As part of their retention strategy to keep you involved they provide
ongoing reports on the money you lent, business success and payback.
WHAT IS A CHANNEL?
https://youtu.be/AKe0hlK4X84
Channels includes entities you use to communicate your proposition to your segments,
as well as entities through which you sell product and later service customers.
For example, if you sell bulbs for light houses and there’s a website all light house
attendants purchase equipment, that site is a sales Channel. If you use Google
AdWords, that’s a Channel, too (for getting attention). If you use a third party company
to service the bulbs when they break, that’s also a Channel.
Output: a list of important Channels, linked to Personas or Segments if they differ
substantially. Make notes on what steps are relevant for each- promotion, sales,
service, etc. Channels define your interface with the Customer. It’s important to think all
the way through the customer ‘journey’ in specific terms. For most businesses, the way
they get a customer’s attention is different than the way they on-board them or support
them over the long term.
A company can deliver its value proposition to its targeted customers through different
channels. Effective channels will distribute a company’s value proposition in ways that
are fast, efficient and cost effective. An organisation can reach its clients either through
its own channels (store front), partner channels (major distributors), or a combination of
both.
Revenue Streams
https://youtu.be/BnsQfP-hS6Q
Revenue Stream is a way a company makes income from each customer segment.
There are several ways to generate a revenue stream:
Asset Sale - (the most common type) Selling ownership rights to a physical good (e.g.
Wal-Mart)
Usage Fee - Money generated from the use of a particular service (e.g. UPS)
Subscription Fees - Revenue generated by selling a continuous service (e.g. Netflix)
Lending/Leasing/Renting - Giving exclusive right to an asset for a particular period of
time (e.g. Leasing a Car)
Licensing - Revenue generated from charging for the use of a protected intellectual
property (e.g. Playing a song at a public event or venue)
Brokerage Fees - Revenue generated from an intermediate service between 2 parties
(e.g. Broker selling a house for commission)
Advertising - Revenue generated from charging fees for product advertising (e.g. Ads
shown before or during YouTube clips and videos)
Remember: “There is no business in your business model without revenue streams.”
Be specific, when citing your revenue stream sources by getting down to actual pricing
and projected lifetime numbers. For example, $50/mo with 2 yr lifetime.
You need these numbers to ballpark the opportunity or “problem worth solving” both for
yourself and for your external stakeholders. If you don’t have a “big enough” problem
worth solving (that’s not even plausible on paper) then why expend any effort on it.
Keeping your pricing model as simple as possible, especially at the earlier stages, not
only helps with ball-parking but also with faster validation of your business model.
Start with a single price modelled after your early adopters. Your early adopters
represent your best first customers and should also represent a “significant enough”
initial beachhead of customers. The thinking here is that if you can’t get these guys to
accept your pricing model, what chance do you have with your other segments?
https://www.entrepreneur.com/article/282364 5 WAYS TO BUILD RELATIONSHIP
WITH CUSTOMERS
ASSIGNMENT: Continuing from last week's lesson, define the Customer Relationships,
Channels & Revenue Streams for your business.
NEXT WEEK: BMCIII : KEY PARTNERS
Key Partners: The people who are integral to your business succeeding.
In order to identify your key partners, you need to ask yourself the following questions in
relation to your business: who are your key partners? Who are your suppliers? Which
resources are you getting from your partners? And which activity do your partners
perform?
Once identified, in order to reduce the risk of a business and heighten operations,
creating key partner relationships can be an integral step.
A good example could be the building of a good relationship with your customers or
local council. By building this brand loyalty and strength with key partners, it is more
likely that customers will repeatedly buy from you and that you will be welcomed to the
community, giving you a better reputation and increased custom.
BMC III
WEEK 6 – KEY PARTNERS
https://youtu.be/zypQ82kN94k
Key Partners: The people who are integral to your business succeeding.
In order to identify your key partners, you need to ask yourself the following questions in relation to
your business: who are your key partners? Who are your suppliers? Which resources are you getting
from your partners? And which activity do your partners perform?
Once identified, in order to reduce the risk of a business and heighten operations, creating key partner
relationships can be an integral step.
A good example could be the building of a good relationship with your customers or local council. By
building this brand loyalty and strength with key partners, it is more likely that customers will repeatedly
buy from you and that you will be welcomed to the community, giving you a better reputation and
increased custom.
Remember : Once you have listed out your Key Partners, build a Value Proposition for each one of them
as well. This Value Proposition should address the question, "Why should they partner with you?".
KEY ACTIVITIES
https://youtu.be/KXzlEy-wJnQ
Key Activities: Activities we need to complete in-order to build our value proposition for our customers
and partners.
When defining key activities, it is important to assess your business in terms of: your distribution
channels, customer relationships and revenue streams. The identification of your key activities allows
you to see your most important activities in executing your value proposition, which was shown in the
last entry as being the value within your product or service which the customer buys.
An example of a key activity for The Economist magazine would be creating an efficient supply chain to
drive down costs and ensure that deliveries were made on time to meet deadlines and demand.
KEY RESOURCES
https://youtu.be/GUZjKbRvUBs
Key Resources: All the resources needed to build our value proposition for our Customers and Partners.
The questions you need to ask of your business when uncovering your key resources are similar to those
for key activities, namely: distribution channels, customer relationships and revenue streams.
The resources which you are trying to identify could be anything integral to the business’ value
proposition, physical resources (e.g. machinery), intellectual (e.g. patents), human (e.g. workforce) and
financial.
But essentially, these resources are the tangible and intangible necessities to create value for the
customer. They are needed in order to support the business and would be considered an asset to the
company. Amazon, for example, provide value to customers through their huge product range made
available through their website which is available from anywhere, therefore saving customers time and
money, given their smaller cost centres. The key resource to Amazon would be the company’s IT
infrastructure, without that, they have no service to provide.
COST: BUILDING A COST STRUCTURE FOR YOUR BUSINESS
https://youtu.be/7E_K4_i3HIg
Cost Structure describes the most important monetary consequences while operating under different
business models. There are two classes of Business Structures:
Cost-Driven - This business model focuses on minimising all costs and having no frills. (e.g. SouthWest)
Value-Driven - Less concerned with cost, this business model focuses on creating value for their
products and services. (e.g. Louis Vuitton, Rolex)
Characteristics of Cost Structures:
Fixed Costs - Costs are unchanged across different applications. e.g. salary, rent.
Variable Costs - These costs vary depending on the amount of production of goods or services. e.g.
music festivals.
Economies of Scale - Costs go down as the amount of good are ordered or produced.
Economies of Scope - Costs go down due to incorporating other businesses which have a direct relation
to the original product.
Having a low cost structure is a strong competitive advantage which market leaders in industry after
industry recognise, when companies with low cost business models enter their markets.
In the steel industry the mini-mills took on traditional smelters, in automobile manufacturing
standardised Japanese cars won out over customised vehicles, "no frills" airlines such as Southwest
Airlines or Ryanair took down traditional airlines such as US Airways and Swissair, open source software
has taken large market shares within several software areas, and a hot topic right now is the struggle of
traditional newspaper companies as a consequence of low cost online substitutes.
Online companies with low costs structures are currently disrupting traditional industries and have
created some very high operating margin businesses, with Craigslist perhaps the most referenced
example, generating an estimated $100mm in annual revenues with an ope rating margin of 90%.
The business model concept is a good framework to identify where costs arise, and how it relates to the
creation and capturing of value for customers and other value recipients. Identifying significant costs
and assets needed, relating to each component of the business model, provides an overview that can be
used to improve the existing model or completely alter it.
Knowing how much things costs and how it will change over time is the only way of maintaining a
rational cost structure. Also knowing how choices in the different business model components affects
costs in other components is a great starting point for business model innovation.
Few if any managers and executives have visibility of the costs associated with the differen t parts of the
business model. Especially in times of cost reduction it often ends up cutting too deeply in areas that are
critical to the business while leaving money on the table in areas that are less critical. Once the different
major costs are identified you can start question each of the business model components:
How can this be performed differently at lower cost, or even be eliminated?
What companies are focusing on low-cost alternatives in this particular business model component but
perhaps in another industry?
How could collaboration with another partner lower or eliminate costs?
CUSTOMER JOURNEY MAPS
WHAT IS CUSTOMER JOURNEY MAP?
https://youtu.be/eMBtJ5Q6EDg
A customer journey map tells the story of the customer’s experience starting from the initial contact,
right through the process of engagement and eventually into a long-term relationship.
It examines what drives your customers and allows you to identify on which part of their journey do
they need attention? It will also give you an overview of the entire experience. It talks abo ut the user’s
feelings, motivations and questions each of these touchpoints.
A customer journey map takes many forms but typically appears as some type of infographic. Whatever
its form, the goal is the same: to teach organizations more about their customers. It’s a very useful tool
even if the results find that the customer doesn’t need any help.
‘Assist me’ baskets by Sephora. Buying beauty products is a highly personal experience and Sephora
understands that some people might want assistance in every decision they make regarding their
products, and some people might want to browse around and only ask for help when they need it.
WHY IS CUSTOMER JOURNEY MAP IMPORTANT?
https://youtu.be/ibMoLZ67SP8
A customer journey map is a powerful tool.
If you are a designer, it will help you to understand the context of users. You will gain a clear picture of
where the user has come from and what they are trying to achieve.
It also gives managers an overview of the customer’s experience. They will see how customers move
through the sales funnel. This will help them to identify opportunities to enhance the experience. The
map will show how enhanced customer service can differentiate the organization’s digital experience.
For the user experience designer, a customer journey map helps to identify gaps, points in the customer
experience that are disjointed or painful. These might be:
gaps between devices, when a user moves from one device to another;
gaps between departments, where the user might get frustrated.
gaps between channels (for example, where the experience of going from social media to the website
could be better).
Most of all, a customer journey map puts the user front and centre in the organization’s thinking. It
shows how mobile, social media and the web have changed customer behaviour. It demonstrates the
need for the entire organization to adapt.
It encourages people across the organization to consider the user’s feelings, questions and needs. This is
especially important with digital products and services.
How To Present Your Customer Journey Map
There is no right or wrong way to produce a customer journey map. Normally, it will be some form of
infographic with a timeline of the user’s experience. But it could just as easily be a storyboard or even a
video.
The goal is to ensure that the user’s story remains front and centre in people’s minds. Get a designer to
produce the graphic to ensure it is as clear as possible and that it grabs people’s attention.
Whatever its form, the map should contain both statistical and anecdotal evidence. It should highlight
users’ needs, questions and feelings throughout their interaction with the organization.
Don’t make it too complex. It is easy to get caught up in the multiple routes a user might take. This will
just muddy the story. The graphic is not meant to map every aspect of the customer’s experience.
Rather, it should tell a simple story to focus people’s attention on the customer’s needs. Think of the
customer journey map as a poster pinned to the office wall. At a glance, people should be able to see
the key touchpoints that a user passes through. It should remind them that the customer’s needs must
always be at the forefront of their thinking. Most importantly, after you’re done, take the customer
journey yourself and make changes accordingly.
Using Smaply To Build Your Customer Journey Map
https://youtu.be/kKNXohO3MH4
Try Smaply to build your Customer Journey Map. You can use this service free of cost for a limited
period of time.
TOOLS:
UXPRESSIA ( https://uxpressia.com/templates )contains two folders full of Customer Journey Maps (aka
customer experience maps or user experience maps) based on actual experiences.
VISUAL PARADIGM ( https://www.visual-paradigm.com/ ) provides a 30 days free trial with training
videos and tutorials.
BEHAVIORAL RESPONSE ( https://behaviouralresponse.com/the-ultimate-guide-to-creating-a-customer-
journey-map/ ) claims to be the ultimate guide to creating a customer journey map.
Creating The Concept Poster
Let’s say you wanted to start a retail store selling athleisure apparel and your key differentiation would
be to bring a sense of community in your store.
You set up a healthy juice bar, a small work out space for freelance trainers to conduct fitness classes
rent free, a large community board to showcase all the studios, gyms and fitness classes that provide
more intense training within the area around the store. You think that’s still not enough and you add a
few more ideas into your concept.
Now consider the following questions:
What are the strengths of the idea you selected? What are its weaknesses? What issues will need to be
overcome?
How could other ideas from your creative matrix be modified or recombined and integrated into this
concept to make it better?
What are the key assumptions the concept is built around? What tests could you run to verify the
veracity of those assumptions?
The Concept Poster will help you answer many of these questions and present a first draft of your
concept to a viewer in a cohesive and comprehensive way. The Concept Poster is comprised of three
major sections that capture your work and provides a roadmap for future thinking:
Background & Insights. In this section present the findings from your research during the Empathize and
Define phases. It includes pain points, behavioural archetypes, design principles, and key stakeholders.
The components here represent the logical underpinning to which your concept must directly connect.
Basic Concept. Give a brief description of the concept and the value proposition it presents to key
stakeholders. What does the concept do? How does it work? What are the elements? Here you also
present the benefits the concept offers stakeholders, both functional and emotional.
Key Assumptions & Anticipated Issues. Here you articulate the assumptions that must be true for your
concept to succeed, in terms of desirability, feasibility, and viability. This section also invites you to begin
to think about how you would test these assumptions.
ASSIGBNMENT:
1. Create a Customer Journey Map using any one of the tools provided.
2. Be able to present the Customer Journey Map along with the fully validated Problem Statement,
Persona, Need Statement, Business Idea, Business Model Canvas. (TBA)
BUSINESS MODEL CANVASS
BMC I-II-III
• The Business Model Canvas, is a
strategic management and
entrepreneurial tool. It allows
you to describe, design,
challenge, invent, and pivot your
business model.
Business Model
Design Elements
• Customer Segmentation
• Channels
• Customer Relationships
• Revenue Streams
• Key Partners
• Key Activities
• Key Resources
• Costs
• is simply the grouping together of customers
based on similarities they share with respect to
Customer any dimensions you deem relevant to your
business. Dimensions could include customer
segmentation needs, channel preferences, interest in specific
product features, customer profitability – the
list goes on.
The only way to answer the question of how to best segment your
customers is to first define what your objective is for the
segmentation.
In other words, you must first define what you want the segmentation
to “do for your business”. Examples of common segmentation
objectives include:
Customer segmentation: Objectives
Develop new products; Create segmented ads Develop differentiated Target prospects with Optimise your sales-
& marketing customer servicing & the greatest profit channel mix
communications; retention strategies; potential;
Segmenting your customers into groups according to their needs
has a number of advantages. It can help you to:
1 2 3 4 5 6 7 8 9
identify your focus your avoid the build loyal improve use your identify new increase profit group your
most and least marketing on markets which relationships customer resources products; potential by customers by
profitable the customers will not be with customers service; get wisely; improve keeping costs factors such as
customers; who will be profitable for by developing ahead of the products to down, and in geographical
most likely to you; and offering competition in meet customer some areas location, size
buy your them the specific parts of needs; enabling you to and type of
products or products and the market; charge a higher organisation,
services; services they price for your type and
want; products and lifestyle of
services; consumers,
attitudes and
behaviour
How you segment your customers will depend on whether you
are marketing your products and services to:
businesses or organisations -
business-to-business or B2B;
individual consumers or households
- business-to-consumer or B2C
B2B
• If you are segmenting business
markets, you could divide the
market by: what they do -
industry sector, public or private,
size and location; how they
operate - technology, use of your
products; their buying patterns -
how they place orders, their size
and frequency; how they behave
- loyalty and attitude to risk.
• If you are segmenting consumer
markets, you could group customers
by: location - towns, regions and
countries; profiles - such as age,
gender, income, occupation,
B2C education, social class, attitudes and
lifestyles; buying behaviour - including
product usage, brand loyalty and the
benefits they seek from the product
or service
VALUE
PROPOSITION
• A value proposition is where your
company’s product offer
intersects with your customer’s
desires. It’s the magic fit between
what you make and why people
buy it. Your value proposition is
the crunch point between
business strategy and brand
strategy
• The value proposition sits at the
pivot point of the entire business
model. Mapping the business
model of a new product or
service is one of the most
important parts of building a
business strategy.
• Use the Value Proposition
Canvas to build a strong Value
Proposition for your customers
and users
BMC II Customer
Relationships
• To ensure the survival and success of any businesses,
companies must identify the type of relationship they
want to create with their customer segments.
Various forms of
customer relationships:
• Personal Assistance: Assistance in a form of employee-
customer interaction. Such assistance is performed either
during sales, after sales, and/or both.
• Dedicated Personal Assistance: The most intimate and hands
on personal assistance where a sales representative is
assigned to handle all the needs and questions of a special set
of clients.
• Self Service: The type of relationship that translates from the
indirect interaction between the company and the clients.
Here, an organisation provides the tools needed for the
customers to serve themselves easily and effectively.
Various forms of customer relationships
Co-creation: A personal
relationship is created
through the customer’s direct
Automated Services: A input in the final outcome of
system similar to self-service Communities: Creating a the company’s
but more personalised as it community allows for a direct products/services. One
has the ability to identify interaction among different aspect of Customer
individual customers and clients and the company. The Relationships you have to
his/her preferences. An community platform consider is the strategies you
example of this would be produces a scenario where want to follow for customer
Amazon.com making book knowledge can be shared and acquisition and retention -
suggestion based on the problems are solved between also referred to as GET-KEEP-
characteristics of the previous different clients. GROW strategies. This is
book purchased. where the integration with
other building blocks of the
business model is very
important.
Channel
Channels includes entities you use to communicate your proposition to your
segments, as well as entities through which you sell product and later service
customers.
For example, if you sell bulbs for light houses and there’s a website all light house
attendants purchase equipment, that site is a sales Channel. If you use Google
AdWords, that’s a Channel, too (for getting attention). If you use a third party
company to service the bulbs when they break, that’s also a Channel.
Make notes on what steps are
relevant for each- promotion, sales, For most businesses, the way they
Output: a list of important Channels, service, etc. Channels define your get a customer’s attention is
linked to Personas or Segments if interface with the Customer. It’s different than the way they on-
they differ substantially. important to think all the way board them or support them over
through the customer ‘journey’ in the long term.
specific terms.
• A company can deliver its value proposition
to its targeted customers through different
channels. Effective channels will distribute a
company’s value proposition in ways that are
CHANNELS fast, efficient and cost effective. An
organisation can reach its clients either
through its own channels (store front),
partner channels (major distributors), or a
combination of both.
Revenue Streams
REVENUE STREAM IS A WAY A COMPANY MAKES ASSET SALE - (THE MOST COMMON TYPE) USAGE FEE - MONEY GENERATED FROM THE USE
INCOME FROM EACH CUSTOMER SEGMENT. SELLING OWNERSHIP RIGHTS TO A PHYSICAL OF A PARTICULAR SERVICE (E.G. UPS)
THERE ARE SEVERAL WAYS TO GENERATE A GOOD (E.G. WAL-MART)
REVENUE STREAM:
Revenue Streams
Subscription Fees - Revenue generated by selling a continuous service
(e.g. Netflix)
Lending/Leasing/Renting - Giving exclusive right to an asset for a
particular period of time (e.g. Leasing a Car)
Licensing - Revenue generated from charging for the use of a protected
intellectual property (e.g. Playing a song at a public event or venue)
Brokerage Fees - Revenue generated
from an intermediate service between 2
parties (e.g. Broker selling a house for
commission)
Advertising - Revenue generated from
charging fees for product advertising
(e.g. Ads shown before or during
YouTube clips and videos)
Remember: “There is no business in
your business model without revenue
streams.”
Keeping your pricing model as simple as possible,
especially at the earlier stages, not only helps with
ball-parking but also with faster validation of your
business model.
Start with a single price modelled after your early
adopters. Your early adopters represent your best
first customers and should also represent a
“significant enough” initial beachhead of customers.
The thinking here is that if you can’t get these guys
to accept your pricing model, what chance do you
have with your other segments?
BMC III –KEY PARTNERS
KEY PARTNERS: THE PEOPLE WHO ARE INTEGRAL TO YOUR WHICH RESOURCES ARE YOU GETTING FROM YOUR
BUSINESS SUCCEEDING. IN ORDER TO IDENTIFY YOUR KEY PARTNERS? AND WHICH ACTIVITY DO YOUR PARTNERS
PARTNERS, YOU NEED TO ASK YOURSELF THE FOLLOWING PERFORM?
QUESTIONS IN RELATION TO YOUR BUSINESS: WHO ARE YOUR
KEY PARTNERS? WHO ARE YOUR SUPPLIERS?
KEY PARTNERS
ONCE IDENTIFIED, IN ORDER TO REDUCE THE RISK OF A BY BUILDING THIS BRAND LOYALTY AND STRENGTH WITH KEY
BUSINESS AND HEIGHTEN OPERATIONS, CREATING KEY PARTNERS, IT IS MORE LIKELY THAT CUSTOMERS WILL
PARTNER RELATIONSHIPS CAN BE AN INTEGRAL STEP. A GOOD REPEATEDLY BUY FROM YOU AND THAT YOU WILL BE
EXAMPLE COULD BE THE BUILDING OF A GOOD RELATIONSHIP WELCOMED TO THE COMMUNITY, GIVING YOU A BETTER
WITH YOUR CUSTOMERS OR LOCAL COUNCIL. REPUTATION AND INCREASED CUSTOM.
• Remember : Once you have
listed out your Key Partners,
build a Value Proposition for
each one of them as well. This
Value Proposition should
address the question, "Why
KEY PARTNERS should they partner with you?".
BMC III-KEY ACTIVITIES
Key Activities: Activities we
need to complete in-order to
build our value proposition your distribution channels,
for our customers and
partners.
When defining key activities,
it is important to assess your customer relationships and
business in terms of:
revenue streams.
KEY ACTIVITIES
• The identification of your key activities
allows you to see your most important
activities in executing your value proposition,
which was shown in the last entry as being
the value within your product or service
which the customer buys.
• An example of a key activity for The
Economist magazine would be creating an
efficient supply chain to drive down costs
and ensure that deliveries were made on
time to meet deadlines and demand.
BMC III- Key Resources
• All the resources needed to build our value proposition for
our Customers and Partners.
• The questions you need to ask of your business when
uncovering your key resources are similar to those for key
activities, namely:
• distribution channels,
• customer relationships and
• revenue streams.
KEY RESOURCES
They are needed in order to support the
business and would be considered an asset
The resources which you are trying to
to the company. Amazon, for example,
identify could be anything integral to the
provide value to customers through their
business’ value proposition, physical
huge product range made available through
resources (e.g. machinery), intellectual (e.g.
their website which is available from
patents), human (e.g. workforce) and
anywhere, therefore saving customers time
financial. But essentially, these resources
and money, given their smaller cost
are the tangible and intangible necessities
centres. The key resource to Amazon would
to create value for the customer.
be the company’s IT infrastructure, without
that, they have no service to provide.
BMC III- COST: BUILDING A COST STRUCTURE
FOR YOUR BUSINESS
Cost Structure describes the most important monetary
consequences while operating under different business models.
There are two classes of Business Structures:
• Cost-Driven - This business model focuses on minimising all costs and having no
frills. (e.g. SouthWest)
• Value-Driven - Less concerned with cost, this business model focuses on creating
value for their products and services. (e.g. Louis Vuitton, Rolex)
Fixed Costs - Costs are unchanged across different
applications. e.g. salary, rent.
Variable Costs - These costs vary depending on the
Characteristics amount of production of goods or services. e.g. music
festivals.
of Cost
Structures: Economies of Scale - Costs go down as the amount of
good are ordered or produced.
Economies of Scope - Costs go down due to
incorporating other businesses which have a direct
relation to the original product.
Having a low cost structure is a strong competitive advantage which
market leaders in industry after industry recognise, when companies with
low cost business models enter their markets.
The business model concept is a good framework to identify where costs
arise, and how it relates to the creation and capturing of value for
customers and other value recipients.
BMC III- COST Identifying significant costs and assets needed, relating to each
component of the business model, provides an overview that can be used
to improve the existing model or completely alter it.
Knowing how much things costs and how it will change over time is the
only way of maintaining a rational cost structure. Also knowing how
choices in the different business model components affects costs in other
components is a great starting point for business model innovation.
How can this be performed differently at
lower cost, or even be eliminated?
What companies are focusing on low-cost
BMC III- alternatives in this particular business model
component but perhaps in another
COST industry?
How could collaboration with another
partner lower or eliminate costs?
The Business Model Canvas Explained
(The material contained in this handout is taken from the book Business Model Generation by Alex Osterwalder & Yves
Pigneur)
Customer Segments Questions to be Answered:
Defines the different groups of people or organizations an enterprise • For whom are we creating value?
aims to reach and serve. • Who are our most important customers?
Customers comprise the heart of any business model. Without Notes
(profitable) customers, no company can survive for long.
In order to better satisfy customers, a company may group them into
distinct segments with common needs, common behaviors, or other
attributes. A business model may define one or several large or small
Customer Segments. An organization must make a conscious decision
about which segments to serve and which segments to ignore. Once this
decision is made, a business model can be carefully designed around a
strong understanding of specific customer needs.
Customer groups represent separate segments if:
• Their needs require and justify a distinct offer
• They are reached through different Distribution Channels
• They require different types of relationships
• They have substantially different profitabilities
• They are willing to pay for different aspects of the offer
Value Propositions
Describes the bundle of products and services that create value for a
specific Customer Segment.
Questions to be Answered:
The Value Proposition is the reason why customers turn to one company • What value do we deliver to the customer?
over another. It solves a customer problem or satisfies a customer need. • Which one of our customer’s problems are we helping to solve?
Each Value Proposition consists of a selected bundle of products and/or Which customer needs are we satisfying?
services that caters to the requirements of a specific Customer Segment. • What bundles of products and services are we offering to each
In this sense, the Value Proposition is an aggregation, or bundle, of Customer Segment?
benefits that a company offers customers. Some Value Propositions may
be innovative and represent a new or disruptive offer. Others may be Notes
similar to existing market offers, but with added features and attributes.
Channels
Describes how a company communicates with and reaches its
Customer Segments to deliver a Value Proposition. Questions to be Answered:
• Through which Channels do our Customer Segments want to be
Communication, distribution, and sales Channels comprise a company's reached?
interface with customers. Channels are customer touch points that play • How are we reaching them now?
an important role in the customer experience. • How are our Channels integrated?
• Which ones work best?
Channels serve several functions, including: • Which ones are most cost-efficient? How are we integrating
• Raising awareness among customers about a company’s them with customer routines?
• products and services
• Helping customers evaluate a company’s Value Proposition Notes
• Allowing customers to purchase specific products and services
• Delivering a Value Proposition to customers
• Providing post-purchase customer support
Customer Relationships
Describes the types of relationships a company establishes with
specific Customer Segments.
Questions to be Answered:
A company should clarify the type of relationship it wants to establish • What type of relationship does each of our Customer
with each Customer Segment. Relationships can range from personal to • Segments expect us to establish and maintain with them?
automated. • Which ones have we established? How costly are they?
• How are they integrated with the rest of our business model?
Customer relationships may be driven by the following motivations:
• Customer acquisition Notes
• Customer retention
Boosting sales (upselling)
Key Resources
Describes the most important assets required to make a business
model work.
Questions to be Answered:
Key Resources
Describes the most important assets required to make a business
model work.
Questions to be Answered:
Every business model requires Key Resources. These resources allow • What Key Resources do our Value Propositions require?
an enterprise to create and offer a Value Proposition, reach markets, • What Key Resources do our Distribution Channels require?
maintain relationships with Customer Segments, and earn revenues. • What Key Resources do our Customer Relationships require?
• What Key Resources do our Revenue Streams require?
Different Key Resources are needed depending on the type of business
model. A microchip manufacturer requires capital-intensive production Notes
facilities, whereas a microchip designer focuses more on human
resources. Key resources can be physical, financial, intellectual, or
human. Key resources can be owned or leased by the company or
acquired from key partners.
Key Activities
Describes the most important things a company must do to make its
business model work.
Questions to be Answered:
• What Key Activities do our Value Propositions require?
Every business model calls for a number of Key Activities. These are
• Our Distribution Channels?
the most important actions a company must take to operate successfully.
• Customer Relationships?
Like Key Resources, they are required to create and offer a Value
• Revenue streams?
Proposition, reach markets, maintain Customer Relationships, and earn
revenues. And like Key Resources, Key Activities differ depending on
Notes
business model type. For software maker Microsoft, Key Activities
include software development. For PC manufacturer Dell, Key
Activities include supply chain management. For consultancy
McKinsey, Key Activities include problem solving.
Key Partnerships
Describes the network of suppliers and partners that make the
business model work. Questions to be Answered:
• Who are our Key Partners?
Companies forge partnerships for many reasons, and partnerships are • Who are our key suppliers?
becoming a cornerstone of many business models. Companies create • Which Key Resources are we acquiring from partners?
alliances to optimize their business models, reduce risk, or acquire • Which Key Activities do partners perform?
resources.
Notes
We can distinguish between four different types of partnerships:
• Strategic alliances between non-competitors
alliances to optimize their business models, reduce risk, or acquire • Which Key Activities do partners perform?
resources.
Notes
We can distinguish between four different types of partnerships:
• Strategic alliances between non-competitors
• Competition: strategic partnerships between competitors
• Joint ventures to develop new businesses
Cost Structure
Describes all costs incurred to operate a business model.
This building block describes the most important costs incurred while
operating under a particular business model. Creating and delivering Questions to be Answered:
value, maintaining Customer Relationships, and generating revenue all • What are the most important costs inherent in our business
incur costs. Such costs can be calculated relatively easily after defining model?
Key Resources, Key Activities, and Key Partnerships. Some business • Which Key Resources are most expensive?
models, though, are more cost-driven than others. So-called “no frills” • Which Key Activities are most expensive?
airlines, for instance, have built business models entirely around low
Cost Structures. Notes
Revenue Streams
Represents the cash a company generates from each Customer
Segment (costs must be subtracted from revenues to create earnings).
If customers comprise the heart of a business model, Revenue Streams
are its arteries. A company must ask itself, For what value is each Questions to be Answered:
Customer Segment truly willing to pay? Successfully answering that • For what value are our customers really willing to pay?
question allows the firm to generate one or more Revenue Streams from • For what do they currently pay?
each Customer Segment. Each Revenue Stream may have different • How are they currently paying?
pricing mechanisms, such as fixed list prices, bargaining, auctioning, • How would they prefer to pay?
market dependent, volume dependent, or yield management. • How much does each Revenue Stream contribute to overall
revenues?
question allows the firm to generate one or more Revenue Streams from • For what do they currently pay?
each Customer Segment. Each Revenue Stream may have different • How are they currently paying?
pricing mechanisms, such as fixed list prices, bargaining, auctioning, • How would they prefer to pay?
market dependent, volume dependent, or yield management. • How much does each Revenue Stream contribute to overall
revenues?
A business model can involve two different types of Revenue Streams:
• Transaction revenues resulting from one-time customer Notes
payments
• Recurring revenues resulting from ongoing payments to either
deliver a Value Proposition to customers or provide post-
purchase customer support
WEEKS 9-10
USER EXPERIENCE DESIGN
What is UI and UX? How are they different?
UX Design refers to the term User Experience Design, while UI Design stands for User
Interface Design. Both elements are crucial to a product and work closely together. But
despite their professional relationship, the roles themselves are quite different, referring
to very different parts of the process and the design discipline. Where UX Design is a
more analytical and technical field, UI Design is closer to what we refer to as graphic
design, though the responsibilities are somewhat more complex.
There is an analogy I like to use in describing the different parts of a (digital) product:
If you imagine a product as the human body, the bones represent the code which give it
structure. The organs represent the UX design: measuring and optimizing against input
for supporting life functions. And UI design represents the cosmetics of the body–its
presentation, its senses and reactions.
But don’t worry if you’re still confused! You’re not the only one!
User Experience Design is a human-first way of designing products.
As is found on Wikipedia:
• User experience design (UXD or UED) is the process of enhancing
customer satisfaction and loyalty by improving the usability, ease of use,
and pleasure provided in the interaction between the customer and the
product.
This implies that regardless of its medium, UX Design encompasses any and all
interactions between a potential or active customer and a company. As a scientific
process it could be applied to anything, street lamps, cars, Ikea shelving and so on.
• User Experience Design is the process of development and improvement of
quality interaction between a user and all facets of a company.
• User Experience Design is responsible for being hands on with the process
of research, testing, development, content, and prototyping to test for
quality results.
• User Experience Design is in theory a non-digital (cognitive science)
practice, but used and defined predominantly by digital industries.
While User Experience is a conglomeration of tasks focused on optimization of a
product for effective and enjoyable use; User Interface Design is its compliment, the
look and feel, the presentation and interactivity of a product.
• User Interface Design is responsible for the transference of a brand’s
strengths and visual assets to a product’s interface as to best enhance the
user’s experience.
• User Interface Design is a process of visually guiding the user through a
product’s interface via interactive elements and across all sizes/platforms.
• User Interface Design is a digital field, which includes responsibility for
cooperation and work with developers or code.
Or in analogical terms, UI Design produces a product’s:
Skin - a product’s visual/graphic presentation.
Senses - a product’s reactivity and interactivity in response to a user’s input or different
display environments.
and Makeup - a product’s guides, hints, and directives that visually leads users through
their experience.
Why Is It Important?
Two words: usability and familiarity.
WHAT IS MARKETING STRATEGY?
Now that you have designed your product or service using empathy or systems thinking,
built your MVP, and even identified your suppliers, competitors, and resources, how
would you bring your product or service to market?
What is your go to market strategy?
Although there are many steps to developing your go to market strategies which have
been designed over the years and are of course, constantly evolving based on the state
of the market, we have chosen to look at 7 steps.
1. Establishing your ideal target market
2. Defining your market strategy
3. What’s your channel of choice?
4. Shaping your price
5. Developing your marketing strategy
6. Ensuring you can follow through
7. Getting your first few customers
Establishing your ideal target market
You would have already gone through this in the previous lessons. Some key points to
revisit.
Identify your markets: Which are the markets or industries that are experiencing the
voids or gaps? What are their most urgent or chronic pain points? Are these markets or
industries aligned with your capability to serve them?
Identify their personas: Who would be using your offering? What are their specific
characteristics and behaviours? Try to narrow this down to 1 or 2 user personas and get
specific.
Identify yourself: Does your product or service address their needs? Can you reach and
access these markets proficiently? Can you also consistently measure your progress?
How underserved is this market and what is the level of competition you’d expect to
face?
Identify your objectives: Why are you doing this now and what can you eventually hope
to gain from this? Whatever the reasoning may be, ensure you are specific, concise,
and honest.
Defining your market strategy
Where would your product or service fit in the market and how would you let users
know?
What is your value proposition: What makes you unique from your competition? Why
would your customers choose your brand over what’s already available? Start by
asking:
• What are the real needs of your target customers?
• Which features in your product or service addresses these needs?
• What are the important benefits of your product or service?
• How is your offering differentiated in the marketplace?
Position your brand: How would you position your brand in the mind of your customers?
How do you want people to view you in relation to what is already available in the
market? Strong brand positioning is what makes your business unique. For example,
do you want to be a budget traveller or luxury Airbnb?
Messaging: How do you talk about the value you create? Does it create an emotional
connection with your customers?
Identify your customers’ journey: Recall the lesson on the customer journey maps and
how many stages there are in your customer’s buying journey? Have you identified their
behaviours before and after they make a purchase? At which point should you reach out
to them?
What’s your channel of choice?
We define channels as how you will be linking your offerings to your customers. Sales
channels might include products or services being sold through a physical brick and
mortar store(retail), call centre (credit cards or loan applications), face-to-face (direct
sales from a home visit), a trade show (launch of new products), e-commerce platforms
(Lazada, e-bay , Amazon or Alibaba), social media (Instagram or Facebook
advertisements) and the list goes on.
Whichever channels you choose to connect your customers with, there should be a
consistent brand offering. Start by ensuring the right fit, for example can complex and
highly priced products be sold over e-commerce? Is the level of customer involvement
high or low? We would rank buying light bulbs online as low and choosing a wedding
gown as high involvement. Ultimately, what level of interaction do your customers
require and can your channel of choice provide you with a competitive advantage?
Shaping your price
Once you’ve defined your channels, you’ll need to take a look at your finance. You
would need to define how you would price your product as well as gather the estimated
costs associate with your strategy. Consider the message that will be communicated
through your price. Are you a premium product that will need to be aggressively sold?
Or are you trying to go lower than the current competition and open to new customers?
Be mindful though, how will that affect your profit margin?
Consider the following when shaping your price,
• How much value are you bringing to your customers?
• Are there any existing price assumptions?
• How should you price your product in comparison to your competitors?
• Will you be competing on price?
• Can you create a competitive advantage with your pricing model?
Develop Your Marketing Strategy
The final step is to develop a unique marketing strategy to reach out to your target
market. How would you delight your customers and surprise your competitors? Recall
how Apple used to work hard to build suspense and keep their iPhone plans secret until
“just the right moment” to go to market with their new product.
Lead generation: You already have your target market set in your sights. However, how
are you going to find people within your target market to become your customers? For
example, if you are selling app development packages to brick and mortar companies,
who in these companies should you reach out to? Where would you find all their
contacts? How would they prefer to be contacted? How would they prefer to respond?
Content: What value are you creating for users outside of the product or service? Well
curated content is a powerful way to get in front of potential customers and show them
that you’re knowledgeable and trustworthy. Can your content strategy educate users
and get them emotionally involved? Think about what you can teach users and how
your content strategy can help support your launch with tools like social media posts
and short video posts.
Marketing site: Where will the main information about your offering be found? Will it be
on your website, mobile app, social media platforms, posted all over the entrance to
your shop or all of them? Are they consistent and regularly updated? Are you explaining
your value quickly and in a compelling enough way to encourage a purchase? Most
importantly, is it easy to make a purchase? Have you ever come across any websites
that does everything right and when you decide you want to make a purchase, you
realise there’s no shopping cart?
Events, ads, and PR: What else can you do to get people interested? This could mean
using paid ads, search engine marketing, hosting or presenting at events, and using
Public relations (PR) to amplify your presence.
Ensuring you can follow through
Now that you have the plan, it is imperative that you have the systems and processes in
place to follow through. What is the right approach for reaching out to your customers?
For example, if you have chosen to utilise either inbound or outbound marketing, are
there processes in place to ensure the smooth and consistent delivery of your offerings
to your customers?
Inbound marketing (Blogs, social media): Which platform and tools are you going to use
for managing relationships and promoting the product? Can you be consistent and quick
to answer any enquiries and concerns? Do you have time to build an online community?
Are you in the loop with the latest Instagram trends and other key marketing channels
your customers are active on?
Outbound marketing (print media, TV commercials, brochures, radio, email, cold
calls): If you are building a sales team, how are you going to train them so that they’re
knowledgeable enough and confident in selling the product on the telephone? How are
your sales team going to find, engage with, and find the right leads? Are you able to
cope with all the enquiries after paying to broadcast your commercial on a popular TV
series for the month?
The Marketing Mix
"Marketing Mix" is a general phrase used to describe the different kinds of choices
companies have to make in the whole process of bringing a product or service to
market. It can be used to help you decide how to take a new offer to market. and to test
your marketing strategy.
The 4Ps
The 4Ps is just one way of defining the marketing mix. The 4Ps are:
1. Product (or Service).
2. Place.
3. Price.
4. Promotion.
Product/Service
1. What does the customer want from the product/service? What needs does it satisfy?
2. What features does it have to meet these needs?
3. Are there any features you've missed out?
4. Are you including costly features that the customer won't actually use?
5. How and where will the customer use it?
6. What does it look like? How will customers experience it?
7. What size(s), color(s), and so on, should it be?
8. What is it to be called?
9. How is it branded?
10. How is it differentiated versus your competitors?
11. What is the most it can cost to provide, and still be sold sufficiently profitably? (See
also Price, below).
Place
1. Where do buyers look for your product or service?
2. If they look in a store, what kind? A specialist boutique or in a supermarket, or both?
Or online? Or direct, via a catalogue?
3. How can you access the right distribution channels?
4. Do you need to use a sales force? Or attend trade fairs? Or make online
submissions? Or send samples to catalogue companies?
5. What do you competitors do, and how can you learn from that and/or differentiate?
Price
1. What is the value of the product or service to the buyer?
2. Are there established price points for products or services in this area?
3. Is the customer price sensitive? Will a small decrease in price gain you extra market
share? Or will a small increase be indiscernible, and so gain you extra profit margin?
4. What discounts should be offered to trade customers, or to other specific segments of
your market?
5. How will your price compare with your competitors?
Promotion
1. Where and when can you get across your marketing messages to your target
market?
2. Will you reach your audience by advertising in the press, or on TV, or radio, or on
billboards? By using direct marketing mailer? Through PR? On the Internet?
3. When is the best time to promote? Is there seasonality in the market? Are there any
wider environmental issues that suggest or dictate the timing of your market launch, or
the timing of subsequent promotions?
4. How do your competitors do their promotions? And how does that influence your
choice of promotional activity?
So Why Mix?
All elements from the Marketing Mix have an interaction on and with each other. If you
have a product, you will have to create a price and sell it. The way you communicate
this product will make it either more or less visible to your target market. The price you
ask for the product will infer a special quality. If you communicate effectively about the
product, it will need to be for sale in a place where your target market has access to it.
These elements, product, price, place and promotion all influence each other.
Most businesses understand the marketing mix; but finding the right marketing mix
balance takes time to put together.
SWOT vs. PESTEL
SWOT Analysis
SWOT analysis is a tool for auditing a company and the environment around it. It is the
first stage of planning and helps a company to focus on key issues.
SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and
weaknesses are internal SWOT factors. Opportunities and threats are external SWOT
factors.
• A strength is a positive internal factor.
• A weakness is a negative internal factor.
• An opportunity is a positive external factor.
• A threat is a negative external factor.
A company should try and aim to turn it’s weaknesses into strengths, and it’s threats
into opportunities. The outcome should be an increase in value for customers - which
hopefully will improve the company’s competitive advantage.
PESTEL Analysis
PESTEL Analysis, is a concept of marketing, used as a tool by companies to track the
environment they’re operating in or are planning to launch a new project/product/service
etc.
PESTEL stands for:
• P for Political,
• E for Economic,
• S for Social,
• T for Technological,
• E for Environmental, and
• L for Legal.
It gives a bird’s eye view of the whole environment from many different angles that one
wants to check and keep a track of while contemplating on a certain idea/plan.
Marketing With No Budget
Guerrilla marketing is quite different from traditional marketing efforts. Guerrilla
marketing means going after the conventional goals of profits, sales and growth but
doing it by using unconventional means, such as expanding offerings during gloomy
economic days to inspire customers to increase the size of each purchase.
Instead of asking that you invest money, guerrilla marketing suggests you invest time,
energy, imagination and knowledge instead. It puts profits, not sales, as the main
yardstick. It urges that you grow geometrically by enlarging the size of each transaction,
having more transactions per year with each customer, and tapping the enormous
referral power of current customers. And, it does it through one of the most powerful
marketing weapons around--the telephone.
The telephone is a remarkably effective follow-up weapon. Don't use the phone to follow
up all your mailings to customers, but research has proved that it will always boost your
sales and profits. Sure, telephone follow-up is a tough task. But it works. Anyhow, no
one ever said that guerrilla marketing is a piece of cake.
E-mail ranks up there with the telephone, possibly even out outranking it. It's
inexpensive. It's fast. It lets you prove that you really care. It helps strengthen your
relationship.
Lean upon your website as well. Instead of telling your whole story with other marketing,
use that other marketing to direct people to your site. Then, use the site to give a lot of
information and advance the sale to consummation. A key to online success is creating
a brief and enticing e-mail that directs readers to a website that give enough information
for a person to make an intelligent purchase decision.
Guerrilla marketing preaches fervent follow-up, cooperation instead of competition,
"you" marketing rather than "me" marketing, dialogues instead of monologues, counting
relationships instead of counting sales, and aiming at individuals instead of groups.
All guerrillas realize that the process of marketing is very much akin to the process of
agriculture. Their marketing plans are the seeds they plant. Their marketing activities
are the nourishment they give to each plant. Their profits are the harvest they reap.
They know those profits don't come in a short time. But come they do if you start with a
plan and commit to it.
Guerrillas know they must seek profits from their current customers. They worship at the
shrine of customer follow-up. They are world-class experts at getting their customers to
expand the size of their purchases. Because the cost of selling to a brand-new
customer is six times higher than selling to an existing customer, guerrilla marketers
turn their gaze from strangers to friends. This reduces the cost of marketing while
reinforcing the customer relationship.
When your customers are confronted with their daily blizzard of junk mail and unwanted
e-mail, your mailing piece won't be scrapped with the others and your e-mail won't be
instantly deleted. After all, these folks know you, identify with you, trust you. So they'll
be delighted to purchase--or at least check out--that new product or service you're
offering. They'll always be inclined to buy from a company they've patronized.
Guerrillas are able to think of additional products and services that can establish new
sources of profits to them. They're constantly on the alert for strategic alliances--fusing
marketing efforts with others in order to market aggressively while reducing marketing
investment.
The internet and your bookstore are teeming with a treasure trove of marketing tactics
that can help you discover smart guerrilla marketing tactics.
But learning about them is only half the battle. If you don't begin putting them into
practice, you won't see the results these type of marketing efforts can have on your
bottom line.
BRAND STRATEGY- What is BRANDING?
Branding is one of the most important aspects of any business, large or small, retail or
B2B. An effective brand strategy gives you a major edge in increasingly competitive
markets. But what exactly does "branding" mean? How does it affect a small
business like yours?
Simply put, your brand is your promise to your customer. It tells them what they can
expect from your products and services, and it differentiates your offering from your
competitors'. Your brand is derived from who you are, who you want to be and
who people perceive you to be.
Are you the innovative maverick in your industry? Or the experienced, reliable one? Is
your product the high-cost, high-quality option, or the low-cost, high-value option? You
can't be both, and you can't be all things to all people. Who you are should be based to
some extent on who your target customers want and need you to be.
The foundation of your brand is your logo. Your website, packaging and promotional
materials--all of which should integrate your logo--communicate your brand.
Brand Strategy
Your brand strategy is how, what, where, when and to whom you plan on
communicating and delivering on your brand messages. Where you advertise is part of
your brand strategy. Your distribution channels are also part of your brand strategy. And
what you communicate visually and verbally are part of your brand strategy, too.
Consistent, strategic branding leads to a strong brand equity, which means the added
value brought to your company's products or services that allows you to charge more for
your brand than what identical, unbranded products command. The most obvious
example of this is Coke vs. a generic soda.
Because Coca-Cola has built a powerful brand equity, it can charge more for its
product--and customers will pay that higher price.
The added value intrinsic to brand equity frequently comes in the form of perceived
quality or emotional attachment. For example, Nike associates its products with star
athletes, hoping customers will transfer their emotional attachment from the athlete to
the product. For Nike, it's not just the shoe's features that sell the shoe.
Defining Your Brand
Defining your brand is like a journey of business self-discovery. It can be difficult, time-
consuming and uncomfortable. It requires, at the very least, that you answer the
questions below:
• What is your company's mission?
• What are the benefits and features of your products or services?
• What do your customers and prospects already think of your company?
• What qualities do you want them to associate with your company?
Do your research. Learn the needs, habits and desires of your current and prospective
customers. And don't rely on what you think they think. Know what they think.
Because defining your brand and developing a brand strategy can be complex, consider
leveraging the expertise of a nonprofit small-business advisory group or a Small Business
Development Center .
Once you've defined your brand, how do you get the word out? Here are a few simple,
time-tested tips:
• Get a great logo. Place it everywhere.
• Write down your brand messaging. What are the key messages you want to
communicate about your brand? Every employee should be aware of your brand
attributes.
• Integrate your brand. Branding extends to every aspect of your business--how you
answer your phones, what you or your salespeople wear on sales calls, your e-
mail signature, everything.
• Create a "voice" for your company that reflects your brand. This voice should be
applied to all written communication and incorporated in the visual imagery of all
materials, online and off. Is your brand friendly? Be conversational. Is it ritzy? Be
more formal. You get the gist.
• Develop a tagline. Write a memorable, meaningful and concise statement that
captures the essence of your brand.
• Design templates and create brand standards for your marketing materials. Use
the same color scheme, logo placement, look and feel throughout. You don't need
to be fancy, just consistent.
• Be true to your brand. Customers won't return to you--or refer you to someone
else--if you don't deliver on your brand promise.
• Be consistent. I placed this point last only because it involves all of the above and
is the most important tip I can give you. If you can't do this, your attempts at
establishing a brand will fail.
Building A Mission / Vision Statement
Vision Statements and Mission Statements are inspiring words chosen by successful
leaders to clearly and concisely convey the direction of the business. By crafting a clear
mission statement and vision statement, you can powerfully communicate your intentions
and motivate your team or company to realize an attractive and inspiring common vision
of the future.
"Mission Statements" and "Vision Statements" do two distinctly different jobs.
A Mission Statement defines the company’s purpose and primary objectives. Its prime
function is internal – to define the key measure or measures of the company’s success –
and its prime audience is the leadership team and investors.
Vision Statements also define the company’s purpose, but this time they do so in terms
of the company’s values rather than bottom line measures (values are guiding beliefs
about how things should be done.) The vision statement communicates both the purpose
and values of the organization.
For employees, it gives direction about how they are expected to behave and inspires
them to give their best. Shared with customers, it shapes customer's understanding of
why they should work with your company.
When developing a mission statement, try and answer the following questions:
• What do we do today?
• Who do we do it for?
• What is the benefit?
When developing a vision statement, try and answer the following questions:
• What do we want to do going forward?
• When do we want to do it?
• How do we want to do it?
ENTREPRENEURIAL FINANCE
https://youtu.be/lH95Ih8Q0QE
CASH FLOW
Cash flow is the money that is moving (flowing) in and out of your business in a month.
Although it does seem sometimes that cash flow only goes one way - out of the business - it
does flow both ways.
Cash is coming in from customers or clients who are buying your products or services. If
customers don't pay at time of purchase, some of your cash flow is coming from collections of
accounts receivable.
Cash is going out of your business in the form of payments for expenses, like rent or a
mortgage, in monthly loan payments, and in payments for taxes and other accounts payable.
Think of 'cash flow' as a picture of your business checking account. If more money is coming in
than is going out, you are in a "positive cash flow" situation and you have enough to pay your
bills. If more cash is going out than coming in, you are in danger of being overdrawn, and you
will need to find money to cover your overdrafts. This is why new businesses typically need
working capital, in the form of a loan or line of credit, to cover shortages in cash flow.
Lack of cash is one of the biggest reasons small businesses fail. The Small Business
Administration says that "inadequate cash reserves" are a top reason start-up don't succeed.
It's called "running out of money," and it will shut you down faster than anything else. As a
start-up, you may need to keep track of cash flow on a weekly, maybe even a daily basis.
https://youtu.be/hISdzmjNO5w
BURN RATE
What Is Burn Rate & How Is It Calculated?
The term is usually used in connection to a start-up, and indicates the rate at which your
company is consuming, or burning, its financing or store of venture capital to support
operations in excess of cash flow.
It's a measure of negative cash flow, and it is most often expressed in months, though in a crisis
it might be measured in weeks or days.
For instance, let's say your company needs $5000 every month to keep the lights on, but sales
are only $2500 for the same period. You are then burning $2500 a month.
There are two good reasons that burn rate matters. The first is that it tells you when you're
going to run out of money.
The second is that investors look at a start-up companies burn rate and measure it against
future revenues of the company to decide if the company is a worthwhile investment. If the
burn rate is greater than forecast or if the company's revenues are not growing as rapidly as
they are forecast to grow, then investors may think the company is not a good investment. It
may be too risky.
You should calculate and watch your burn rate carefully, as many businesses, such as those in
technology, may take a long time to find their market and become profitable.
2 Easy Steps to Calculating Burn Rate
Let's focus on a period, such as a quarter. What's the difference in your cash balance at the
beginning of the quarter and at the end of the quarter? So, if you started with $10,000 "in the
bank", and at the end of the quarter you have $4000 you burned $6000.
Divide by the number of months in the period you selected. There are three months in a
quarter, so your company burned $2000 a month.
If you want to stay in business, sales must rise to generate at least $2000 a month. Of course, if
you have planned acquisitions coming up, your burn rate going forward will be higher.
BALANCVE SHEET
What Is A Balance Sheet?
The balance sheet is a very important financial statement that summarizes a company's assets
(what it owns) and liabilities (what it owes). A balance sheet is used to gain insight into the
financial strength of a company. You can also see how the company resources are distributed
and compare the information with similar companies.
The balance sheet informs company owners about the net worth of the company at a specific
point in time. This is done by subtracting the total liabilities from the total assets to calculate
the owner's equity, also known as shareholder's equity (for corporations) or simply the net
worth.
https://youtu.be/NkbCHQKxXXY
RETURN OF INVESTMENT (ROI)
What Is ROI & How To Calculate It?
An investor cannot evaluate any investment, without first understanding how to calculate
return on investment (ROI). This calculation serves as the base from which all informed
investment decisions are made, and although the calculation remains constant, there are
unique variables that different types of investment bring to the equation.
To calculate it, you simply take the gain of an investment, subtract the cost of the investment,
and divide the total by the cost of the investment. Or:
ROI = (Gains – Cost)/Cost
An Example
If an investor buys 20 shares of Your Company for $10 a share, his investment cost is $200. If he
sells those shares for $250, then his ROI is ($250-200)/$200 for a total of 0.25 or 25%. This can
be confirmed by taking the cost of $200 and multiplying by 1.25, yielding $250.
https://youtu.be/eoAR8ZyAyoc
STARTUP VALUATION
What is Valuation & How to Value a Start-up?
Business valuation of any kind is never cut and dry. For start-ups with little or no revenue and
an uncertain future, assigning a valuation is especially tricky. For mature businesses that are
publicly listed and have a steady revenue, there are specific facts and figures to use to
determine a value. However, a start-up is much more difficult to value since it is likely nowhere
near making relevant sales. If you need to raise capital for your start-up, it’s important to
determine what your start-up’s value is. But do you know how to best value your start-up?
One of the most basic economic principles is that of supply and demand. You can use this
principle for valuing your start-up. As the name implies, the more scarce a supply, the higher
the demand. For your start-up, that means if you are part of a much talked about new patented
technology start-up, you could drive up your valuation by attracting multiple interested
investors competing for the deal.
Most start-ups won’t be fortunate enough to experience multiple investors courting them for a
deal. However, even if you don’t have real demand from investors, you can create a perceived
demand when dealing with one investor. To do so, don’t let them think that they are the only
investor interested in your start-up, as that can decrease your valuation. Work to portray your
start-up as new and unique to create the scarcity needed to maximize your valuation.
Without a history showing profit or revenue, your start-up has very little to no liquidity.
Without cash flow, it is difficult for start-ups to determine their valuation. It’s going to take time
to become profitable, so you will need to look to your future success to determine a value. Ask
yourself a few key questions:
How many years will it take you to be profitable? If you can get there quicker, your valuation
will be higher.
How much are comparable companies valued at when they become profitable?
A company may be worth a fraction of the number they are valued at when they reach
profitability. Factors like likelihood of success and the quality of the management team should
be taken into factor.
Your industry makes a difference. Each industry has its own way of valuing start-ups. For
example, an VR/AR Start-up would have a much higher valuation than a SaaS CRM. Research
the valuations achieved in recent investments or M&A transactions in your market before you
approach investors.
Some angel investors and venture capitalists use a “rule of thumb” value to quickly come up
with a range of start-up value. The values are typically set by the investors, and they depend on
the start-up’s stage of development. Simply put, the further along the start-up has progressed,
the lower the investor’s risk and the higher its value. Examples of stages of development
include:
A start-up has an exciting business idea
A start-up has a stunning team of engineers and a great business person
The start-up has a Minimum-Viable-Product (MVP) with early adopters
The start-up has partners, a customer base and a pipeline of prospects
Revenue growth and an obvious pathway to profitability is shown.
What Grade Are You? Another way to look at the developmental stages is by breaking it out
into four stages similar to the four years of high school education. The stage you are in is a key
factor in determining your value.
Freshman: an idea, team and a prototype. Bootstrap financed and raised $50 thousand to
$0.5M.
Sophomore: MVP with early adopters. Seed stage angels financed from $500 thousand to $1.5
million.
Junior: Experiencing user or revenue growth and displayed a full proof of concept around the
start-up. Nearing up to $1 million in revenue. Series A venture capital financed from $1.5
million to $5 million.
Senior: Reached multi-millions in revenue and ready to scale up with a capital raise. Series B/C
venture capital financed from $5 million to $50 million.
https://youtu.be/USDkr-dmkDo
ASSESSMENT: Using the tools provided in the Toolbox, build a 3 Year Financial Plan for your
business.
TOOLBOX: STARTUP RUNWAY
Startup Runway is a cash planning tool which helps start-ups understand, manage and extend
their cash runway.
FUNDING AND EXITS
https://youtu.be/Jibp_2GUxbM
Bootstrap
This is where you invest your own money to startup. You can use your savings or use your credit
cards to pay for initial expenses that you will incur.
Pre-Seed Capital
You have an idea, maybe a working prototype and are looking for funding that will allow you to
focus on your business full time. Pre-seed capital tends to cover the first stage in the life of a
start-up and is often comprised of three main sources of financing:
1. FFF (fools, friends, and family): the three classical Fs that support you and are
keen to invest in your business.
2. Business angels: previous start-up founders who have had exits and decide to
invest the money in other start-ups (or their own) or investors that despite not
having a tech-related background decide to back companies in the space, given
their potential growth and current market situation. Contrary to Venture Capital
firms, business angels often invest their own money and at one of the riskiest
stages for start-ups, thus their importance in every single start-up market.
3. Accelerators: These organisations provide capital, mentorship and office space to
teams in exchange for 5 to 10% of equity.
Seed Capital
Seed capital can be described as the capital necessary to start a company and to try to find
product-market fit. Seed rounds range from S$250K to S$750K or S$1 million. The main
providers of capital at these stage are business angels, super angels and early stage Venture
Capital firms. However, in recent years more players have joined the game and are, in theory,
improving the ecosystem.
Crowdfunding: there are two types of crowdfunding that are closely tied to start-up investing.
1. Reward based: For hardware start-ups and creative projects there’s what’s often called
‘reward-based crowdfunding’, where sites like Kickstarter and Indiegogo are global leaders.
Users can back the projects they like and get something material in return (physical or digital
products and services), receiving no equity from the teams or companies providing such goods.
“The funding goal is the amount of money that a creator needs to complete their
project. Funding on Kickstarter is all-or-nothing. No one will be charged for a pledge towards a
project unless it reaches its funding goal. This way, creators always have the budget they scoped
out before moving forward.” – Kickstarter.com
2. Equity based: The other kind of crowdfunding that’s relevant for start-ups is equity
crowdfunding. As the name indicates, in this instance backers (investors) of the companies get
equity in return, thus becoming shareholders of the companies and being able to participate in
the future returns the start-ups might be able to provide to investors. This type of investing is
often carried by platforms that serve as aggregators, choosing start-ups and inviting backers to
invest in them through the platform, which get to charge a fee per deal closed.
Syndicate investing: the idea of a syndicate is to let angel investors syndicate deals with each
other. This means that angels with good track records can lead investments in early stage start-
ups and allow other angels to co-invest, providing additional capital to the financing rounds.
The advantage for the three parts involved are simple to understand:
• Lead angel investors get to choose the start-ups they want to invest in and don’t
have to face the burden of providing all the capital.
• Angels that join in don’t have to select the start-ups if they trust the criteria of the
lead angel investors.
• Start-ups can get more money than usual, faster.
Series A
Start-ups that get to this stage have usually figured out their product, the size of the market
and need capital to scale, improve distribution systems or establish a business model if they
don’t have one yet. Typical Series A rounds range from S$2 to S$5 million and are led by
traditional Venture Capital firms that end up owning between 15 and 30% of the invested start-
ups.
Series A and previous stages are the riskier for investors, given the doubts surrounding the
start-ups, their products and their teams.
Series B
Series B investments are “all about scaling”. Successful start-ups at this stage tend to have an
established user base and a business model that is working.
Series B usually starts at S$6 million and can be has high as S$8 to S$10 million. Series B deals
are not as common in Singapore as in the US and tend to be led or include the participation of
US-based VC firms.
Series C
When companies reach this stage they’re fully mature. Business model is working -whether the
company is profitable or not-, user base is expanding and acquisitions might be in the crosshairs
of the executives leading these companies.
Financing rounds at these stages tend to range from tens to hundreds of millions. A clear
difference between Series C and other rounds, besides the amount being invested, is that at
this point private equity firms and investment banks tend to be the lead investors, with the
participation of large Venture Capital firms. From this stage on the outcome tends to be an IPO
or to get acquired by a much bigger company.
SOURCES OF FUNDING
An Angel Investor is someone who puts their own finance into the growth of a small business at
an early stage, also potentially contributing their advice and business experience. They might be
a wealthy, well-connected individual who’s taken a personal liking to your product, a group of
angel investors who club together to fund start-ups, or even a friend or member of your family
who’s decided to put some money in.
Angels make their own decision about the investment, and in return for providing personal
equity they take shares in the business. The amount they invest is flexible – it could be a small
amount to get you off the ground, or a larger amount. While they can provide insight and
advice about your business, their job isn’t to build up your company.
Venture Capital funding is a whole other level. For a start, rather than individual investors,
winning venture capital usually involves a whole firm – investors, board members, and people
whose job is to generally help your business develop. Venture capital firms are made of
professional investors, and their money comes from a variety of sources – corporations and
individuals, private and public pension funds, foundations.
Those who invest money in venture capital funds are called ‘limited partners’; those managing
the fund and working with individual companies are called ‘general partners’, and these are the
people who work with the start-up to ensure that it's developing.
The job of venture capital firms is to find businesses with high growth potential. The firm take
shares and have a say in the future of the company and its running, and in exchange for their
involvement venture capitalist firms expect a high return on investment. After a period of time,
often years, the venture capitalists sell shares in the company back to the owners or through an
initial public offering, hopefully making much more that what they put in.
Venture capital usually deals with very large amounts of money – rather than seed funding, it
can be multi-million deals. And while more and more start-ups are winning venture capitalism
investment, with the sums involved and the risk of investing in a start-up, businesses a bit
further down the line might be more likely to gain the trust and money of venture capitalists.
TERM SHEETS
erm sheets are non-binding agreements setting forth the basic terms and conditions under
which an investment will be made. A term sheet serves as a template to develop more detailed
legal documents. Once the parties involved reach an agreement on the details laid out in the
term sheet, a binding agreement or contract that conforms to the term sheet details is then
drawn up. A term sheet lays the groundwork for ensuring that the parties involved in a business
transaction are in agreement on most major aspects of the deal, thereby precluding the
possibility of a misunderstanding. It also ensures that expensive legal charges involved in
drawing up a binding agreement or contract are not incurred prematurely.
They generally cover the more important aspects of a deal, without going into every minor
detail and contingency covered by a binding contract. For example, a term sheet from a venture
capital company that is investing in an early-stage company may contain such details as the
amount of investment, the percentage stake sought, anti-dilutive provisions and valuation.
EXAMPLE OF TERM SHEET: https://kindrik.sg/template/se-asia-seed-investment-term-sheet-
2021-05-25.pdf?404=true
DEBT VS. EQUITY FINANCING
Debt Financing
Purchasing a home, a car or using a credit card are all forms of debt financing. You are taking a
loan from a person or business and making a pledge to pay it back with interest. Debt financing
for your business works in a similar way. As a business owner, you can apply for a business loan
from a bank or receive a personal loan from friends, family or other lenders, all of which you
must pay back. Even if family members lend you money for your business, they must charge the
minimum interest rate in order to avoid the gift tax.
The advantages of debt financing are numerous. First, the lender has no control over your
business. Once you pay the loan back, your relationship with the financier ends. Next, the
interest you pay is tax deductible. Finally, it is easy to forecast expenses because loan payments
do not fluctuate.
The downside to debt financing is very real to anybody who has debt. Debt is a bet on your
future ability to pay back the loan. What if your company hits hard times or the economy, once
again, experiences a meltdown? What if your business does not grow as fast or as well as you
expected? Debt is an expense and you have to pay expenses on a regular schedule. This could
put a damper on your company's ability to grow.
Finally, although you may be an Pte Ltd or other business entity that provides some separation
between company and personal funds, the lender may still require you to guarantee the loan
with your family's financial assets.
Equity Financing
The public does not understand equity financing as well as debt financing, because equity
financing involves investors. You could offer shares of your company to family, friends and
other small investors, but equity financing often involves venture capitalists or angel investors.
The big advantage of equity financing is that the investor takes all of the risk. If your company
fails, you do not have to pay the money back. You will also have more cash available because
there are no loan payments. Finally, investors take a long-term view and understand that
growing a business takes time.
The downside is large. In order to gain the funding, you will have to give the investor a
percentage of your company. You will have to share your profits and consult with your new
partners any time you make decisions affecting the company. The only way to remove investors
is to buy them out, but that will likely be more expensive than the money they originally gave
you.
EXIT STRATEGY
https://youtu.be/l5e76iKzHU8
The exit strategy is a way of "cashing out" an investment.
Examples include an initial public offering (IPO) or being bought out by a larger player in the
industry. Also referred to as a "harvest strategy" or "liquidity event”. It is a method by which a
venture capitalist or business owner intends to get out of an investment that he or she has
made in the past.
It's more difficult for a VC or entrepreneur to get money out of an investment because they are
generally dealing with private companies. When a firm is private, the shares cannot be sold
nearly as easily as when the firm is publicly traded on a stock exchange. So, even though a
private start-up firm could be worth millions of dollars, the VC/entrepreneur has little access to
this wealth.
You can think of the exit strategy as the first opportunity to trade an illiquid asset (shares in a
private firm) for a very liquid asset (cash).
Start-ups looking for angel investors or venture capital (VC) absolutely need an exit strategy
because investors require it. The exit is what gives them a return. And the rest of us, starting,
running, and growing a business, but not looking for outside investors, will probably need an
exit eventually; but there’s probably no rush. The exit strategy related to start-up funding, is
what happens when investors who had previously put money in a start-up get money back,
usually years later, for a lot more money than they initially spent.
Investor exits normally happen in only two ways: Either the start-up gets acquired by a bigger
company, for enough money to give the investors a return (as just happened with WhatsApp &
Facebook), or the start-up grows and prospers enough to eventually register for selling shares
of stock to the buying public over a public stock market, as happened with Facebook in 2012
and Twitter in 2013.
When investors sit for pitches from start-ups, they expect the start-ups to cover the exit
strategy. That usually means talking, in the pitch and in the business plan, about how similar
companies in similar markets have been able to exit via selling out to a larger company. The
more sophisticated plans and pitches will mention recent exits and offer information about how
the companies that exited were valued when they were bought. That usually ends up as
something like “[this similar company] was purchased by [that company] in [that year] for [that
amount], which was [that multiple] of its revenues.” The standard phrase in that context is “5X”
for an exit value of five times revenues, or “10X,” or whatever. And that should not be confused
with similar phrasing describing the investors’ exit: an exit at “5X,” for example, would be one
in which the investors received an actual exit amount, in money or shares they can sell, of five
times what they originally invested.
You can understand how investors feel about exit strategy if you consider what happens to
investors who don’t get exits. They don’t have a return. They put money into a company, but
they get nothing back. Having a minority share in a healthy, growing company, without any
prospect of an exit, is a terrible scenario for investors.
TYPES OF EXITS
An IPO
In an IPO, you sell a portion of your company in the public markets. You and your management
team typically remain in place for a period of years, your investors and managers may be able
to sell some stock, and your company continues to operate much as it has in the past.
However, your company will be subject to additional government regulations, and stock market
analysts and institutional investors will scrutinise your quarterly performance.
A Strategic Acquisition
In a strategic acquisition, another company purchases your business, either with cash or stock
in the acquiring company or with some combination of stock and cash. The acquirer may or
may not retain you and your management team, and may or may not make substantial changes
in your company's operations, staff, and business lines.
The benefit is typically liquidity because if you sell the company to a strategic acquirer you
might be able to sell most or all of your stock.
The disadvantage of this exit strategy is that "you are likely to lose operating control”.
A Management Buyout
If you decide to recapitalize and sell the company to the next generation of managers it is
known as a management buyout. This type of transaction is usually financed through some
combination of debt and/or private equity investment, with the debt collateralized by the
assets of the company. It provides immediate liquidity to the owner and early shareholders,
and allows the company to continue as a private enterprise.
The benefit is that you usually have a smoother transition. The founders most likely are not
managing the company on a day-to-day basis, ceding that to the management team, which is
now buying the company. This exit strategy marks a change of ownership, gets the
shareholders some liquidity, yet provides a seamless transition for the company and employees
and other constituencies.
LEGAL REQUIREMENTS
https://youtu.be/AcFQRg2QuxU
https://youtu.be/2WKiNg00Mpc
Intellectual Property [IP]
Intellectual Property [IP] is the ownership of ideas. Unlike tangible assets to your business such
as computers or your office, intellectual property is a collection of ideas and concepts.
There are only three ways to protect intellectual property in the United States: through the use
of copyrights, patents, or trademarks. A copyright applies to a written document; a patent to a
specific product design; and a trademark to a name, phrase or symbol. All three methods have
limitations, there's no one perfect way to protect an idea.
Copyright / Copyright Protection
A copyright will protect the following categories of works:
• literary works
• musical works, including any accompanying words
• dramatic works, including any accompanying music
• pantomimes and choreographic works
• pictorial, graphic and sculptural works
• motion pictures and other audio-visual works
• sound recordings
• architectural works
• computer programs (sometimes the graphical user interface) and websites
Copyright protection gives the copyright holder the exclusive right to copy the work, modify it
(that is, create "derivative works"), and distribute, perform and display the work publicly.
Ideas or concepts do not have copyright protection. Copyright protects the expression of the
idea, but not the ideas themselves. For example, if I ask you what a chair is, you get a picture in
your head; the picture I get in my head is different from the picture you get in your head and
probably also different from the picture Buffy gets in her head. These are the "ideas" of what a
chair is. However, if you were to draw the chair you envisioned in your head or use words to
describe that chair, it's an "expression" of the idea--and that's what's protected by copyright.
Generally, the only protection for ideas and concepts is through trade secret law and/or
confidentiality agreements, which provide a contractual remedy for misuse or disclosure of the
idea.
Patents
Patents protect processes, methods and inventions that are "novel," "non-obvious" and
"useful." If granted, a patent gives you a 20-year monopoly on selling, using, making or
importing an invention into the United States. The requirements for a patent are complex, but
here they are in a nutshell:
• Your work must be novel. This means it must not be known or used by others in
this country, or patented or described in a printed publication here or abroad, or
in public use or for sale in this country more than one year prior to the application
for patent.
• Your work must be non-obvious. This means it must not be obvious to a person
having ordinary skill in the pertinent art as it existed when the invention was
made.
• Your work must be useful. This means that it must have current, significant,
beneficial use as process, machine, and manufacture, composition of matter or
improvements to one of these. According to the Patent Office: "The word
'process' is defined by law as a process, act or method, and primarily includes
industrial or technical processes. The term 'machine' used in the statute needs no
explanation. The term 'manufacture' refers to articles that are made, and includes
all manufactured articles. The term 'composition of matter' relates to chemical
compositions and may include mixtures of ingredients as well as new chemical
compounds. These classes of subject matter taken together include practically
everything which is made by man and the processes for making the products."
Patent protection requires full public disclosure of the work in detail and therefore precludes
maintaining any trade secret protection in the same work.
Trademarks
A trademark is like a brand name. It is any word(s) or symbol(s) that represent a product to
identify and distinguish it from other products in the marketplace. A trademark word example
would be "Rollerblades." A trademark symbol would be the peacock used by NBC.
A trademark can be registered in three ways:
1. By filing a "use" application after the mark has been used.
2. By filing an "intent to use" application if the mark has not yet been used.
3. In certain circumstances in which a foreign application exists, you can rely on that.
The TM (™) mark may be used immediately next to your mark. The ® registration symbol may
only be used when the mark is registered with the PTO. It is unlawful to use this symbol with
your mark before receiving an issued registration from the PTO.
What qualities make for a strong trademark? The cardinal rule is that a mark must be
distinctive. The more distinctive it is, the easier your trademark will be to enforce. This is why
so many trademarked products have unique spellings.
Trademark rights last indefinitely if the company continues to use the mark to identify its goods
or services. When the mark is no longer being used, the registration is terminated. The initial
term of federal trademark registration is 10 years, with 10-year renewal terms.
Trade Secrets
There is a great deal of confusion regarding trade secrets. Many people think that a trade secret
is some type of protection provided by the government that allows them to seek recourse in
court should someone infringe upon their idea. However, unlike copyrights, trademarks and
patents, a trade secret is not registered with any government office to provide a verifiable
public record of any claims to the secret. You can, however, declare one to a patent lawyer in a
notarized and signed disclosure. In this manner the trade secret belongs to you forever--or until
someone leaks it.
Trade secrets refer to items such as recipes that are unique and provide a business with a
competitive advantage, but which cannot be safeguarded under current forms of idea
protection such as copyright, trademark or patent. The best form of protection for these items
is to keep them a secret. One of the most famous and best-kept trade secrets is the formula for
Coca-Cola.
The best way to secure the information for a trade secret is to restrict access to the secret and
have individuals and companies sign nondisclosure agreements with you should you enter into
a relationship with them which will require them to know some aspects of the secret. If
someone independently develops or reverse-engineers your trade secret, there's nothing you
can do. If someone does leak it, you can sue for theft. Suing, however, cannot stop the person
from using the leaked information. So although you may get money from the suit, you lose the
larger potential profits you could have made from the idea. Still, if your luck holds and your
trade secret remains secret, royalty income from it can last significantly longer than the patent
period.
Non-Disclosure Agreements [NDAs]
A Non-Disclosure Agreement (NDA) is a legal contract between two or more parties that
signifies a confidential relationship exists between the parties involved. The confidential
relationship often refers to information that is to be shared between the parties but should not
be made available to the general public. NDAs are also commonly referred to as a
confidentiality agreement.
NDAs often arise when two companies are about to do business together. The parties are
restricted from releasing information regarding any business processes of the counterparty
integral to the company's operations. NDAs also may arise between an employer and
employee. If the employee has access to sensitive information about the company, he may be
asked to sign an NDA when he is hired. This provides an incentive to the employee not to
release this sensitive information and avoid a costly legal headache. NDAs also sometimes arise
between a company seeking funding and an investor in the company or potential investors, as
NDAs are a very common way to protect company trade secrets. This information may include a
go-to-market strategy and sales plan, potential customers, a manufacturing process or
proprietary software. If an NDA is breached by one party, the other party may seek court action
to prevent any further disclosures and may sue the disclosing party for monetary damages.
ASSESSMENT: Propose a Business Structure for your business.
AN INVESTOR SUMMARY
What Is It?
The first thing the professional investor wants to see (and looks forward to) when evaluating a
possible investment is an executive summary of the project.
This is sometimes also called:
• Executive Summary
• Investor one-pager
• Investor executive summary
Unlike standard executive summaries that appear at the beginning of any business plan, this
document is different as it serves a completely different purpose. The purpose is primarily to
convince investors to ask for more information, and to convince them that your venture is
worth pursuing. Creating an executive summary is a matter of craftsmanship and experience
combined with the knowledge of the investor’s goals and thought process. This is an excellent
opportunity for you to create a great first impression, and we will be happy to help you.
Why Is It Important?
Venture capital funds and professional investors get dozens of calls and emails every week with
“investment opportunities”. They are very busy investing in many different companies and
typically only need five minutes to determine their stance on whether to invest or not. The
investor summary is a summary of the business plan and marketing proposal packaged in a
contextually and visually appealing way. After reading the executive summary, the investor
should receive positive answers to the following questions:
• Is there a real problem in the market and is the market big enough?
• Is there a need and do you have the solution?
• Do you have a competitive advantage?
• Is the project going to make money?
• Will the team be able to carry out the plan?
A good investor summary is your way of attracting the attention of investors, and when
completed properly, it can bring a lot of financing to your startup.
What Should It Include?
Must Have:
• One line description of the project
• The problem
• The solution
• Market overview
• Competitors overview
• Competitive Advantage
• Business Model
Nice To Have:
• Marketing and go-to-market strategy
• Milestones and goals
• Budget – Sources and Uses
Example : One Page Investment Summary
Toolbox : One Page Investment Summary Template
PITCHING FOR INVESTMENT
What Is A Business Pitch?
A pitch is basically delivering a business plan verbally. A pitch typically takes the form of an
entrepreneur or group of entrepreneurs presenting or describing their ideas to prospective
investors.
An elevator pitch is simply a very short pitch that distills the idea into a short summary that
takes only as long as a short elevator ride. A video pitch is a pitch done via a short video rather
than in person.
Regardless of the means chosen to pitch, the aim is typically the same; describing a business
opportunity with the intention of securing funding to develop the idea further.
The Business Pitch Process
Typically, entrepreneurs commence the pitch with a request for a certain amount of funding in
return for a certain percentage of equity in the business. The presenter then describes the
opportunity and concludes with a Q&A session. If an offer is made by an investor and it is
accepted by the presenter, due diligence would then be undertaken to ensure that the
investment opportunity is as it was described and that the key financials stand up to scrutiny.
Business plan pitches are often presented with the aid of presentation tools such as Microsoft
PowerPoint. If this is the case for you, it is worth reading up on key presentation tips such as
Guy Kawasaki’s 10/20/30 rule. It is also worth providing the audience with a copy of the slide
deck so they can take notes. Finally, these handouts should contain an appendix with an
additional level of detail not covered by the main pitch.
Unlike most business plans, the pitch is not a physical (or virtual) document. A pitch should,
however, contain the same content as a business plan, with the main differences being the
breadth of material covered and the delivery method. Therein lies one critical problem.
For some entrepreneurs, business planning is ‘difficult’ and pitching is assumed to be a slightly
easier means to secure funding. This perception results in shortcuts and a dangerously myopic
perspective.
Preparation tends to be more limited and the results are all too predictable — the entrepreneur
is discomfited when the prospective investor asks the most rudimentary of questions. The
lesson is clear- a pitch is not a substitute for a business plan; it is simply a different, more
concise, delivery method.
PITCH FOR INVESTMENT
https://youtu.be/rhL03SdSjhE
Creating an Ideal Pitch
The optimum way to create an effective pitch is to start with a thorough investment summary.
Once this is written, the key elements of the investment summary can be distilled into a pitch.
One major benefit of this method is that while the process of creating a business plan can be
difficult, it is also rigorous and usually an exhaustive process. Hence it serves to equip the
author with the answers to typical questions they should expect from prospective investors.
Creating a pitch without the discipline of following the business plan process is fraught with
danger. While the presenter can describe the product or service in detail, those that pitch
without a plan tend to fall when asked to describe the market opportunity or their sales
forecasts in more detail.
The Investment
A primary aim of most pitches is to secure funding for an idea. The presenter needs to decide in
advance what the likely terms are for the investment. Like a business plan, a pitch needs to
describe the opportunity for the investor in clear terms so they can assess risk and return, and
how it sits within their existing investment portfolio.
Considering pitches along a continuum, at one end you have an idea (which is essentially
worthless) and at the other end a successful company generating significant free cash flows
daily. The point along the continuum where your company sits is hugely relevant in the context
of the investment opportunity. An idea that has not yet been commercialized and has no
customers is hugely risky and, as a result, any prospective investor is going to demand a
significant equity stake in return for their investments. For many the risk may even be too high
to bear as they may doubt the ability of the company to generate sufficient cash to cover day-
to-day operations, to say nothing of generating sufficient sales to support an exit for the
investor in due course. The equity you are prepared to give away and the value that you put on
that equity needs to be based on real metrics, such as existing sales. While the means to value
businesses are varied, the figures you are offering need to be plausible and realistic when
considered in the context of existing sales levels (as distinct from aspirational sales levels).
Summary
The key message to take away is that a pitch is simply a concise verbal manifestation of the
investment summary and is not to be considered as a substitute. Those who succeed with their
pitch objectives are those who present a viable opportunity, can answer questions from a
panel, and can convince these prospects that their pitch is worthy of investment. All the same
qualities that those looking to secure funding for a business plan should strive for!
PITCHING ESSENTIALS
https://youtu.be/WmorNKbymy4
TOOLBOX: VARIOUS
IMPROVE PRESENTATIONS : https://pitchdeck.improvepresentation.com/best-pitch-decks
PITCH DECK EXAMPLES: https://pitchdeckexamples.com
PITCHDECK: https://pitchdeck.io/
ASSESSMENT: Build a Pitch Deck for your business using no more than 10 slides, using
PowerPoint / Google Docs / Keynote.//FINAL DEMO
Week 10: Go to Market 5. How and where will the customer use it? 3. When is the best time to promote? Is there seasonality in
6. What does it look like? How will customers experience the market? Are there any wider environmental issues that
it? suggest or dictate the timing of your market launch, or the
What is Marketing Strategy 7. What size(s), color(s), and so on, should it be? timing of subsequent promotions?
8. What is it to be called? 4. How do your competitors do their promotions? And how
Marketing strategy is a long-term plan for achieving a 9. How is it branded? does that influence your choice of promotional activity?
company's goals by understanding the needs of 10. How is it differentiated versus your competitors?
customers and creating a distinct and sustainable 11. What is the most it can cost to provide, and still be sold SWOT vs. PESTEL
competitive advantage. It encompasses everything from sufficiently profitably? (See also Price, below). SWOT Analysis
determining who your customers are to deciding what SWOT analysis is a tool for auditing a company and the
channels you use to reach those customers. Place environment around it. It is the first stage of planning and
1. Where do buyers look for your product or service? helps a company to focus on key issues.
Marketing strategy refers to a business’s overall game 2. If they look in a store, what kind? A specialist boutique or
plan for reaching prospective consumers and turning in a supermarket, or both? Or online? Or direct, via a SWOT stands for strengths, weaknesses, opportunities,
them into customers of their products or services. A catalogue? and threats. Strengths and weaknesses are internal SWOT
marketing strategy contains the company’s value 3. How can you access the right distribution channels? factors. Opportunities and threats are external SWOT
proposition, key brand messaging, data on target 4. Do you need to use a sales force? Or attend trade fairs? factors.
customer demographics, and other high-level Or make online submissions? Or send samples to • A strength is a positive internal factor.
elements. catalogue companies? • A weakness is a negative internal factor.
5. What do you competitors do, and how can you learn • An opportunity is a positive external factor.
The Marketing Mix from that and/or differentiate? • A threat is a negative external factor.
“Marketing Mix” is a general phrase used to describe the
different kinds of choices companies have to make in the Price A company should try and aim to turn it’s weaknesses into
whole process of bringing a product or service to market. It 1. What is the value of the product or service to the buyer? strengths, and it’s threats into opportunities. The outcome
can be used to help you decide how to take a new offer to 2. Are there established price points for products or should be an increase in value for customers - which
market. and to test your marketing strategy. services in this area? hopefully will improve the company’s competitive advantage.
3. Is the customer price sensitive? Will a small decrease in
4Ps - one way of defining the marketing mix. price gain you extra market share? Or will a small increase PESTEL Analysis
1. Product (or Service) be indiscernible, and so gain you extra profit margin? PESTEL Analysis, is a concept of marketing, used as a tool
2. Place 4. What discounts should be offered to trade customers, or by companies to track the environment they’re operating in
3. Price to other specific segments of your market? or are planning to launch a new project/product/service etc.
4. Promotion 5. How will your price compare with your competitors? PESTEL stands for:
• P for Political,
Product/Service • E for Economic,
1. What does the customer want from the product/service? Promotion • S for Social,
What needs does it satisfy? 1. Where and when can you get across your marketing
• T for Technological,
2. What features does it have to meet these needs? messages to your target market?
• E for Environmental, and
3. Are there any features you’ve missed out? 2. Will you reach your audience by advertising in the press,
4. Are you including costly features that the customer won’t or on TV, or radio, or on billboards? By using direct • L for Legal.
actually use? marketing mailer? Through PR? On the Internet?
It gives a bird’s eye view of the whole environment from The telephone is a remarkably effective follow-up weapon. gaze from strangers to friends. This reduces the cost of
many different angles that one wants to check and keep a Don't use the phone to follow up all your mailings to marketing while reinforcing the customer relationship.
track of while contemplating on a certain idea/plan. customers, but research has proved that it will always boost
your sales and profits. Sure, telephone follow-up is a tough When your customers are confronted with their daily blizzard
Sales Strategy task. But it works. Anyhow, no one ever said that of junk mail and unwanted e-mail, your mailing piece won't
https://www.youtube.com/watch?v=wk712mAA80o guerrilla marketing is a piece of cake. be scrapped with the others and your e-mail won't be
instantly deleted. After all, these folks know you, identify with
Sales strategy is a set of decisions, actions, and goals E-mail ranks up there with the telephone, possibly even out you, trust you. So they'll be delighted to purchase--or at
that inform how your sales team positions the organization outranking it. It's inexpensive. It's fast. It lets you prove that least check out--that new product or service you're offering.
and its products to close new customers. It acts as a guide you really care. It helps strengthen your relationship. They'll always be inclined to buy from a company they've
for sales reps to follow, with clear objectives regarding sales patronized.
processes, product positioning, and competitive analysis. Lean upon your website as well. Instead of telling your
whole story with other marketing, use that other marketing to Guerrillas are able to think of additional products and
Sales strategy is a detailed compilation of organizational direct people to your site. Then, use the site to give a lot of services that can establish new sources of profits to them.
goals, team structure and responsibilities, existing market information and advance the sale to consummation. A key to They're constantly on the alert for strategic alliances--fusing
data, customer personas, and other key details that impact online success is creating a brief and enticing e-mail marketing efforts with others in order to market aggressively
the success or failure of your sales efforts. that directs readers to a website that give enough while reducing marketing investment.
information for a person to make an intelligent purchase
decision. The internet and your bookstore are teeming with a treasure
Difference Between a Marketing Strategy & a Sales trove of marketing tactics that can help you discover smart
Strategy Guerrilla marketing preaches fervent follow-up, cooperation guerrilla marketing tactics.
instead of competition, "you" marketing rather than
Marketing With No Budget "me" marketing, dialogues instead of monologues, counting But learning about them is only half the battle. If you don't
Guerrilla marketing is quite different from traditional relationships instead of counting sales, and aiming at begin putting them into practice, you won't see the results
marketing efforts. Guerrilla marketing means going after the individuals instead of groups. these type of marketing efforts can have on your bottom line.
conventional goals of profits, sales and growth but doing it
by using unconventional means, such as expanding All guerrillas realize that the process of marketing is very Examples of Go To Market Strategy
offerings during gloomy economic days to inspire customers much akin to the process of agriculture. Their marketing
to increase the size of each purchase. plans are the seeds they plant. Their marketing activities are The right strategy doesn't depend on your product, but your
the nourishment they give to each plant. Their profits are the buyers. Let's take a look at the companies, their buyers, and
Instead of asking that you invest money, guerrilla marketing harvest they reap. They know those profits don't come in their strategy.
suggests you invest time, energy, imagination and a short time. But come they do if you start with a plan and
knowledge instead. It puts profits, not sales, as the main commit to it. Desktop Computers
yardstick. It urges that you grow geometrically by enlarging Let's take a company that wants to own the desktop
the size of each transaction, having more transactions per Guerrillas know they must seek profits from their current computing market. Firstly, come up with something that's
year with each customer, and tapping the enormous referral customers. They worship at the shrine of customer follow- truly amazing and different, clever, unique. Take that to as
power of current customers. And, it does it through one of up. They are world-class experts at getting their customers broad a market as you possibly can, and this is what the
the most powerful marketing weapons around--the to expand the size of their purchases. Because the cost of company I'm about to talk about did. Take it to as broad a
telephone. selling to a brand-new customer is six times higher than market as you possibly can. Find out from that early market
selling to an existing customer, guerrilla marketers turn their experience what group of buyers are likely to be a good
market for you to focus on in the future. Start very broadly, competitors. Your brand is derived from who you are, who Defining Your Brand
selling very widely. Find the pattern and then find a niche that you want to be and who people perceive you to be. Defining your brand is like a journey of business self-
you think might be worth dominating, and then completely discovery. It can be difficult, time-consuming and
change the strategy and focus just on that. Are you the innovative maverick in your industry? Or the uncomfortable. It requires, at the very least, that you answer
experienced, reliable one? Is your product the high-cost, the questions below:
Leader in an enterprise software category high-quality option, or the low-cost, high-value option? You • What is your company’s mission?
I'm going to pick an established player in an established can’t be both, and you can’t be all things to all people. Who • What are the benefits and features of your products
market. Very different story. This established player in an you are should be based to some extent on who your or services?
established market had done such a good job of riding the target customers want and need you to be. • What do your customers and prospects already
enterprise applications market, that they were near dominant think of your company?
in that space. That's good news, but it's also bad news. The The foundation of your brand is your logo. Your website, • What qualities do you want them to associate with
bad news is that pretty much all of the market, the enterprise packaging and promotional materials–all of which should your company?
market, had already bought either from this company, or from integrate your logo–communicate your brand.
one of their competitors. Whilst they enjoyed the lion's share Do your research. Learn the needs, habits and desires of
of the market, the market was pretty much drying up. Brand Strategy your current and prospective customers. And don’t rely on
Everybody had bought a product like this from either them or Your brand strategy is how, what, where, when and to whom what you think they think. Know what they think.
from their competitor. you plan on communicating and delivering on your brand
messages. Where you advertise is part of your brand Because defining your brand and developing a brand
Challenger in enterprise software strategy. Your distribution channels are also part of your strategy can be complex, consider leveraging the expertise
I'll stick to a mature market, but this time the company's not brand strategy. And what you communicate visually of a nonprofit small-business advisory group or a Small
the gorilla. In fact, they're probably fourth on a good day. and verbally are part of your brand strategy, too. Business Development Center.
Maybe less, maybe fifth or sixth in the market. It's a big Consistent, strategic branding leads to a strong brand equity,
market, and they've done well, they've profited, and they've which means the added value brought to your company’s Once you’ve defined your brand, how do you get the word
used those profits to continue to invest in sales and products or services that allows you to charge more for your out? Here are a few simple, time-tested tips:
marketing as well as R&D. The problem is that as the market brand than what identical, unbranded products command. • Get a great logo. Place it everywhere.
started to decline, their fortunes declined. They'll continue to The most obvious example of this is Coke vs. a generic soda. • Write down your brand messaging. What are the key
invest, but they're investing in order to grow their share in a messages you want to communicate about your
market that was pretty much consolidating. Now we're losing Because Coca-Cola has built a powerful brand equity, it can brand? Every employee should be aware of your
money hand over fist. charge more for its product–and customers will pay that brand attributes.
higher price. • Integrate your brand. Branding extends to every
What Is Branding? aspect of your business–how you answer your
Branding is one of the most important aspects of any The added value intrinsic to brand equity frequently comes phones, what you or your salespeople wear on sales
business, large or small, retail or B2B. An effective brand in the form of perceived quality or emotional attachment. For calls, your e-mail signature, everything.
strategy gives you a major edge in increasingly competitive example, Nike associates its products with star athletes,
• Create a “voice” for your company that reflects your
markets. But what exactly does "branding" mean? How does hoping customers will transfer their emotional attachment
brand. This voice should be applied to all written
it affect a small business like yours? from the athlete to the product. For Nike, it’s not just the
communication and incorporated in the visual
shoe’s features that sell the shoe.
imagery of all materials, online and off. Is your brand
Simply put, your brand is your promise to your customer. It
friendly? Be conversational. Is it ritzy? Be more
tells them what they can expect from your products and
formal. You get the gist.
services, and it differentiates your offering from your
• Develop a tagline. Write a memorable, meaningful • Audience and buyers - Who is going to buy your
and concise statement that captures the essence of When developing a mission statement, try and answer the product, what do you know about them, and how
your brand. following questions: does your strategy support them?
• Design templates and create brand standards for • What do we do today? • Competitive landscape - Who else is in the market
your marketing materials. Use the same color • Who do we do it for? and how are they going to react to you waltzing in?
scheme, logo placement, look and feel throughout. • What is the benefit? • Distribution - How and where will you distribute your
You don’t need to be fancy, just consistent. product?
• Be true to your brand. Customers won’t return to When developing a vision statement, try and answer the • Is your product marketing-intensive or sales-
you–or refer you to someone else–if you don’t following questions: intensive? (Will your customers respond better to
deliver on your brand promise. • What do we want to do going forward? marketing or sales?)
• Be consistent. I placed this point last only because • When do we want to do it? o Price: How much selling do you need to do?
it involves all of the above and is the most important • How do we want to do it? Higher prices and larger economic decisions
tip I can give you. If you can’t do this, your attempts for customers are better suited to sales than
at establishing a brand will fail. Various Tool Box: marketing.
Dipp helps generate Facebook, Instagram, Linkedin o Market size: Are you going after a large pool
Building a Mission / Vision Statement marketing content and display banner ads with an of customers where direct sales would be
Vision Statements and Mission Statements are inspiring artificially-intelligent designer. inefficient? Or a small group who need more
words chosen by successful leaders to clearly and concisely attention before they’ll make a decision?
convey the direction of the business. By crafting a clear Piktochart is an instructional blog with good video examples o Product complexity: Do you need a
mission statement and vision statement, you can powerfully of marketing plans from large companies such as Uber and salesperson to explain the features and
communicate your intentions and motivate your team Coca Cola. benefits to potential customers? Or is it self-
or company to realize an attractive and inspiring common explanatory enough that people who buy it
vision of the future. Lumen 5 helps you with Growth Hacking. It can can start using it right away?
create social posts, stories and ads. o B2B or B2C: Are you selling to companies or
Mission Statement defines the company’s purpose and to individuals? In most cases, individuals will
primary objectives. Its prime function is internal – to define Offeo creates impressive video ads, promos and social be better suited to marketing campaigns,
the key measure or measures of the company’s success – videos. while companies need to be sold to.
and its prime audience is the leadership team and investors. o Relationships: Does your success rely on
Wrike helps you build a go-to-market plan template building a long-term relationship with a
Vision Statements also define the company’s purpose, but customer? Sales helps you connect more
this time they do so in terms of the company’s values rather Neil Patel provides 35 growth hacking tools for Marketer's regularly with people, while marketing puts
than bottom line measures (values are guiding beliefs about who don't code you in front of people when they need you.
how things should be done.) The vision statement
communicates both the purpose and values of the 9 Steps to Build a Go To Market Strategy (Framework and 2. Your go to market strategy template: A step-by-step
organization. Examples) guide to bringing your product to the people
1. Everything you need to know before you write your 1. What is your business case? Why are you launching
For employees, it gives direction about how they are go to market strategy this product right now and what do you hope to gain
expected to behave and inspires them to give their best. • Product-Market Fit - What problems does your from it?
Shared with customers, it shapes customer’s product solve for people and how have you validated
understanding of why they should work with your company. the need?
2. Define your market strategy - Where does your 4. Create your external marketing plan - What sort of product? Are they in the loop with the
product sit in the market and how will you tell users external marketing are you going to use to tell people latest Instagram trends, Linkedin
about it? about your new product? scraping/prospecting trends and other key
• Value props: What makes you different from the • Branding: Who are you? What promises do you marketing channels your customers are active
competition? Why would someone choose to make as a company, both through the language on?
buy you over what’s already available? For you use to describe yourself and the way you • Client acquisition: What’s the right approach for
example, you integrate with more tools they present yourself visually? If you already have a finding clients? Inbound sales? Outbound sales?
already use, or you have a mobile version. strong and well-established brand for your Cold calling? Resellers and partners?
• Positioning: Where does your product fit in the company, is this new product consistent with it? • Training support: How are you going to train the
market? How do you want people to view you in • Lead generation: How are you going to find sales team so they’re knowledgeable enough
relation to other products out there? (i.e. you’re people to become customers? There are many and confident in selling the product?
a “luxury AirBnB” or “a more affordable and different ways to find leads and generate
powerful version of Slack”) demand for your product. How are you going to 6. Sync up with support - How will you support new
• Messaging: How do you talk about the value you do it? users and customers with questions or issues?
create? Don’t get overwhelmed here. It’s enough • Content: What value are you creating for users • Tools: What tools are you going to be using to
to just pick 3 pain points you solve for users or outside of the product? Content is a powerful build and manage relationships with your
benefits you provide. way to get in front of potential customers and customers? Do you have a CRM or some other
• Sales and support materials: What is necessary show them that you’re knowledgeable and tool you already use and are familiar with? Will
to support and sell the product? What resources, trustworthy. Think about what you can teach support be done in real-time or over email?
tools, and support do you need? users and how your content strategy can help • Onboarding and support: How will new users
• Customer journey: How many stages are there support your launch with things like blog posts, know how to use your product? Do you have an
in your customer’s buying journey and what are videos, ebooks, and whitepapers. onboarding or training series ready for them?
the behaviors they take before and after • Marketing site: Where will the main information • Retention strategies: How will you make sure
purchasing? How much should people already about your new product live? Will it be on your people stick around? Or identify and nurture
know about you when they engage with the main site or on a micro-site? How will you explain people who look like they’re going to leave?
product? your value quickly and in a compelling enough • Satisfaction measurement: What will tell you
• Personas: Who uses your product? What are way to get people to purchase? that you’re successful? (repeat usage, NPS
their specific characteristics and behaviors? Try • Events, ads, and PR: What else can you do to scores, upgrades, etc…)
to narrow this down to 1 or 2 user personas and get people interested? This could mean using
get specific. paid ads, search engine marketing, hosting or 7. Know where this product fits in your overall
• Use Cases: How will those people use the presenting at events, and using PR to amplify roadmap - What priority will this new product have over
product? How can you help them imagine a life your launch in other outlets. other features/products/initiatives?
that’s better because they’re a customer of • Priority for development team: How (and in what
yours? 5. Specify your sales strategy and supporting order) will new features or bug fixes be
materials - How are you going to empower salespeople addressed?
3. Lock in your pricing strategy - How much are you to help you get a piece of the market? • Market feedback: How will future plans be
going to charge for your product and why? • Tools and resources: How are your sales team communicated to customers?
going to find, engage with, and sell to potential
customers? What tools are they going to use for
managing relationships and demoing the
• Employee feedback: How will other people on investment. If the burn rate is greater than forecast or if the
your team keep up-to-date with this new Think of 'cash flow' as a picture of your business checking company's revenues are not growing as rapidly as they are
product? account. If more money is coming in than is going out, you forecast to grow, then investors may think the company is
are in a "positive cash flow" situation and you have enough not a good investment. It may be too risky.
8. Decide on success metrics - What is the main to pay your bills. If more cash is going out than coming in,
purpose of this new product and how will you know if it you are in danger of being overdrawn, and you will need to You should calculate and watch your burn rate carefully, as
is a success? find money to cover your overdrafts. This is why new many businesses, such as those in technology, may take a
• Meaningful: Is it tied to a specific business goal businesses typically need working capital, in the form of a long time to find their market and become profitable.
that most people can agree on? loan or line of credit, to cover shortages in cash flow.
• Measurable: Is there a number attached to it or 2 Easy Steps to Calculating Burn Rate
some way to quantify the results? Lack of cash is one of the biggest reasons small businesses 1. Let's focus on a period, such as a quarter. What's
• Operational: Will you be able to quickly see the fail. The Small Business Administration says that the difference in your cash balance at the
effects of your changes? "inadequate cash reserves" are a top reason start-up don't beginning of the quarter and at the end of the
• Motivational: Is it something you and your team succeed. It's called "running out of money," and it will shut quarter? So, if you started with $10,000 "in the
want to work on? you down faster than anything else. As a start-up, you bank", and at the end of the quarter you have
may need to keep track of cash flow on a weekly, maybe $4000 you burned $6000.
even a daily basis. 2. Divide by the number of months in the period you
9. Clarify your ongoing budget and resource needs -
selected. There are three months in a quarter, so
How will you continue to support this product?
your company burned $2000 a month.
Burn Rate If you want to stay in business, sales must rise to generate
What Is Burn Rate & How Is It Calculated? at least $2000 a month. Of course, if you have planned
Week 11: Entrepreneurial Finance
The term is usually used in connection to a start-up, and acquisitions coming up, your burn rate going forward will be
indicates the rate at which your company is consuming, or higher.
What is Entrepreneurial Finance?
burning, its financing or store of venture capital to support
operations in excess of cash flow.
Balance Sheet
Cash Flow
It's a measure of negative cash flow, and it is most often
Cash flow is the money that is moving (flowing) in and
expressed in months, though in a crisis it might be measured What Is A Balance Sheet?
out of your business in a month. Although it does seem
in weeks or days. The balance sheet is a very important financial statement
sometimes that cash flow only goes one way - out of the
that summarizes a company's assets (what it owns) and
business - it does flow both ways.
For instance, let's say your company needs $5000 every liabilities (what it owes). A balance sheet is used to gain
• Cash is coming in from customers or clients who
month to keep the lights on, but sales are only $2500 for the insight into the financial strength of a company. You can
are buying your products or services. If customers
same period. You are then burning $2500 a month. also see how the company resources are distributed and
don't pay at time of purchase, some of your cash
compare the information with similar companies.
flow is coming from collections of accounts
There are two good reasons that burn rate matters. The first
receivable.
is that it tells you when you're going to run out of money. The balance sheet informs company owners about the net
• Cash is going out of your business in the form of worth of the company at a specific point in time. This is
payments for expenses, like rent or a mortgage, in The second is that investors look at a start-up companies done by subtracting the total liabilities from the total assets
monthly loan payments, and in payments for taxes burn rate and measure it against future revenues of the to calculate the owner's equity, also known as shareholder's
and other accounts payable. company to decide if the company is a worthwhile equity (for corporations) or simply the net worth.
Return On Investment [ROI] startup, you could drive up your valuation by attracting the further along the startup has progressed, the lower the
What Is ROI & How To Calculate It? multiple interested investors competing for the deal. investor’s risk and the higher its value. Examples of stages
An investor cannot evaluate any investment, without first of development include:
understanding how to calculate return on investment (ROI). Most startups won’t be fortunate enough to experience • A startup has an exciting business idea
This calculation serves as the base from which all informed multiple investors courting them for a deal. However, even if • A startup has a stunning team of engineers and
investment decisions are made, and although the calculation you don’t have real demand from investors, you can create a great business person
remains constant, there are unique variables that different a perceived demand when dealing with one investor. To do • The startup has a Minimum-Viable-Product
types of investment bring to the equation. so, don’t let them think that they are the only investor (MVP) with early adopters
interested in your startup, as that can decrease your • The startup has partners, a customer base and
To calculate it, you simply take the gain of an investment, valuation. Work to portray your startup as new and unique to a pipeline of prospects
subtract the cost of the investment, and divide the total by create the scarcity needed to maximize your valuation. • Revenue growth and an obvious pathway to
the cost of the investment. Or: profitability is shown.
Without a history showing profit or revenue, your startup has
ROI = (Gains – Cost)/Cost very little to no liquidity. Without cash flow, it is difficult for What Grade Are You? Another way to look at the
startups to determine their valuation. It’s going to take time developmental stages is by breaking it out into four stages
Example: If an investor buys 20 shares of Your Company for to become profitable, so you will need to look to your future similar to the four years of high school education. The stage
$10 a share, his investment cost is $200. If he sells those success to determine a value. Ask yourself a few key you are in is a key factor in determining your value.
shares for $250, then his ROI is ($250-200)/$200 for a total questions: • Freshman: an idea, team and a prototype.
of 0.25 or 25%. This can be confirmed by taking the cost of • How many years will it take you to be profitable? Bootstrap financed and raised $50 thousand to
$200 and multiplying by 1.25, yielding $250. If you can get there quicker, your valuation will $0.5M.
be higher. • Sophomore: MVP with early adopters. Seed
• How much are comparable companies valued at stage angels financed from $500 thousand to
Startup Valuation when they become profitable? $1.5 million.
What is Valuation & How to Value a Startup?
• Junior: Experiencing user or revenue growth
Business valuation of any kind is never cut and dry. For A company may be worth a fraction of the number they are and displayed a full proof of concept around the
startups with little or no revenue and an uncertain future, valued at when they reach profitability. Factors like likelihood startup. Nearing up to $1 million in revenue.
assigning a valuation is especially tricky. For mature of success and the quality of the management team should Series A venture capital financed from $1.5
businesses that are publicly listed and have a steady be taken into factor. million to $5 million.
revenue, there are specific facts and figures to use to
• Senior: Reached multi-millions in revenue and
determine a value. However, a startup is much more difficult Your industry makes a difference. Each industry has its own ready to scale up with a capital raise. Series B/C
to value since it is likely nowhere near making relevant sales. way of valuing startups. For example, an VR/AR startup venture capital financed from $5 million to $50
If you need to raise capital for your startup, it’s important to would have a much higher valuation than a SaaS CRM. million.
determine what your startup’s value is. But do you know how Research the valuations achieved in recent investments or Case Study: SEED Ventures
to best value your startup? M&A transactions in your market before you approach
investors. Tool Box: Startup Runway
One of the most basic economic principles is that of supply
Startup Runway is a cash planning tool which helps start-
and demand. You can use this principle for valuing your Some angel investors and venture capitalists use a “rule of ups understand, manage and extend their cash runway.
startup. As the name implies, the more scarce a supply, the thumb” value to quickly come up with a range of startup
higher the demand. For your startup, that means if you are value. The values are typically set by the investors, and they
part of a much talked about new patented technology depend on the startup’s stage of development. Simply put,
Week 12: Funding and Exits group of angel investors who club together to fund start-ups, down the line might be more likely to gain the trust and
or even a friend or member of your family who’s decided to money of venture capitalists.
put some money in.
Different Funding Strategies
Angels make their own decision about the investment, and Term Sheets
Bootstrap in return for providing personal equity they take shares in the Term sheets are non-binding agreements setting forth the
This is where you invest your own money to startup. You business. The amount they invest is flexible – it could be a basic terms and conditions under which an investment will
can use your savings or use your credit cards to pay for small amount to get you off the ground, or a larger amount. be made. A term sheet serves as a template to develop more
initial expenses that you will incur. While they can provide insight and advice about your detailed legal documents. Once the parties involved reach
business, their job isn’t to build up your company. an agreement on the details laid out in the term sheet, a
Pre-Seed Capital binding agreement or contract that conforms to the term
You have an idea, maybe a working prototype and are Venture Capital funding is a whole other level. For a start, sheet details is then drawn up. A term sheet lays the
looking for funding that will allow you to focus on your rather than individual investors, winning venture capital groundwork for ensuring that the parties involved in a
business full time. Pre-seed capital tends to cover the first usually involves a whole firm – investors, board members, business transaction are in agreement on most major
stage in the life of a start-up and is often comprised of three and people whose job is to generally help your business aspects of the deal, thereby precluding the possibility of a
main sources of financing: develop. Venture capital firms are made of professional misunderstanding. It also ensures that expensive legal
1. FFF (fools, friends, and family): the three classical investors, and their money comes from a variety of sources charges involved in drawing up a binding agreement or
Fs that support you and are keen to invest in your – corporations and individuals, private and public pension contract are not incurred prematurely.
business. funds, foundations.
2. Business angels: previous start-up founders who They generally cover the more important aspects of a deal,
have had exits and decide to invest the money in Those who invest money in venture capital funds are called without going into every minor detail and contingency
other start-ups (or their own) or investors that ‘limited partners’; those managing the fund and working with covered by a binding contract. For example, a term sheet
despite not having a tech-related background individual companies are called ‘general partners’, and these from a venture capital company that is investing in an early-
decide to back companies in the space, given their are the people who work with the start-up to ensure that it's stage company may contain such details as the amount of
potential growth and current market situation. developing. investment, the percentage stake sought, anti-dilutive
Contrary to Venture Capital firms, business angels provisions and valuation.
often invest their own money and at one of the The job of venture capital firms is to find businesses with high
riskiest stages for start-ups, thus their importance growth potential. The firm take shares and have a say in the
in every single start-up market. future of the company and its running, and in exchange for Debt vs Equity Financing
3. Accelerators: These organisations provide capital, their involvement venture capitalist firms expect a high return Debt Financing
mentorship and office space to teams in exchange on investment. After a period of time, often years, the venture Purchasing a home, a car or using a credit card are all forms
for 5 to 10% of equity. capitalists sell shares in the company back to the owners or of debt financing. You are taking a loan from a person or
through an initial public offering, hopefully making much business and making a pledge to pay it back with interest.
more that what they put in. Debt financing for your business works in a similar way. As
Sources of Funding a business owner, you can apply for a business loan from a
Angel Investor is someone who puts their own finance into Venture capital usually deals with very large amounts of bank or receive a personal loan from friends, family or other
the growth of a small business at an early stage, also money – rather than seed funding, it can be multi-million lenders, all of which you must pay back. Even if family
potentially contributing their advice and business deals. And while more and more start-ups are winning members lend you money for your business, they must
experience. They might be a wealthy, well-connected venture capitalism investment, with the sums involved and charge the minimum interest rate in order to avoid the gift
individual who’s taken a personal liking to your product, a the risk of investing in a start-up, businesses a bit further tax.
out, but that will likely be more expensive than the money the buying public over a public stock market, as happened
The advantages of debt financing are numerous. First, they originally gave you. with Facebook in 2012 and Twitter in 2013.
the lender has no control over your business. Once you pay
the loan back, your relationship with the financier ends. Next, Exit Strategy When investors sit for pitches from start-ups, they expect the
the interest you pay is tax deductible. Finally, it is easy to start-ups to cover the exit strategy. That usually means
forecast expenses because loan payments do not fluctuate. The exit strategy is a way of "cashing out" an investment. talking, in the pitch and in the business plan, about how
similar companies in similar markets have been able to exit
The downside to debt financing is very real to anybody who Examples include an initial public offering (IPO) or being via selling out to a larger company. The more sophisticated
has debt. Debt is a bet on your future ability to pay back the bought out by a larger player in the industry. Also referred to plans and pitches will mention recent exits and offer
loan. What if your company hits hard times or the economy, as a "harvest strategy" or "liquidity event”. It is a method by information about how the companies that exited were
once again, experiences a meltdown? What if your business which a venture capitalist or business owner intends to get valued when they were bought. That usually ends up as
does not grow as fast or as well as you expected? Debt is an out of an investment that he or she has made in the past. something like “[this similar company] was purchased by
expense and you have to pay expenses on a regular [that company] in [that year] for [that amount], which was
schedule. This could put a damper on your company's ability It's more difficult for a VC or entrepreneur to get money out [that multiple] of its revenues.” The standard phrase in that
to grow. of an investment because they are generally dealing with context is “5X” for an exit value of five times revenues, or
private companies. When a firm is private, the shares cannot “10X,” or whatever. And that should not be confused with
Finally, although you may be an Pte Ltd or other business be sold nearly as easily as when the firm is publicly traded similar phrasing describing the investors’ exit: an exit at “5X,”
entity that provides some separation between company and on a stock exchange. So, even though a private start-up firm for example, would be one in which the investors received
personal funds, the lender may still require you to guarantee could be worth millions of dollars, the VC/entrepreneur has an actual exit amount, in money or shares they can sell, of
the loan with your family's financial assets. little access to this wealth. five times what they originally invested.
Equity Financing You can think of the exit strategy as the first opportunity to You can understand how investors feel about exit strategy if
The public does not understand equity financing as well as trade an illiquid asset (shares in a private firm) for a very you consider what happens to investors who don’t get exits.
debt financing, because equity financing involves investors. liquid asset (cash). They don’t have a return. They put money into a company,
You could offer shares of your company to family, friends but they get nothing back. Having a minority share in a
and other small investors, but equity financing often involves Start-ups looking for angel investors or venture capital (VC) healthy, growing company, without any prospect of an exit,
venture capitalists or angel investors. absolutely need an exit strategy because investors require is a terrible scenario for investors.
it. The exit is what gives them a return. And the rest of us,
The big advantage of equity financing is that the investor starting, running, and growing a business, but not looking for
takes all of the risk. If your company fails, you do not have to outside investors, will probably need an exit eventually; but Types of Exits
pay the money back. You will also have more cash available there’s probably no rush. The exit strategy related to start-up An IPO
because there are no loan payments. Finally, investors take funding, is what happens when investors who had previously In an IPO (Initial Public Offering), you sell a portion of your
a long-term view and understand that growing a business put money in a start-up get money back, usually years later, company in the public markets. You and your management
takes time. for a lot more money than they initially spent. team typically remain in place for a period of years, your
investors and managers may be able to sell some stock,
The downside is large. In order to gain the funding, you will Investor exits normally happen in only two ways: Either the and your company continues to operate much as it has in
have to give the investor a percentage of your company. You start-up gets acquired by a bigger company, for enough the past.
will have to share your profits and consult with your new money to give the investors a return (as just happened with
partners any time you make decisions affecting the WhatsApp & Facebook), or the start-up grows and prospers However, your company will be subject to additional
company. The only way to remove investors is to buy them enough to eventually register for selling shares of stock to government regulations, and stock market analysts and
institutional investors will scrutinise your quarterly 8 Business Exit Strategy Methods
performance. 1. Pass the business along to a family member
2. Explore a merger or get acquired
3. Pursue an “acquihire”
A Strategic Acquisition 4. Have existing managers buy you out
In a strategic acquisition, another company purchases your 5. Sell your stake to a partner/investor
business, either with cash or stock in the acquiring 6. Plan an initial public offering (IPO)
company or with some combination of stock and cash. The 7. Liquidate the business
acquirer may or may not retain you and your management 8. File for bankruptcy
team, and may or may not make substantial changes in
your company's operations, staff, and business lines.
Various Tool Box
The benefit is typically liquidity because if you sell the Captable.io (now LTSE) is an equity management software
company to a strategic acquirer you might be able to sell to plan start up equity, financing rounds and provides
most or all of your stock. record keeping of ownership.
The disadvantage of this exit strategy is that "you are likely Fundel (now Alta) has buy and sell side options and
to lose operating control”. investment opportunities in unlisted companies as well as
avenues to raise capital or monetise existing privately held
shares.
Management Buyout
If you decide to recapitalize and sell the company to the
next generation of managers it is known as a management
buyout. This type of transaction is usually financed through
some combination of debt and/or private equity investment,
with the debt collateralized by the assets of the company. It
provides immediate liquidity to the owner and early
shareholders, and allows the company to continue as a
private enterprise.
The benefit is that you usually have a smoother transition.
The founders most likely are not managing the company on
a day-to-day basis, ceding that to the management team,
which is now buying the company. This exit strategy marks
a change of ownership, gets the shareholders some
liquidity, yet provides a seamless transition for the company
and employees and other constituencies.
Accounting and Legal
Requirements
TAXATION
• TAXATION – is the inherent power of the state
to demand contributions for public purposes.
• TAX – are the enforced proportional
contributions from persons and property
levied by the law-making body of the state by
virtue of its sovereignty for the support of the
government and all public needs.
• TYPES OF TAXES:
1. National – imposed by national government
2. Local – imposed by local government
• ADVANTAGES derived by an entrepreneur
when paying the right tax at the right time:
1. Saves the taxpayer the burden of penalties
2. Helps in sustaining the life of the business
ESSENTIAL CHARACTERISTCS of TAX
1. It is an enforced contribution
2. It is generally payable in money
3. It is proportional in character
4. It is levied on persons or property
5. It is levied by the state which has jurisdiction
over the person or property
6. It is levied by the law-making body of the state
7. It is levied for public purpose/s
8. It is commonly required to be paid at regular
periods or intervals
KINDS of NATIONAL INTERNAL REVENUE TAXES
• Taxes that an entrepreneur need to pay:
1. Income tax
2. Estate and donor’s taxes
3. VAT
4. Percentage taxes
5. Excise taxes on certain goods
6. Documentary stamp taxes
7. other taxes imposed by the law and collected
by the BIR
INCOME TAX on BUSINESS
• SOLE PROPRIETORSHIP is subjected to
graduated tax on income for a calendar year
from January 1 to December 31 (2020).
• Deadline for filling final income tax return for
the calendar year is April 15 (2021) of the year
that follows
BUSINESS LAW
• LAW – means any rule of action or any system
of uniformity.
– may be promulgated and enforced by the
state (legal sense) or maybe in non-legal
sense (divine law, natural law, moral law,
and physical law)
CHARACTERISTICS of LEGAL LAW
1. It is a rule of conduct.
2. It is obligatory.
3. It is promulgated by legitimate authority.
4. It is for common observance and authority.
SOURCES of LEGAL LAW
1. Constitution
2. Legislation
3. Administrative or executive orders,
regulations and rulings
4. Judicial decisions
5. Custom
6. Principles of justice and equity
7. Religion
• Knowledge in business law is important when
DECIDING:
1. on the form of business organization
2. on the kind of products to deal in
3. on the location of the business
4. on whether to transact on cash basis or with
disbursement checks or on account
5. on borrowings and mortgages
6. on character loans or loans with collaterals
7. on promissory notes, bank checks, and other
negotiable instruments
8. on partnering with local citizens or with
foreigners
9. on local or foreign transactions
10. on franchising or start-up ventures
11. on dealing with debtors or creditors
12. on selling on consignments
13. on leasing or outright purchase
• Laws that a business person may DEAL with:
1. partnership and corporation
2. obligations and contracts
3. negotiable instruments
4. sales, agency, and credit transactions
5. taxation
6. labor
LAW on OBLIGATIONS and CONTRACTS
• OBLIGATION – is a judicial necessity to give,
to do or not to do
• CONTRACT – is a meeting of minds between
two persons whereby one binds himself,
with respect to the other, to give something
or to render some service
LABOR
• One of the essentials in the trading and
manufacturing of tangible products and the
rendering or services.
• Department of Labor and Employment
(DOLE) – is responsible for the regulation of
employment
• DOLE’s authority concerns with:
1. promotion of employment & apprenticeship
2. worker’s protection and welfare
3. promotion and maintenance of industrial
peace based on social justice
LABOR CODE of the PHILIPPINES
• contains labor policies relating to terms and
conditions of employment which include:
1. workweek and working hours
2. vacations
3. special leave
4. holidays
5. employment of minors
6. hiring policies
7. termination of employment
8. workplace safety
9. minimum wage
10. social security benefits
11. medical benefits
12. worker’s compensation benefits
13. bonus and additional benefits
14. worker’s rights
INTELLECTUAL PROPERTY RIGHTS
• Entrepreneur should be conscious of the
need to protect his trade name, trademark,
logos, and product content and design.
• Registry:
ØTrade names – DTI
ØCopyright – National Library
ØPatents – Patent Office of the DTI
• COPYRIGHT – is the body of law that grants
authors, artist, and other creators protection
for their literary and artistic creations which
cover literary works, musical works, works of
art, maps and technical drawings, photographic
works, motion pictures, computer programs,
and multimedia products.
– Protection is acquired at the moment of
creation of the work and deposit copies with
the National Library
• PATENT – is a statutory grant by government
which confers to an inventor or his legal
successor in return for the disclosure of the
invention to the public and the right for a
limited period of time to exclude others from
making and using the territory of the country
that grants the patent.
• TRADEMARK – is a distinguishing mark, name,
or symbol used to identify a product
Creating an Enterprise
By:
Dr. Maria Simplicia E. Flores, PTRP, MSCPD
Learning Objectives:
• These units will help the student to:
1. Identify the three basic forms of business ownership:
§ Sole proprietorship
§ Partnership
§ Corporation
2. Discuss the advantages and disadvantages of each of
the three basic patterns of business ownership.
3. Gain competence in making a business legal.
Business Opportunities
1. Grocery stores 11. Insurance agencies
2. Drug stores 12. Transportation services
3. Gasoline stations 13. Real estate brokerages
4. Fast food outlets 14. Bakeshops
5. Hardware stores 15. Machine shops
6. Constructions 16. Preschools
7. Repair shops 17. Beauty parlors
8. Laundry shops 18. Spas
9. Restaurants 19. Barber shops
10. Travel agencies 20. Importers
21. Exporters
22. Producers of crafts
23. Boutiques
24. Computer shops
25. Dress shops
26. Courier deliveries
27. Food catering
28. Boarding houses
29. Internet cafes
30. Resorts
31. Sports venues
32. Coffee shops
33. Professional services
Blue Ocean Strategy
• Red ocean – type of business where we see a lot
of crowding (many business entities in one
particular type of business)
– e.g. selling hot pandesal, lechon manok
• Blue ocean – is breaking away from what is
ordinary.
– Enterprise is a venture characterized by innovation,
creativity, dynamism, and risk.
– e.g. from hot pandesal to specialty cakes (Ann’s Home)
DTI Province Focus Sectors – Plus Ones
GLOBAL OPPORTUNITIES
• Globalization – is about the expansion of business
operations from one country to another.
– Global companies start by exporting their products to
another country.
– As they foothold in that country, they transfer their
manufacturing to that country to make the products
readily available to the locals and to keep their price
low.
How Does a Company Go Global?
• EXPORTING – means selling products to another
country. Prices are in foreign currency, usually US
Dollars, quoted as FOB, CIF, or C&F.
ØFree on Board (FOB) price - means that the seller’s
price is quoted from the factory to the port of exit (FOB
Manila).
ØCost, Insurance and Freight (CIF) price – is a quotation
from the factory to the port of entry (CIF, New York).
ØCost and Freight (CF) quotation – means insurance is
for the account of the buyer and is not included in the
price quotation of the seller.
• PARTNERSHIP – entering into an agreement with a
foreign company to do business in the country would
be beneficial to the local entrepreneur.
ØAgreement in the case of exchange students and faculty
• FRANCHISING – it is being practiced by big foreign
corporations by allowing their company’s name to be
used by local entrepreneurs to give their business a
global reputation.
ØExpensive
• BRANCH OPENING – expensive venture especially
for start-ups
Connecting with Foreign
Buyers/Partners
Obstacles to Globalization
• Regional Trade Alliances – to ensure the continued
flow of goods and availability of products in their
territories, countries belonging to a certain region
organize themselves to engage in trade.
– European Union (EU); North American Free Trade
Agreement (NAFTA); Association of South East Asian
Nations (ASEAN)
– One reason why leaders of countries visit one another is
to engage in trade
FORMS OF BUSINESS ORGANIZATIONS
• Organization – defined as having two or more
individuals working together towards the
attainment of a goal or goals.
• Forms of Business Organizations:
1. SOLE PROPRIETORSHIP – simplest form; only
one individual owns all the assets; most
convenient to operate; easy to liquidate
2. PARTNERSHIP – an association of two or more
persons to carry on as co-owners of a business
for profit.
Ø “By the contract of partnership, two or more persons
bind themselves to contribute money, property or
industry to a common fund with the intention of
dividing the profits among themselves.”
Ø Examples:
1. Doctors and Dentists – sharing of clinic space
2. Accountants and lawyers – helping each other
3. Travel agencies
3. CORPORATION – separate body consisting of
at least five individuals treated by law as a
unit.
Ø “An artificial being created by operation of law,
having the right of succession and the powers,
attributes and properties expressly authorized by
law or incident to its existence.”
Ø Existence is 50 years and renewable for another
50 years.
Ø Government requirements need to be met prior to
company closure.
SOLE PROPRIETORSHIP
ADVANTAGES DISADVANTAGES
1. Easy to form 1. Limited source of capital
2. Less government 2. Life of business may be
requirements dependent on the life of
3. Fast decision-making the owner
(only one person decides) 3. Management that may
4. Flexibility of operations be limited to the
5. Suited to small business capacity of the owner
PARTNERSHIP
ADVANTAGES DISADVANTAGES
1. Easy to form 1. Unlimited liability of the
2. Subject to less government partner for the debts of
requirements the partnership
3. Suited to the practice of a 2. Limited term of
profession existence
4. Some are exempted from 3. Limited capital
income tax
5. Flexibility of operations
CORPORATION
ADVANTAGES DISADVANTAGES
1. Capacity as a legal entity 1. Activities limited by the
2. Practically unlimited life articles of incorporation
3. Limited liability of and corporate by-laws
stockholders for 2. Possibility of abuse of
corporate debts powers of officers
4. Wider source of capital 3. Subject to more
governmental requirements
Articles of Co-Partnership
• Is the written agreement between partners. This
contains the following:
1. Name of the partnership
2. Names of the partners
3. Place of business
4. Effective date of the partnership
5. Duration of the contract
6. Nature of business
7. Investments of each partner & corresponding
capital
8. Rights, powers, and duties of the partners
9. Accounting period
10.Profit and loss sharing
11.Compensation for services offered by partners
12.Treatment of partners’ additional investments
and withdrawals
13.Procedures for settlement of partners’ interest
upon dissolution of partnership
14.Provision for settlement of disputes
• Securities and Exchange Commission (SEC) – is
the government agency that regulates this kind
of business (partnerships and corporation).
• By-laws – are also required for partnerships
and corporations.
– It enumerate specific guidelines in the conduct of
the functions of partnerships and corporations.
Articles of Incorporation of
a Stock Corporation
• The articles of incorporation must contain the
following matters:
1. Name of the corporation
2. Specific purpose or purposes for which the
corporation is being incorporated
3. Place where the principal office of the corporation is
to be located (which must be within the Philippines)
4. Terms for which the corporation exists
5. Names, nationalities and residences of the
incorporators
6. Number of directors or trustees (not less than 5 nor
more than 15)
7. Names, nationalities and residences of the persons
who shall act as directors or trustees until the first
regular directors or trustees are duly elected
8. If it is a stock corporation, the amount of its
authorized capital stock in lawful money of the
Philippines, the number of shares into which it is
divided, and in case the shares are par value shares,
the par value of each, the names, nationalities and
residences of the original subscribers, and the
amount subscribed and paid by each on his
subscription, and if some or all of the shares are
without par value, such fact must be stated.
• Corporation Law provides that the subscribed
capital is 25% of authorized capital stock and
that the paid-up capital is 25% of the subscribed
capital.
– Example:
• Authorized capital ₱ 1,000,000
• Subscribed capital ₱ 250,000
• Paid-up capital ₱ 62,500 (needed cash
or assets to put up a corporation with ₱ 1,000,000
authorized capital)
Registering a Business
• DTI – www.dti.gov.ph
• Small and Medium Enterprises (SMEs) –
promoted by the government and private sector
(inclusion of Entrepreneurship in grade school and
high school curriculum)
• SOLE PROPRIETORSHIP – registered business
name with the DTI will give her the exclusive
right to use that business name. However, she
should not forget to renew the registration with
the DTI once every 5 years
ØSecure a copyright of the name and its logo
with the Intellectual Property Office (IPO) of
the DTI and the National Library.
• PARTNERSHIPS and CORPORATIONS may
NOT register their business names with the DTI
because the registration is already included in the
SEC.
ØPartnership – registers with the SEC its articles of
co-partnership
ØCorporation – registers with the SEC its articles
of incorporation
• After the registration with DTI and/or SEC,
registration with the following should follow:
1. BIR for
q TIN
q Business / Trade name
q Authority to print books of accounts, invoices,
receipts and other accounting records
q Books of accounts, invoices, receipts, etc.
2. DOLE
3. Mayor’s Office
4. Other government agencies
Other Agencies:
1. BFAD – for manufacturers of drugs, cosmetics,
and food products
2. NFA (Regulatory Division) – for rice, corn, and
flour dealers
3. Fiber Industry Development Authority – for
processors and traders of fibers and fiber
products
4. Bureau of Fisheries and Aquatic Resources (BFAR)
– for those engaged in the export of fish and fish
products and other aquatic products
5. Bureau of Animal Industry (BAI) – for exporters
of animals and animal by-products
6. Bureau of Plant Industry (BPI) – for exporters of
plant and plant products
7. Forest Management Bureau – for exporters of
forest products (logs, lumber products, plywood)
8. National Tobacco Administration – for those
engaged in the production or export of flue-
cured Virginia-type tobacco, Burley, and Turkish/
Oriental tobacco products
9. DTI-Bureau of Product Standards (BPS) – for
commodity clearance for producers,
manufacturers, or exporters
10.National Subcontractors Exchange (SUBCONEX)
DTI NCR – for business interested in tie-ups with
export-oriented firms as subcontractors/suppliers
provided they fall in the following sectors:
garments and hand-woven fabrics, gifts and
house wares, furniture and fixtures, footwear,
and leather goods, fresh and processed foods,
and jewelry
11.Intellectual Property Office (IPO) – for firms
wishing to register patents and trademarks
12.DTI-Bureau of Trade Regulation and Consumer
Protection (BTRCP) – for enterprises engaged
directly or indirectly in the servicing, repair or
maintenance of vehicles, engines and engineering
works, electrical components, electronics, air-
conditioning and refrigeration, office machines
and data processing, equipment, medical and
dental equipment, and also technical personnel
(mechanics or technicians)
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