CHAPTER 7 REVENUE MODELS AND FINANCING providing Internet are good examples of companies using

this revenue model. Mobile phone carriers also use this

"Finance is not merely about making money. It's about model to charge for minutes of outbound calls and
achieving our deep goals and protecting the fruits of our labor. quantities of SMS text messages.
It's about stewardship and, therefore, about achieving the good (3) Rental - Rental as a revenue model commonly makes use
society”–Robert J. Shiller of a physical asset. The income comes from periodic basis
such as monthly or annual rental. This could also involve
REVENUE MODEL
one-time payment called lease for temporary use of the
 Revenue model is a conceptual structure that explains
asset such as land or building for instance.
how a business generates money. It includes where the
revenue comes from and the resources needed for every
LICENSING
aspect of the revenue generation strategy of the business.
 This model is common among inventors, creators, and
intellectual property owners which grant a license to use
DIFFERENT TYPES OF REVENUE MODELS
their name, products or services at a predetermined or
recurring cost.
COMMERCIAL AND RETAIL
 In this revenue model physical products are sold in the
(1) License of usage - The revenue model is common
market either through business to business (B2B) or
among many software companies such as SPSS. This is
business to consumer (B2C).
also use for legally protected intellectual property like
patents, trademarks, copyrights owners which grant a
(1) Selling physical goods - Traditionally this is the retail
license limited by time, territory, distribution and volume to
world that consists of high-street, stores and malls.
anyone who fulfils their requirements and pays for it.
However, when Amazon came in the 90s, the E-
(2) Certifications - This is slightly different from the use of
commerce which offered less price became popular.
license. A good example here are the various anti-virus
Selling over the Internet presented less real estate costs.
programs that require certifications to make full use of
(2) Selling digital products - Nowadays, there are numerous
them such as MacAfee, Avast and Kaspersky.
digital goods that could just be downloaded and be
consumed immediately. They usually do not have
AUCTIONS AND BIDS
production or inventory costs or even limitations when it
 Commonly auction happens when a seller offers an item
comes to quantity. Digital products could be in the form of
or items for sale and expects the highest price. In a
electronic gadgets. songs, e-books, games and apps for
specific place, the products are exhibited and participants
electronic gadgets.
try to outbid one another by placing higher bids. The
(3) A service sold per unit - This model considers the work-
product is awarded to the highest bidder at the end of the
hour applied by lawyers, accountants, consultants and
auction.
website developers among others. Other common units
include distance of Grab taxis, weight of parcel shipment
(1) Auctions - The traditional auction industry is being used
companies and bandwidth of internet service providers.
by furniture, antiques, painting and vintage cars.
This model is also being applied by platforms such as Get
(2) Dynamic pricing - In dynamic pricing, businesses set
a Freelancer, Upwork and Elance.
flexible prices for products or services based on current
(4) A service with fixed price - Here the service being
market demands. A few marketing sectors like the travel,
offered has a fixed amount. In the salon and barber shop,
hospitality, entertainment, electricity and public transport
the services have its set amount such as haircut, styling,
retails widely practice dynamic pricing.
coloring as well as manicure and pedicure.
(5) Sale of services for future use - Phones that make use
ADVERTISING
of prepaid payments or the use of credit cards for future
travels are good examples for this revenue model.  Advertising as a revenue model makes money by charging
(6) Daily deals / flash sales - Consumers are given the the advertiser per size of the space offered in print, the
chance to buy items at a steep discount. Here, suppliers length of the video in television or the duration of the
sell big quantities via a coupon company (Groupon commercial in radio.
Philippines is an example) which allow a decrease in
marketing, sales and inventory costs. (1) Advertisements - Some time ago, advertisements
appeared simply in traditional media such as newspapers,
SUBSCRIPTION AND USAGE FEES magazines, billboards, television and radio. Today,
advertising also embraces the Internet and expands on
 This category entails offering customers a specific product
apps and mobile platforms. Facebook, Twitter, Instagram,
or service that customers can pay for over a longer period
and WhatsApp as social media sites together with Search
of time, usually month to month, or even year to year.
Engine sites that include Google, YouTube, and Pinterest
obtain the bulk of their money using an advertising
(1) Subscriptions - This model provides a specified service
revenue model.
for a pre-determined periodic charge. Users are charged a
(2) Promoted content - Known also as sponsored or
recurrent fee (monthly or annual) for using their services.
suggested content, promoted content is almost like a
Annual subscription fee is charged on a monthly basis by
regular user content.
magazines and newspapers in exchange to deliver a new
(3) Sponsorships - Sponsorship is basically a fixed
issue every month for 12 months.
promotion. It can involve placing a logo on a website or on
(2) Usage fees - Utilities such as Meralco for electricity,
the jerseys of a popular sports team. Sponsorships are
Manila Waters and Maynilad for water and Converge for
 regularly traded on the audience size. Companies may  All businesses must generate money in order to have
sponsor, for instance, sports events, conventions, revenue. A business usually produce money out of its
websites, and Technology, Entertainment, Design (TED) various business activities. The more products and/or
talks. services being sold; the more money a business can
produce which provide higher level of revenue.
DATABASES
 A company using this revenue model collects data and FACTORS TO CONSIDER WHEN MAXIMIZING REVENUE:
then sell them directly to a consumer or business
customer. A number of companies use this revenue model (1) Revenue channels - Here are the sources of an
such as Bloomberg, Reuters, Standard & Poor's, Thomson entrepreneur's revenue which may come from online sales
Financial, D&B Corporation and the most popular market and ecommerce, through retail sales in bricks and mortar
research company which is Nielsen. stores, or through wholesales to other businesses. An
entrepreneur may focus in only one channel or may use a
1. The more special the information, the superior the combination.
value. (2) Revenue streams - The total revenue may be composed
2. The usage will be more valuable and expensive when with various streams. For instance, a small coffee shop
the data is deepened with thoughtful analysis. could, have the coffee sales, cake and pastry sales and
3. Some entities focus in lead generation that create and lunch sales as its streams. An entrepreneur should decide
maintain names and contact information of possible on the most reliable, productive and lucrative stream he
customers and trade them to 3rd parties. would focus on.
(3) Product and service split - An entrepreneur ought to
identify the most profitable products and/or services of his
TRANSACTIONS AND INTERMEDIATION business. These products and/or services should be
Revenue in this model comes from transactions that involve strong enough to compete despite market changes, be
the main profit- making activity of a business. Transactions able to have stable revenue and adapt well to changes.
include the sale of goods a manufacturer produces or the sale The most productive and flexible products and services,
of items a re-seller buys and then sells. Intermediation refers the greater the ability of a company to deliver continuous
to bringing together two or more parties involved in a and developing income for the business.
transaction. (4) Value vs volume - The question here involves the choice
of selling big quantity of products/services at low margin or
(1) Brokerage - In order to facilitate a transaction, a small quantity at a high margin. The business then can
brokerage company serves as a middleman that connects generate a more attractive price point and no value for
buyers and sellers. Once the transaction has been customers. Using various new channels, new streams or
completed, the company normally receives a commission. new products/services an entrepreneur may aim to
(2) Transaction enablers - Other entities makes possible the balance value and volume for new sales and more profit
transaction between two parties. The revenue here is the levels.
fee which is usually an exact percentage of the deal.
PayPal is a good example, which makes possible the COST DRIVERS
transaction between the sellers and buyers.  cost driver is the direct cause of a cost and its effect on the
(3) Affiliate - Commonly found in internet marketing, affiliate total cost incurred. In a business, the concern of continuity
revenue model allows a blogger to make money online. and discontinuity of it is cost.
This model works once the affiliate promotes links to  The Activity-based Costing (ABC) is a method being
relevant products. If the products get sold there is an used to accurately identify both the direct and indirect
affiliate commission that can be collected which can range costs in a particular activity.
in percentage depending on the company. This can work
in combination with ads. PRICING STRATEGIES
(4) Creating a platform - The Internet makes possible the o Price is a significant element of the marketing mix. This is
opportunity to connect sellers with consumers effortlessly. the company's complete source of earning. It does not
Here, a platform manager is in-charge of maintaining and only include the cost of production but the profit margin as
upgrading the online marketplace. He takes care of well. The three most essential influencers of pricing
customer service, payment collection, mediation and even are cost, consumer demand and competition.
insurance if available. A good example is Airbnb that
provides "breakfast and bed" to those tourists who are not THREE COMMON PRICING STRATEGIES BEING USED BY
interested in hotels ENTREPRENEURS

REVENUE AND COST DRIVERS (1) Maximization (Revenue Growth) - Startups use
 Revenue and cost drivers are important components of maximization when they make pricing produce the
any business model. Usually revenue and costs are greatest revenue for the business. Maximizing revenue
reported in gross in financial statements. However, growth in the short term is done by estimating both the
revenue and costs are really individual elements that form fixed and variable costs and then discover how to cut
those gross numbers. Every business model has its own these costs.
distinct revenue and cost drivers. Startups should pursue maximization under two situations:
a. When there are no distinct differences in customer
REVENUE DRIVERS segments' willingness to pay
 b. When the optimum short term and long term prices are
identical
(2) Penetration (Market Share) - This is setting a low price in TARGET-RETURN PRICING
a competitive market to win dominant market share and o The target-return pricing is a method wherein a business
raising it later. Penetration gives importance to market prices its product and/ or service based on a target rate of
share. It is common for entrepreneurs to use this method return on the investment or what the company anticipates
at the start. from the investing in the business. In this method, the
(3) Skimming (Profit Maximization) - This is setting a high company estimates the money placed in the operations of
price and systematically broaden the product offering to the business and then calculate the return its expects by
address more of the customer base at lower prices as the assuming a specific quantity of the product that can be
market progresses. The advantage here is that a business sold.
obtains high profits at its startup, when it needs the cash Advantages Disadvantages
the most, and creates an impression of high quality and 1. Dynamic price 1. Reliance on estimating
elitism in its industry at launch. determination – It the final selling price of
considers market factors of the product correctly - Any
CALCULATING PRICE demand error on this manner may
o Pricing is one of the most essential aspects of a market and supply while defining cause the entire marketing
strategy, that includes promotion, distribution and people. the selling price. strategy to fail.
2. Higher profitability - It 2. Estimating too low a
The consideration of pricing is based on the target
takes into account reducing price - This may place the
customers. cost as the selling price is impractical burden on the
already fixed beforehand. production department.
COST-LED PRICING 3. Efficient and optimum 3. Narrow-minded goal of
o Cost plus pricing method is a pricing strategy wherein a utilization of resources It reducing cost - The
company adds all expenses which have been used in leads to creative ways of organization may opt to use
producing a product which include direct material cost, reducing the cost of the cheaper technology or
direct labor cost, and overhead costs then it adds some product and leads to stable materials or faulty designs
fraction of a desired profit margin on top and arrived at a technological and economic which be advantageous
price for a product and/or service. gains for the company. on the company or the
4. Availability of value- customers.
added products and 4. Estimating a selling
Advantages Disadvantages
services - The benefits of price and cost for markup
1. Few resources are 1. Disregards competition -
cost reduction are passed - If the business fails to sell
needed - The method The cost plus formula may end on to the customers who that many numbers of
does not require up pricing too high or too low enjoy better products at estimated units, it is bound
researches. Easy to compared to competition. cheaper prices. to suffer losses.
derive the product price 2. Product costs overruns - 5. Better prediction and
by just summing up the The department in-charge of response to market
expenses and then production simply designs what changes - Coordination
allocate markup the target market wants and amongst its various
percentage. willing to pay. departments such as
2. Justifiable - When 3. Contract cost returns - The production, marketing,
there is price increase, a supplier has no opportunity to design, and engineering
business may just point to limit its expenses but still can enables it to form a cohesive
strategy in the event of any
suppliers as the reason include all costs for
major shift in trends.
for the increase. reimbursement.
3. Complete coverage
of cost and a steady 4. Disregard replacement
costs - Costs is based from VALUE-BASED PRICING
rate of return - As long
past data, hence if there would o Value-based pricing is a method that uses the perception
as the computation of
be changes, the recent of the customers on the worth or value of a product and/or
costs is correct, allowing
replacement cost would no service for pricing. For entrepreneurs who wanted to
the mark-up ensures a
longer be a representative of convey the value of its product and/or service to its
positive rate of return.
the real costs. customers and wanted to be distinct in the market, value-
4. Beneficial against
based pricing is better to be used. This method also
incomplete knowledge -
5. Inefficient The guarantee of provides freedom to ignore costs and generate more
This method is especially
a target rate of return creates money.
helpful when there is no
little incentive for cutting cost or Advantages Disadvantages
information about a
for increasing profitability 1. Higher profit margins - It 1. Niche market - An
customer's willingness to
through price differentiation. leads to higher profit entrepreneur can target only
pay and no idea about margins for the company a restricted number of
direct competitors in the because customers customers who can afford a
marketplace. purchase products product and/or service with
according to value perceived high prices.
by them. 2. Difficult to expand the
2. Greater brand loyalty - business - This strategy
By creating the best quality works for smaller
 product, the business will companies. and sells highly business because he does happens.
not only get customer loyalty specialized product so not not have to attract external
and repeated business but feasible on a larger funding
will also get referral audience. 6. Investors are much more
business from loyal 3. Competition in the confident and attracted in
customers. market - When a company financing a business whose
3. Low competition - charge high prices, then the owner had created the
Consumers are buying the entrepreneur leaves scope financial foundation of his
product due to perceived for competitors to produce startup
value rather than looking at and sell the same product at business
price or substitute products lower prices. 7. Business founded on
the question of competition 4. Higher production cost - bootstrapping really has
does not arise. It costs more to produce delivered a particular value
4. Supply and demand specialized products and
balance - An entrepreneur need highly skilled
will know the approximate employees to provide the
number of customers who best quality products. CROWDSOURCING
can pay for a product and/or o Crowdsourcing refers to getting work, information, or
service and are willing to
opinions from a big group of people who give their data via
pay high prices to buy them.
the Internet, social media, and smartphone apps.
Using the idea of the
demand for a product in the
market helps a business to NOTABLE AND BEST CROWDSOURCING SITES TODAY
produce supply as a result.
(1) Designhill - It provides creative design concepts for logos,
business cards, stationary design, leaflets and websites.
(2) Flickr - Flickr platform allows for the access to millions of
BOOTSTRAPPING high-quality images, such as that of celebrities, historical
Bootstrapping or self-funding is starting a company with little figures, places, footballers, symbols and icons.
or no capital, thus an entrepreneur relies on money excluding (3) RedesignMe - It is a platform that focuses on overhauling
outside investments. Here, an entrepreneur makes use of his web design and packaging redesign experiences for
personal savings, sweat equity, lean operations, quick consumers.
inventory turnover, and a cash runway to start his business. (4) UTest - Website design, gaming, mobile app design, or
services are usability testing that its developers will
THREE STEPS TO BOOTSTRAP A COMPANY conduct in a professional way.
(5) Chaordix - This one-stop marketplace is ideal for the
(1) Look for seed money - Personal savings and money organizations or professionals and amateurs people who
from relatives and friends could be good sources of the love to participate in giving suggestions and thoughts
seed money or the startup money. Or an entrepreneur about solutions to business problems.
may use her salary from his regular job to finance his side (6) Namethis- It is a useful site to source out for a new name
business. for an entrepreneur's small business or startup from huge
(2) Start with a minimum viable product (MVP) and/or community which comes with a nominal fee to the best
service - It is easy and fast to start selling using the MVP. three name ideas chosen by the business.
Fast is better than a perfect product when bootstrapping. (7) Ponoko - This site is composed of dozens of product
(3) Use customers' money to grow - An entrepreneur may designers who can make recommendation about new
obtain money from preorders form customers and use this ideas for product designs.
money to start its operation. (8) Amazon's Mechanical Turk - This platform has more
than 50,000 "human intelligence tasks" readily available
Advantages Disadvantages for freelancers who look jobs such as writing a review on
1. The entrepreneur gets a 1. It is challenging if demand anything or making a video or a merchandise design
wealth of experience while goes (9) Trendwatching - This site provides expert advices to
risking his own money only. beyond the capability of the customers about new trends on business and market for
2. The "bootstrapper" entrepreneur to deliver the the creation of new strategies for marketing and branding.
reserves the right to all product and/or service to (10) Quri-This platform keeps close monitoring of retail stores
developments. customers. 2. The to provide analytics, insights and guidelines to the retailers
3. The lack of initial funding entrepreneur shoulders for use in the solution on any problems and improvements
makes entrepreneurs almost all
of their respective stores.
innovative and creative in financial risks.
thinking. 3. Fully implementing the
4. An entrepreneur can entrepreneur's idea could be EQUITY FINANCING
make all the decisions difficult due to Limited o Equity financing is the process of generating capital
independently and remain capital and lack of through the sale of shares. Most companies raise money
autonomous from the investment. for reasons such as to pay bills or for long term
investors' instructions. 4. It is stressful to an investment. There several sources of funds in equity
5. Bootstrapping allows an entrepreneur to handle financing like entrepreneur's friends and family, investors,
entrepreneur to fully focus problems especially when or an initial public offering (IPO).
on the key aspects of the something unexpected
 o 1. The Family Investor - The family Investor is
STAGES OF EQUITY FINANCING not actually a classic angel investor at all, but a
supportive family member who knows the
(1) STAGE #1: PRE-SEED FUNDING entrepreneur well.
Pre-seed funding is to the preliminary capital a business o The Relationship Investor - The relationship
that comes from friends, family members or even credit investor is a colleague of the owner from his
cards. previous employment who happened to know his
(2) STAGE #2: SEED FUNDING well.
Seed funding known also as seed capital usually ranges o The Idea Investor - The Idea Investor is a person
from Php100,000 to Php500,000. This fund is frequently who can confirm the soundness of the
given by angel investors. It is typically designed as entrepreneur's idea being very familiar with the
convertible notes or common stock. business.
(3) STAGE #3: EARLY STAGE INVESTMENT (SERIES A & o The Once Removed Investor - The Once
B) Removed Investor could probably have a
Series A refers to the first round of institutional funding for personal or professional connection with either
a venture. The name is taken from the return for capital of the relationship investor or the idea investor.
investors which is normally in the form of a preferred o The "Archangel" Investor - An Archangel could
stock. In Series B, the average fund that could be raised is be a relationship investor or idea investor has
Php5 million to million or even to the extent of Php20 been successful in making other angels and non-
million or even more. angels generate money.
(4) Crowdfunding is raising money for an individual or
(4) STAGE #4: LATER STAGE INVESTMENT (SERIES C, company by collecting donations from a large number of
D, ETC.) individuals to fund a startup business.
ome big companies backed up their ventures with more Four types of crowdfunding
than 10 rounds of financing. This is the Series C, D, and o Donation-based is where individuals group
so on of capital funding coming from venture capital firms
together their resources to back up a benevolent
and/or strategic/corporate investors. Usually in every
cause.
round an entrepreneur may raise from Php5 million to
o Reward -based is where individuals provide
Php20 million or even more.
money to a company in exchange for a reward or
(5) STAGE #5: MEZZANINE FINANCING
something in return usually a product made by
Mezzanine capital is a capital in the form of equity, debt, or
the company.
a convertible note that is given to a company just before its
o Lending - based is where individuals loan money
Initial Public Offering (IPO). They type of capital is being
to a company and accept the company's legally-
provided by private equity companies. In this stage, the
binding commitment to pay back the loan at pre-
company is already well-established that mezzanine
determined time intervals and interest rate.
investors face less risk on their investments, that's why
o Equity-based is where individuals finance in
these investors are quick to cash out funds.
shares sold by a company and obtain a part of
FORMS OF EQUITY FINANCING the profits in the form of a dividend or distribution,
based on the company's decision.
(1) Individual Private Investors–Seeking assistance from (5) Initial Public Offering–A well-established company can
individual investors is one way to raise money for the generate more funds through initial public offering or IPO.
business. Such individual investors may include the In this type of fundraising, a company can source out
entrepreneur's friends, family, and other colleagues. funds by offering shares of the company to the public.
(2) Venture Capitalists–Venture capitalists or VCs are
investors who provide money for the business only after
the company has been operating successfully for some FINANCIAL STATEMENTS
years and they feel that it is already an established one. Financial Statements represent a formal record of the
Venture capitalist approaches: financial activities of an entity. These are written reports that
o Early Stage Financing - Here an individual or quantify the financial strength, performance and liquidity of a
company.
venture capitalist company provides the seed
money to start the business and keeps it running
INCOME STATEMENT
quickly
Also known as a Profit and Loss Statement, the income
o Expansion Financing - The small company has
statement is a summary of a company's total revenue and its
a definite product and/or service offering to sell
operating expenses for a given period such as per month, per
and it has an identified target market.
quarter of a year or for one year.
o Buy Out Financing - The the VCs will be
providing money to buy out a company or buy out
(1) Sales - This number represents the total amount of
branches of other companies.
revenue produced by the business.
(3) Angel investors are those individuals or a larger group
(2) Cost of Goods Sold- Known also as Cost of Sales this
that make available financial backing at an early phase of
number includes all of the costs and expenses directly
the business at advantageous terms and do not typically
related to the production of goods and/or services.
participate in the management of the venture.
(3) Gross Profit - This number is the profit of the company
Types of Angel investors
after subtracting the expenses related to manufacturing
 and selling its products, or the costs associated with
providing its services. CASH FLOW STATEMENT
(4) Operating Expenses - These include the expenses  A cash flow statement is a financial report that describes
incurred every day in the operation of a business. the sources of a company's cash and how that cash was
(5) Total Expenses - This is a sum of all expenses acquired expended over a specified time period.
in business, without yet the taxes or interest expense on o Cash flow from operating activities - This is cash
interest income, if there is any. produced from the daily business operations.
(6) Net Income Before Taxes - This figure is the amount of o Cash flow from investing activities - This cash is
income earned by a business before paying income taxes used for investing in assets, as well as the proceeds
by deducting total operating expenses from gross profit. from the sale of other businesses, equipment, or other
(7) Taxes - This is the amount of income taxes that an long-term assets.
entrepreneur is indebted to the government both local and o Cash flow from financing activities - This cash is
national. paid or received from issuing and borrowing of funds.
(8) Net Income - This is the amount of money the business o Net Increase or Decrease in Cash - The increases
has produced after paying income taxes. in cash from previous year will be written typically,
and decreases in cash are usually written in
BALANCE SHEET (brackets).

 The Balance Sheet also known as Statement of Financial CHAPTER 8 PLANNING AND FAILURES FOR
Position, presents the financial position of an organization ENTREPRENEURS
at a specified date.
(1) Assets - An asset is something that an entity owns or ADVANTAGE OF CREATING A PLAN
controls so that a company can produce economic (1) A plan is necessary to concentrate on goals - Specific
benefits in its usage. goals measure the progress with what has been planned.
o a. Tangible and intangible Tangible assets include Often the outcome of goals change as time passes that
property, plant and - equipment, while intangible leads to mix-up.
‘assets are those without physical substance like (2) . Planning helps keep track of finances - A good plan
goodwill. gives a detailed picture of the budget that is required for
o b. Inventories balance - This includes goods that are every activity in the business operation.
held for sale in the ordinary course of the business (3) Planning helps to keep track of the business progress
such as raw materials, finished goods and works in - A good plan can easily identify how many activities have
progress. been completed and how many are still undone. It
o c. Trade receivables - These include the amounts provides a way to determine the priority activities that must
that are payables from customers upon credit sales. be given attention closely.
These are presented in the Balance Sheet after (4) Planning conveys the risks of what to expect in
subtracting the allowance for bad debts. advance In the early stage of any venture, government
o d. Cash and cash equivalents - These include cash clearances are necessary.
in hand together with any short term investments that (5) Planning helps to understand deviations and failure -
are easily convertible into cash. Often times plans do not work as expected or worst they
(2) Liabilities - A liability is an obligation that a business owes fail.
to someone and its payment could be in cash or other
resources. THE TRIM FRAMEWORK
o Trade and other payables - These mainly  The TRIM framework is basically an acronym for team,
include liabilities payable to suppliers and resources, idea and market. It is a planning tool that
contractors for credit purchases. pinpoints the kinds of people essential to form the
o Short term borrowings - These usually include founding team, the resources at hand and required, the
bank overdrafts and short term bank loans with a fine points of the idea, and the possible market for the
repayment timetable of under 12 months. product or service
o Long-term borrowings - These include loans
which are to be settled up for more than one BACK OF THE ENVELOPE/NAPKIN
year.  The back of the envelope/napkin plan is a quick and
o Current Tax Payable - This is usually presented rough estimation of a business or product idea that is
as a separate line item in the Balance Sheet written on any accessible scrap of paper such as an
because of the importance of this amount. envelope or napkin.
(3) Equity - Equity is primarily what the business owes to its
owners. BUSINESS MODEL CANVAS
o share capital - It represents the amount invested  Business model canvas is a visual chart with elements
by the owners in the company. describing a business' or product's value proposition,
o Retained Earnings - It comprises the total net infrastructure, customers, and finances. Basically, it is a
profit or loss retained in the business once the strategic management and lean startup outline for
dividends are distributed to the owners. developing new or writing down existing business model of
a venture. It is used to align the business' activities by
detailing possible trade-offs.
 (4) Solution - This slide should discuss the likely solutions to
the identified problem and should move on to the specific
THE BUSINESS BRIEF solution and the main reason for planning to choose it.
 A business brief is a document that offers the explanation (5) The Product - This slide showcases the product and its
on the reason why a particular model leads to success in a numerous highlights.
given scenario. It is used to endorse goods and services to (6) Business model - A business model is a theoretical
customers, increase profits, offer solutions to industry structure that supports the feasibility of a product or
problems or intensify consumer awareness of business company.
activities. (7) Competition - This is a section where the entrepreneur
convinces his investors that he has done his homework
(1) Describe completely the task/purpose and knows about his competitors.
(2) Provide some background - In order to gain the trust, (8) The Key Highlight - This section is where the entrepreneur
confidence and respect of the targeted audience, there is compares himself with the competition and prove how he
a need to create a believable history. is better than them.
(3) Explain fully what the target is - Provide a clear picture (9) Marketing and Sales- This section includes the list of all
of who the target audience are. The business brief should the marketing and sales strategies to obtain, overcome,
describe the potential audience and the manner of gaining and to serve the existing and prospective customers of the
their interest. product.
(4) Time - Anyone who would be writing a business brief (10) Management team - This is one of the major section in
ought to give time to himself in preparing it. which the investors are truly interested in is the
management team section.
FEASIBILITY STUDY (11) Key Metrics, Current Status and Future Projections - This
 A feasibility study is an assessment the viability of a is where the entrepreneur boast his current standings and
proposed project or system. It that takes into account all of provide a three-to-five-year forecast of his business.
a project's significant factors such as economic, technical,
legal, and scheduling concerns. THE BUSINESS PLAN
(1) Helps in getting finances
(1) Executive Summary - The most important page/s of the (2) Helps anticipate possible problems
study is a brief narrative describing details of the project, (3) Helps remain on track
product, service, plan, or business which stakeholders (4) Helps in good management of the business
read with interest. (5) Budgeting is easier
(2) Clear Project Description - A outline of the project as it is (6) Helps in the start or continue the business decision
defined for the study can provide stakeholders the answer
to their questions and help them know the results.
(3) Competitive Landscape - Basically, this is a review of the
strengths, weaknesses, opportunities, and threats
encountered by the venture under study. FAILURE AND ENTREPRENEURSHIP
(4) Operating Requirements - Here the entrepreneurs can (1) Henry Ford became bankrupt five times and was even
use this point in the report to remain distinct, concentrated, given the advice to move out of the automobile industry.
and balanced about a venture's real needs. (2) Walt Disney was turned down by investors about 300
(5) Financial Projections-Most investors are interested over times when it was looking for finances.
the financials in a feasibility study to make certain that a (3) The popular Beatles group was not accepted by five
venture can generate the kind of ascendable profits that record companies before their success.
merit their approval. (4) Steve Jobs was one of the leading example of coming
(6) Recommendations and Findings - This is the summary back with a bang. Apple fired him from the CEOS position
of all of the previous feasibility study elements. because of terrible products. He afterwards started NeXT
which turned out to be a huge success. It was because of
this only that Steve Jobs got back to Apple as a CEO.
THE PITCH DECK (5) Thomas Alva Edison is someone who bounced back after
 A pitch deck, known also as an investor pitch deck or a failing. He invented something which mankind cannot
startup pitch deck is the first communication instrument persist without. He took nearly 1000 attempts to discover
that provides an overview of the business in order to raise light. His words on failure are a great source of inspiration
funds. for one and all
(1) Elevator Pitch - An elevator pitch is a quick synopsis of the
idea, background, and experience. TRUTHS ABOUT FAILURE IN ENTREPRENEURSHIP
(2) . 2. Problem - The second slide states the problem the (1) No success without failure - The road to recovery is long
target audience faces. This makes it clear to the investors and painful when someone failed. Although, when
that a clear opportunity has been found by the heartbroken, entrepreneurs turn to understand and
entrepreneur and he has ready to capitalize on it. appreciate more what happened.
(3) Opportunity - A problem leads to an opportunity which can (2) Failure and success are similar - Without failing
be capitalized on. The entrepreneur may use charts, occasionally; an entrepreneur cannot completely
graphs and numbers to validate his statement. understand what success really looks like.
(3) Failure arises from curiosity - Usually an limitless thirst
for knowledge and longing to reach their full potential is
the reason why numerous entrepreneurs venture out.
(4) Failure arises from curiosity - Usually an limitless thirst
for knowledge and longing to reach their full potential is
the reason why numerous entrepreneurs venture out.
(5) Nobody wants to fail - Besides one's own pride, friends,
family and relatives of an entrepreneur do not want him to
fail in his every attempt.
(6) Failure does not mean quitting - Quitting is very different
with failure. Failure is a barrier, quitting is not. Quitting is
when the entrepreneur stops trying.
(7) Each failure gets easier - For an individual being
heartbroken several times, makes acceptance easier and
getting over is much simpler.

REASONS FOR FAILURE

(1) Lack of right vision - Passion is the very most reason of

establishing a business. not all entrepreneurs understand
that the most indispensable thing when opening a
business is the vision. Vision is how the entrepreneur sees
himself and his business say after five to ten years since
he started.
(2) Proper selection of a business - Proper selection of
business is vital to prevent entrepreneurs failing.
(3) Lack of appropriate planning - Incorrect planning is
another common cause why entrepreneurs fail. Having a
well-written business plan especially for first- timers is an
essential component of starting a new business which
entrepreneurs disregard.
(4) Having inadequate capital - It is basically suicidal to start a
business with insufficient capital.
(5) Poor execution of the plan - A well-written business plan is
worthless without proper implementation. The most critical
reason behind the failure of implementation is ineffective
leadership.
(6) The hiring of wrong people - Hiring the right employee is
essential to the success of any entrepreneur and his
business.
(7) Failure in marketing - The success of every business also
depends on its marketing. Marketing is significant in
attracting many potential buyers for the services or
products being offered by the business.
(8) Expanding too soon - Certainly, every entrepreneur wants
to expand and grow. However, making it too soon or very
early can lead to the business into demise. An
entrepreneur should extensively and carefully review and
analyze first all aspects of his business before deciding on
an expansion. There must be proper timing for expansion
since it will be harder to manage the business after.
(9) Miscalculating competition - Underestimating competitors
is risky to undertake by any entrepreneur. Competition
must be identified before taking a portion of the market. To
stay safe in his business position, an entrepreneur should
keep a keen eye on his competitor's strengths and
weaknesses.
(10) Giving up too soon - It is commonly a cause of failure of
every entrepreneur to quit and give up his business.
Although it is really very difficult to get up from
considerable obstructions, but quitting is not a solution.