Creating a Profitable CompanyASU Startup School / Stage 5

By the end of this lesson, you should be able to:• Understand Cost Structure and Revenue Streams• Create a Sales Forecast• Understand and Create a Profit and Loss for your Company• Define key metrics for your businesses success• Understand how to create a repeatable, predictable, scalable

and sustainable company. • Build a Business Plan from your Business Model Canvas

Before we start this lesson, consider:• How much does it cost to acquire a customer?• How much does it cost to build a product?• How much does it cost to service a customer?• How much are fixed cost versus variable cost?• How do I price my product to make a profit?

Startup School is…•Startup School is a 6-part series to help entrepreneurs learn the fundamentals of entrepreneurship. At the end of this series, Entrepreneurs will be able to express their ideas with an excellently crafted elevator pitch. Have completed the Business Model Canvas, Customer Discovery, Built or Identified an MVP and Understand the Cost and Revenue needed to be successful. Finally, we will translate all of this into a Business Plan to execute against.

Your NameYour BIO Here

Overview

1. OVERVIEW

6. GROWTH

2. 3.4.

5.

Building a Profitable Business ModelASU Startup School / Stage 5.1

Let’s look at the Business Model Canvas

Preview book: http://www.businessmodelgeneration.com/downloads/businessmodelgeneration_preview.pdf Download printable canvas: https://upload.wikimedia.org/wikipedia/commons/1/10/Business_Model_Canvas.png

Profit

PROFIT

Cost Structure:What are the most important costs inherent in our business model?Which key resources are most expensive?Which key activities are most expensive?

Revenue Streams:For what value are our customers really willing to pay? For what do they currently pay?How are they currently paying?How would they prefer to pay?How much does each revenue stream contribute to overall revenues?

Cost Structure

Revenue Streams

Keys to Profitable CompanyASU Startup School / Stage 5.2

Repeatable CustomersThe key to success is to find customers that will become repeat customers.

What will they come back for?

So if we can create a subscription service or “wine of the month” subscription then, we will repeat. Most businesses do not have repeat customers.

Predictable Sales With repeatable customers, comes predictable sales. Each month growsThe base customer list and revenue streams.

With predictable sales, you can raise money and invest it to create more Predictable sales.

Scalable BusinessWith predictable sales pouring in, there will be a need to scale your operations.

How do you do for one customer for one million?

Scalable is a great hurdle, productizing your service and creating a service of Your product is one way.

How do you make the process match the technology or people?

These are just the beginning of questions to grapplel with…

Sustainable Company With a scalable business, it creates the possibility to create a sustainableCompany.

Sales Forecast ASU Startup School / Stage 5.3

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things.

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things. Add Referral Source

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things. Add Product/Service

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things. Who Sold It

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things. Company you sold it too

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things. If you have types of customers

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things. How closed is the sale

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things.

Automatic based on % closed and projected

Sales Forecast

Download spreadsheet:

Sales is the life blood of a startup. It also cures many other things. Projected sale in dollars

Profit & Loss ASU Startup School / Stage 5.3

Profit & Loss

Download spreadsheet:

Understanding where you spend money and make money is pretty important.

Profit & Loss

Download spreadsheet:

Understanding where you spend money and make money is pretty important.Auto-populates from Forecast

Profit & Loss

Download spreadsheet:

Understanding where you spend money and make money is pretty important.

Commission to Sales Rep

Profit & Loss

Download spreadsheet:

Understanding where you spend money and make money is pretty important.

Project Management to deliver Service

Profit & Loss

Download spreadsheet:

Understanding where you spend money and make money is pretty important.

Insert Expenses here

Profit & Loss

Download spreadsheet:

Understanding where you spend money and make money is pretty important.Auto-populates from Forecast

Key Metrics for StartupsASU Startup School / Stage 5.4

Key Metrics Let’s review the metrics and pick 3 to see, which is most essential to the success of your business.

LIST KEY METRICS TO CHOOSE FROM WITH DEFINITIONS

Business Model Canvas to Business PlanASU Startup School / Stage 5.5

Translating Canvas to Plan CanvasValue Propositions:• What value do we deliver to the

customer?• Which one of our customer’s

problems are we helping to solve?• What bundles of products and

services are we offering to each customer segment?

• Which customer needs are we satisfying?

Customer Segments:• For whom are we creating value?• Who are our most important

customers?

Business PlanExecutive Summary:• What value does our idea deliver

and to who?

Market/Targeted Customer:• Who is your targeted customer and

what size of market are they?

Translating Canvas to Plan CanvasChannels:• Through which channels do our

customer segments want to be reached?

• How are we reaching them now?• How are our Channels integrated?Customer Relationships:• What type of relationship does each of

our customer segments expect us to establish and maintain with them?

• Which ones have we established?• How are they integrated with the rest of

our business model?

Business PlanMarketing Plan:• What are the channels we need to use

to get to our targeted customer?

Sales/Service Plan:• How do we get, keep and grow our

customers?

CanvasKey Activities:• What key activities do our value

propositions require?• Our Distribution channels?• Customer Relationships?• Revenue Streams?

Business Plan

Operations Plan:• What do we need to do to

operationalize?

Translating Canvas to Plan

CanvasKey Resources:• What key resources do our value propositions

require?• Our Distribution Channels? Customer Relationships?• Revenue Streams?• Which ones work best?• Which ones are the most cost-efficient?• How are we integrating them with customer

routines?• Awareness: How do we raise awareness about our

company’s products and services?• Evaluation. How do we help customers evaluate our

organization’s Value Proposition?• Purchase. How do we allow customers to purchase

specific products and services?• Delivery. How do we deliver a Value Proposition to

the customer?• After Sales. How do we provide post-purchase

customer support?

Business PlanManagement & Staffing Plan:• What team do we need?

Translating Canvas to Plan

CanvasKey Partners:• Who are our key partners?• Who are our key suppliers?• Which key resources are we

acquiring from partners?• Which key activities do partners

perform?

Business PlanPartners & Supply Chain:• Who are the key partners and

suppliers we need to make this happen?

Translating Canvas to Plan

Canvas• Cost Structure:• What are the most important costs

inherent in our business model?• Which key resources are most

expensive?• Which key activities are most expensive?• Revenue Streams:• For what value are our customers really

willing to pay? For what do they currently pay?

• How are they currently paying?• How would they prefer to pay?• How much does each revenue stream

contribute to overall revenues?•

Business PlanStartup Capital• What are the cost to start?

Financial Plan:• What are the revenue streams and the cost

to create repeatable, predictable, scalable and sustainable business model?

Appendices:• What are the other important metrics and

documents to support our business.

Translating Canvas to Plan

Summary and Next Steps

What we will learn in the last class:• How to Grow your Company

At the end of this course, you will have:• Completed many Iterations of the Business Model

Canvas• Completed of a Successful 30-Second Elevator Pitch• Created of a Customer Discovery Analysis• Developed a Minimum Viable Product• Created of a Profitable Company• Understanding of a Fundable Business Plan

Here is a list of all additional resources

To get a sense of the energy humming through Silicon Valley, the following reading will be helpful: First, for the big picture read Why Software is Eating the World, The Rise and Fall of Personal Computing, and Internet Trends. Next, look at these articles on Stanford's Facebook class, The Social Network , and Massively Collaborative Mathematics. Finally, read Startup = Growth and the book, Zero to One.

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