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DIVING INTO ENTREPRENEURSHIP
Melissa Liu CEO 2025 Consulting / 2025 Labs
2025 Labs
Why Diving into Entrepreneurship?
• Fear may be involved
• You can practice and plan…but it still involves a leap of faith
• Done well, it may look easy…but it’s actually a lot of work
• It’s also uncertain – you may crash and burn, you may fail, you may look like a “fool” in front of a crowd
• But it is exhilarating!
I was a high school diver, but
this is not me
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What is entrepreneurship?
• People may envision Uber, Twitter, AirBNB • Not every new company starts and develops like these
• May be a technology company – or not • May be Angel/VC funded – or not • May be planned to become a $ billion company – or not • May be about a “revolutionary new idea” – or not
• Entrepreneurship = The act of starting (and building) a new company that did not previously exist
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Data on entrepreneurship and women-owned business
• Women own 36% of all businesses, according to US Census data from 2012, a 30% increase from 20071
• 13% of all US adults are involved in entrepreneurship2 • Female entrepreneurs start companies with less capital than male
entrepreneurs3
• In 2014, 15.5% of all US based startups receiving VC funding had at least one female founder, up from 9.5% in 20094
• “Virtually all net new jobs created in the U.S. between 1980 and [mid-2000s] were created by firms that were five years old or less”5
2 Forbes, “U.S. Entrepreneurship hits record high”, 2013
1 Forbes, “Why The Force Will Be With Women Entrepreneurs in 2016 ”, 2016
3 National Women’s Business Council, “Access to Capital by High-Growth Women-owned Business, ” 2014 4 TechCrunch, “Female Founders on an Upward Trend, according to CrunchBase”, 2015 5 CNN, “U.S. economy won’t grow fast until we unleash entrepreneurship”, 2016
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Getting started – some initial milestones Before you start, you need:
Iterate, build, re-plan, manage from here
Legal Entity and Filings Now you have a business!
Start-up Financing Enough $ to get started
Start-up Team Resourcing Whoever you need to be able to sell something – could be just you
Product: Something to Sell Product or service you can sell
Company “Presence” Collateral to make your company look legit – web site, business cards, etc.
Bank Account Place for you to take payments and pay bills
Sales You working on selling something to someone
Taxes and Corporate Filings Reporting of the state of your company for taxes and legal filings
Real business
Can take money
Can sell
Have revenue
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Getting started – some initial milestones Before you start, you need:
Iterate, build, re-plan, manage from here
Legal Entity and Filings Now you have a business!
Start-up Financing Enough $ to get started
Start-up Team Resourcing Whoever you need to be able to sell something – could be just you
Product: Something to Sell Product or service you can sell
Company “Presence” Collateral to make your company look legit – web site, business cards, etc.
Bank Account Place for you to take payments and pay bills
Sales You working on selling something to someone
Taxes and Corporate Filings Reporting of the state of your company for taxes and legal filings
Real business
Can take money
Can sell
Have revenue
• Getting to sales does not mean that you have a viable business model…
• ... or that you can ever achieve viability with your current plans and directions
• But it is a start • You will learn from your experiences to here, and you can
evolve your business from that point • We will come back to the business model topic…
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Mall Map: simple overview of a business
Product or Service – something to try to sell
Revenue Model Cost Model
Customer Acquisition
Legal Entity and Filings
“Presence”: Marketing, Web, Media
Organization, Hiring, Contracting
Cost of Doing Business Revenue Generating Product Related Costs
* Area of legal complexity
May take iteration to
get to a viable
business model
Business Model: Drives your profit
Financial Management
IT, Operations, etc.
* You are here (maybe)
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What is a legal entity?
Sole Proprietorship
• You own the business as an individual
• Its bank account is your personal bank account
• Its debts are your personal debts
• No “corporate veil” for liability
Incorporated Business
• Business has been “incorporated” into an entity distinct from its owner(s)
• C Corp • LLC • Non-profit 501(c)3 • S Corp
• Business has its own bank account attached to the business name
• Protection of “corporate veil” (usually)
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Business Models: Product vs Technology Example 1: Software
“Product” Customers Revenue Model
Packaged software (Office or Intuit - traditional)
• User/Purchasers of the software
• Businesses • OEMs (pre-installed PC)
• $ per package sold • Site license, volume discount
Subscription Software (e.g., Office 365, Intuit
Online)
• User/Purchasers of subscriptions
• Can also be businesses
• $ per time period of subscription
• $ per period per user, etc.
Free Software (e.g., Google Docs,
Facebook)
• Purchasers of ads • Purchasers of data
• $ per eyeballs or time watched, etc.
Can be differentiation between what you are building vs what you are selling. The same “thing” could be sold through different models
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Business Models: Product vs Technology Example 2: “Radio”
“Product” Customers Revenue Model
FM Radio • Advertisers • Ad revenue
• Sold by duration, peak times, etc.
Sirius XM • Subscription purchasers /
listeners • Car manufacturers?
• $ per time period of subscription
Pandora • Companies that buy ads • Consumers who pay for a
subscription
• “Freemium” (ad-supported) • Subscription-supported
(ad-free)
Customer = The person who pays. Others are “users”, “listeners”, “readers” – fans who help you attract paying customers
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Some key decisions Goods vs Services
• Physical goods: inventory, shipping logistics, sales tax, manufacturing and/or assembly time, etc.
• Services: labor logistics, retention • Companies can be both gds and svcs • R&D companies: Can be either, also
have up-front cost of development
For-Profit vs Non-Profit • Most businesses are for profit • Non-profit public benefit companies
have many regulatory requirements • For-profit entities: C-corp, S-corp,
LLC, sole proprietorship • Pass-through vs corporate tax
Sole Founder vs Partners
• For some people, it’s better to have partners
• Complementary critical skills • Partnerships don’t always work and
sometimes dissolve • It can be ugly!
Initial Customers
• Ideal if you have a starting set of customers to work with
• Easy way to create a track record of doing business
• Customers = Paying (lots of people willing to try out for free)
In-source / Out-source / Skills
• What you (and partners) can do vs what you need help with
• E.g., outsource web site, logo creation, manufacturing, etc.
• Cost vs internal skill-sets • Skills you want vs skills you don’t
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Recap: Product development in a startup environment
• Expect to iterate on: • products • customers • revenue model
• You might find that you can sell to happy customers – and lose money doing it • May need to iterate on your business model • Lower product cost, higher sales price, different market, volume/
scale, etc.
• Some companies get pretty far with an unproven – or bad? – business model • This works if you are well-funded; not everyone has this option
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We interrupt this story for a few tidbits…
• Steve Blank, “Not All Those Who Wander Are Lost” • Story about the marketing guy who feels he’s meeting goals
because he has made a bunch of calls (activity-based metric) • Goal in startup marketing is not activity-based – it’s actual sales
• Guy Kawasaki, Pioneer Summit 2015 • “All you need is someone to build it, and someone to sell it.
Everything else is bullshit”
Stay focused on selling, and the things you need to do to enable it. Those are your most critical activities.
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Customer acquisition – some market traits
• Cost Sensitivity: • Customer’s own money or OPM
(“Other People’s Money”) • Budget constraints
• Sales Lead Time: • Size of the organization &
bureaucracy • Legal/regulatory oversight and
controls
• Individual characteristics within a market will vary • Wealthy consumers vs not • Small, growing businesses vs large
struggling businesses
• But a market overall will tend to have some characteristics
Cost Sensitivity
Sales Lead Time
Consumer
Large (stable)
business
Individual customer characteristics vary
Small business
Gov’t
Well-funded startup
Non-profit (LT varies)
Disclaimer: This is the experience of a two-time entrepreneur, not a marketing professional
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Customer acquisition / marketing / sales What you might see
Social media
ad placement (mobile, print, web)
search key words
direct mail
cold calls / emails
personal contacts
formal bidding process
consumer government corporate
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Funding your startup
Pre-revenue /customers
(Seed Stage)
Revenue /Customers (Early Stage)
• Bootstrap • Friends and family • Crowdfunding • Angel (individuals
with $) • Micro-VC • Accelerator /
incubator • Corporate seed
money
• Founders money (“bootstrapping”)
• Friends and family
• Small business loan?
Getting Started
• Retained earnings • VC • Corporate capital
investment • Debt financing • Etc.
$
$$ $$$-$$$$
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Taxes, taxes, taxes! C-Corp, LLC taxed as a corporation, but not sole prop. or pass-through entities
Corporate taxes:
LLC taxed as a “pass-through” entity, sole proprietorship, S-Corp, wages from a C-Corp (double taxation) Individual taxes:
W-2 employees (including you: you will pay employment taxes for yourself through corporate or self-employment) Employment taxes:
Any pass-through or sole-proprietorship will pay employment taxes through self-employment taxation Self-employment:
Business license fees (state/local), e.g., for a license certificate that must be shown in the place of business License fees:
Collecting, remitting, reporting taxes for physical products. Rates and taxation varies by state and locality Sales taxes:
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Employment and employment law
• Employment laws can be complicated and change often
• Know the difference – employee versus contractor • Where work is performed, equipment, supervision/control, etc.
• Overtime regulations – recently changed
• Minimum wage laws (federal, state, local)
• Letter of the law vs. spirit of the law
Disclaimer: I’m not a lawyer, or a CPA; this is not the substitute for advice from a professional…but these are some areas you should keep in mind
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Final Thoughts
It’s work – but it’s worth it! Any one idea may well not work out… … but there are always other businesses that could be started Know the financial risk you can handle Questions?
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