Entrepreneur: Perceive and opportunity to create value,
devise a strategy for taking control of necessary
resources, inplement a plan of action to make the change
possible, harvest the reward that comes from the
innovation. Start up: an institution designed to create new
product or service under conditions of extreme
uncertainty. Entrepreneurship is management:
Managing uncertainty, discipline/ management needs
measurement. Entrepreneurship: propose creates
leadership, leadership requires propose.
5 principle drivers for success: 1Timing: is the
marketing ready and demanding for your solution.2 team
building and leadership: multidisciplinary team. 3
“AHA” moment. 4 Business plan: strategy, forecasting,
margin (executing) . 5 financial: resources
Balance Sheet: Assets (current assets {account
receivable, cash, inventories}+investment+property, plan
and equipment+intangible asset+other assets= total
assets) Liabilities & Owners equity (current liabilities
{account payables, banks loans/debt, preferred stocks},
Long-term liabilities= total assets) owners equity {stocks
investment,profits}=TOTAL LIABILITIES & OWNERS.
Balance Sheet: Present wealth in preferred than future
wealth, safe assets are preferred than risky assets.
Assets: investment decisions (Value comes from the
ability to generate cash flows: Technology, infraestructure,
equipment, distribution, marketing platforms, knowledge).
Financing decision (adventage). Debt financing: Keep
full ownership, no obligation after paying debt, interest is
tax deductible, short-and long term option, more cash on
hand. Equity financing: Less risk than debt, no paying
back funds, gain credibility through investor networks,
investors don’t expect immediate ROI, fixed payments for
better budgeting.
Finance – P&L. Forecasting: strategy – operation –
returns: Strategy will determine your sales, Operation will
determine your costs, Returns will measure your success.
Profits and losses (p&l): Sales - Direct costs {initial
inventory + goods bought – final inventory} = Gross
Margin. Operating Expenses Rent + Payroll + marketing
+ maintenance + utilities = Total Operating Expenses.
EBITDA{Gross margin – total operating asset}+
depreciation - interest – taxes=Net profit
Making cash flow decision: Negative returns means
further investment will be needed and there is a need to
manage your cash while you can get new investments are
hang until sales grow. P&L will show you the order you
should spend the money flow you can manage
Strategy – Operation – Returns Comform The
Business Plan: Strat-ups have different business plans
than companies, Deviation from results could be due to
uncertainty, not necessarily from wrong execution, Degree
of external reliance of the plan.
What Make A Business Plan Convincing? Credible or
certified (or with reputation) Evidence
What to avoid in a business plan: 1 Failing to identify
clearly the customer problem that you will address,
2 Failing to identify clearly a narrow target market, 3
Relying on a business model that makes no economic
sense, 4 Relying on a team without the CRITICAL
expertise. 5 Failing to recognize the threats and potential
problems.
Strategy – Macro Planning: 1Forecasting
(determining Goals): economic objectives, market
objectives, operational objectives, social objectives.
2Units Of Measurment: $$$, units sold, tech
achievments, social impact.
Strategic Planning: choosing course of action for a
particular goal (npv), Allowing to plan for several courses
of actions and outcomes, Allow to anticipate capital and
resource needs.
Deciding on the Objective – Purpose: It needs to be
measurable, Control: How much control over the
entrepreneurship, How aligned to your purpose it is,
Equity vs Debt in decision making.
Strategic Choices – Interdependency: 1.product-
market strategy: Price, Margin,Quality, Differentiation. 2
operational Strategy: Vertical Boundaries, Horizontal
Boundaries. 3 financial strategy: Outside vs
Entrepreneur, Debt vs Equit.
Strategic Planning – Integrated Or Not: 1
Product-Market: High Margin-Slow Growth vs
Low Margin-High Growth. 2 Operational
Design: Part of Value Chain? (Production-
Distribution). 3 Financial Decision: Internal
Investment vs Outside Investment (Control?)
Decision Trees: Focus on most important
choices: Make or buy, Borrow or Issue Equity,
fast or slow growth, Reason forward,
simultaneous decisions are more branches.
• Select the highest expected returned
value (Not only Financial) branch.
Key Questions
• Market: What are your market options?
Level of demand? what is the level of
difficulty of their needs? Can you offer a
solution to those needs?
• Operation: What is the level of
production needed according to the level
of demand? High cost or low cost? Do
you have access to that production, or the
infrastructure?
• Financing: Always ask yourself if you
have the funds available to go into the
next phase of the tree.
 • Opening a Andy´s Computers
• Market: Demand - High,
Moderate or Low
• Infrastructure: Large or Small
• Operation: Type of production
to fill capacity?
• Organization: values vs
knowledge
• Location: hi traffic vs new area
• Competition: new entrants –
actual competitors
• Suppliers: quality vs
accessibility
Entrepreneurs Game
• The business plan: You must decide how
much optimism to put into a business
plan. Over-optimism is dangerous. Fail to
identify real threats.
• Strategic Partnering: Whether to
vertically integrate company, allowing
new competition from possible allies.
• Control: Decide how much control is he
willing to exchange for funding
• Information Disclosure: Secret vs
openness
Flexibility vs Commitment
• Committing to a strategy means giving
up others.
• Keeping enough flexibility for change is
nevertheless is key to limit uncertain
negative outcomes. Allow rapid reaction.
• Plans help to attain commitment from
TEAM
• Having the original benchmark is what
allow the entrepreneur to know failed
assumptions.
• Revise your plan regularly
VISION
THE BIGGEST CHALLENGE OF A START UP
IS SUPPORTING EXISTING CUSTOMER
WHILE TRYING TO INNOVATE.
PURPOSE - MISSION – STRATEGY
HYPOTHESIS - BUSINESS PLAN - DECISION
TREES
TO CREATE A “BRILLIANT” STRATEGY.
LEARN - PROVING “BRILLIANT”
STRATEGY
IMPLEMENTING VS VALIDATED
LEARNING
CUSTOMER FIRST
THE EFFORT THAT IS NOT NECESSARY
FOR LEARNING WHAT COSTUMERS WANT,
CAN BE ELIMINATED.
MEASURING – FINANCE
MEASURING VALIDATED LEARNING
Choose your goals:
Customer Goals:
- Identifying Needs
- Customer Satisfaction
- Customer Loyalty
Financial Goals:
- Value Perception (Price)
- Operational Validation and Cost
- Sales Potential
MAKING FAST COMPARISONS AND
DECISIONS
PRODUCTIVITY IN A START UP SHOULD
BE MEASUERD IN HOW MUCH VALIDATED
LEARNING YOU ARE GETTING FROM OUR • EXPERIMENTATION IS A PRODUCT
EFFORTS. YOU HAVE ALREADY STARTED.

BUSINESS PLAN AND GOALS WILL LET FINANCIAL STATEMENT

YOU COMPARE BUSINESS PLAN VS REAL
RESULTS.

START SMALL

• THE AUDACITY OF ZERO IS

IMPORTANT. PARTNERS,
EMPLOYEES, YOURSELF WILL
BENEFIT FROM IT.

THE IMPORTANCE OF VALIDATION

• CREATE STRONG FUNDAMENTALS

• LEARNING COMES FROM THE BASIC ACCOUNTS – P&L

POSIBILITY OF FAILING.
Gross Margin – Gross Profit
EXPERIMENT • Sales
• TEST SISTEMATICATLLY EACH
• Cost of Goods Sold=
COMPONENT OF THE PLAN
EMPIRICALLY • Initial Inventory

• EVERYTHING A START UP DOES IS • + Goods Bought

AN EXPERIMENT DONE TO
ACHIEVE VALIDATED LEARNING. • - Final Inventory

MILESTONES – MINIEXPERIMENTS EBITDA

• MARKET EXPERIMENTS • OPEX (Operating Expenses)

• Price • Payroll

• Need • Utilities

• Package • Rent

• Product Details • Maintenance

• GROWTH EXPERIMENT • OPERATING PROFIT

• Location • Depreciation

• Delivery • NET PROFIT

• Contact Platforms • Interests

FLEXIBLE BUSINESS PLAN • Taxes

BASIC ACOCUNTS – Balance Sheet

 • Assets • Organizational

• Cash What type of employees?

• Inventory Characteristics and knowledge they should have.

• Equipment

• Infrastructure

• Accounts Receivables

Debt and Equity

• Debt

• Accounts Payables

• Banks (Loans/Debt)

• Preferred Stocks

• Equity

• Stocks (Equity Investments) • Financial Strategy

• Profits debt vs equity

STRATEGY

Product Market Strategy

• Price

• High Price – Low Volume

• Low Price – High Volume

• Market

• B2B (Business to Business)

• B2C (Business to Consumer)

STRATEGY

OPERATIONAL STRATEGY

• Value Chain

• Production

• Distribution

• Sales and Service