BU121 Chapter Notes - Chapter 6: Cash Flow, Cash Flow Statement, Price Skimming
Document Summary
Startup resources include: people, physical assets, financial assets, intellectual resources. Decisions about resources are related to the 4 key activities of the business: the value proposition or solution, distribution channels, customer relationships, revenue generation. Risks that prevent the business from ever launching: path-dependent risks. Risks that arise from certain business decisions: low-hanging fruit with high roi. Risks that are easy and cheap to solve, could grow into major deal-killer risks if left unmitigated. Most common metrics used by startups: sales forecast, headcount, expenses, break-even cash flow. Some metrics are industry specific: gross margin, inventory turns, occupancy, qualified leads. Estimating new product demand: use historical analogy or substitute products, talk to customers and intermediaries, use knowledge and experience, use limited production. Pricing assumptions: price item based on value it provides, pricing strategies depending on product (price skimming, bundling, etc. ) Estimating revenues, expenses, and startup costs: sales forecasts to estimate revenues, expenses should be researched from reliable sources.
