The Idea Creates or Adds Value for the Customer
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A product or service that creates or adds value for the customer is one that
solves a significant problem or meets a significant need in new or different
ways. Consider Polar Mobile, a Toronto-based developer of mobile
applications that has made great strides since launching a few years ago.
Polar provides a software platform called MediaEverywhere that makes it
easy for media companies to launch apps for all types of smartphones and
tablet devices. Polar must be doing something right because major
companies are finding value in this relatively new company. In 2018, a mere
decade after it was established, Polar had hundreds of customers around
the world being served by four offices located in Toronto, New York,
London, and Sydney. Its long list of media clients included Vogue, Ad
Week, USA Today, and The Economist. It seems like Polar has clearly shown
the capacity to add value based on this impressive list of partners.
,Suppliers. Another source of financing is suppliers who provide goods (i.e., inventory)
or services to entrepreneurs with an agreement to bill them later. This is referred to as
trade credit. Trade credit can be helpful in getting started because inventory can be
acquired without paying cash, freeing up money to pay other start-up costs. This type
of financing is short-term; 30 days is the usual payback period. The amount of trade
credit available to a new firm depends on the type of business and the supplier's
confidence in the firm. Frequently, though, a new...
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business has trouble getting trade credit because its capacity to repay has
not been demonstrated. Besides these conventional sources of financing,
the possibilities for bootstrap financing are endless. For example, an
entrepreneur might require an advance payment from customers.
Equipment can be leased rather than purchased (which reduces the risk of
obsolete equipment). Office furniture can be rented, premises can be
shared, and manufacturing can be subcontracted, thereby avoiding the
expense of procuring materials, equipment, and facilities.
Advantages of a Partnership
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s the ability to grow by adding talent and money. Partnerships also have an
easier time borrowing funds than sole proprietorships. Banks and other
lending institutions prefer to make loans to enterprises that are not
dependent on a single individual. Partnerships can also invite new partners
to join by investing money. Like a sole proprietorship, a partnership is easy
to organize, with few legal requirements. Even so, all partnerships must
begin with an agreement of some kind. It may be written, oral, or even
unspoken. Wise partners, however, insist on a written agreement to avoid
trouble later. This agreement should answer questions such as these: • Who
invested what sums of money in the partnership? • Who will receive what
share of the partnership's profits? • Who does what and who reports to
whom? • How may the partnership be dissolved? • How will leftover assets
be distributed among the partners? • How will surviving partners be
, protected from claims by surviving heirs if a partner dies? • How will
disagreements be resolved?
a sales forecast
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an estimate of how much of a product or service will be purchased by the
prospective customers for a specific period of time—typically one year.
Total sales revenue is estimated by multiplying the units expected to be
sold by the selling price. The sales forecast forms the foundation for
determining the financial viability of the venture and the resources needed
to start it. For an example of how entrepreneurs are reaching their target
markets in this modern age, check out the E-Business and Social Media box
entitled
- financial viability : Determining financial viability involves preparing
financial forecasts, that is, two-to-three-year projections of a venture's
future financial position and performance. These forecasts typically consist
of an estimate of start-up costs, a cash budget, an income statement, and a
balance sheet
The Idea Is Marketable and Financially Viable
Give this one a try later!
Give this one a try later!
A product or service that creates or adds value for the customer is one that
solves a significant problem or meets a significant need in new or different
ways. Consider Polar Mobile, a Toronto-based developer of mobile
applications that has made great strides since launching a few years ago.
Polar provides a software platform called MediaEverywhere that makes it
easy for media companies to launch apps for all types of smartphones and
tablet devices. Polar must be doing something right because major
companies are finding value in this relatively new company. In 2018, a mere
decade after it was established, Polar had hundreds of customers around
the world being served by four offices located in Toronto, New York,
London, and Sydney. Its long list of media clients included Vogue, Ad
Week, USA Today, and The Economist. It seems like Polar has clearly shown
the capacity to add value based on this impressive list of partners.
,Suppliers. Another source of financing is suppliers who provide goods (i.e., inventory)
or services to entrepreneurs with an agreement to bill them later. This is referred to as
trade credit. Trade credit can be helpful in getting started because inventory can be
acquired without paying cash, freeing up money to pay other start-up costs. This type
of financing is short-term; 30 days is the usual payback period. The amount of trade
credit available to a new firm depends on the type of business and the supplier's
confidence in the firm. Frequently, though, a new...
Give this one a try later!
business has trouble getting trade credit because its capacity to repay has
not been demonstrated. Besides these conventional sources of financing,
the possibilities for bootstrap financing are endless. For example, an
entrepreneur might require an advance payment from customers.
Equipment can be leased rather than purchased (which reduces the risk of
obsolete equipment). Office furniture can be rented, premises can be
shared, and manufacturing can be subcontracted, thereby avoiding the
expense of procuring materials, equipment, and facilities.
Advantages of a Partnership
Give this one a try later!
s the ability to grow by adding talent and money. Partnerships also have an
easier time borrowing funds than sole proprietorships. Banks and other
lending institutions prefer to make loans to enterprises that are not
dependent on a single individual. Partnerships can also invite new partners
to join by investing money. Like a sole proprietorship, a partnership is easy
to organize, with few legal requirements. Even so, all partnerships must
begin with an agreement of some kind. It may be written, oral, or even
unspoken. Wise partners, however, insist on a written agreement to avoid
trouble later. This agreement should answer questions such as these: • Who
invested what sums of money in the partnership? • Who will receive what
share of the partnership's profits? • Who does what and who reports to
whom? • How may the partnership be dissolved? • How will leftover assets
be distributed among the partners? • How will surviving partners be
, protected from claims by surviving heirs if a partner dies? • How will
disagreements be resolved?
a sales forecast
Give this one a try later!
an estimate of how much of a product or service will be purchased by the
prospective customers for a specific period of time—typically one year.
Total sales revenue is estimated by multiplying the units expected to be
sold by the selling price. The sales forecast forms the foundation for
determining the financial viability of the venture and the resources needed
to start it. For an example of how entrepreneurs are reaching their target
markets in this modern age, check out the E-Business and Social Media box
entitled
- financial viability : Determining financial viability involves preparing
financial forecasts, that is, two-to-three-year projections of a venture's
future financial position and performance. These forecasts typically consist
of an estimate of start-up costs, a cash budget, an income statement, and a
balance sheet
The Idea Is Marketable and Financially Viable
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