Business 3

Business Model

This unit is only required for Senior Division teams, who will submit a business plan. However, Junior Division teams are encouraged to follow along with this unit to gain a better understanding of business development.

How to Develop a Business Model
Starting Capital
Revenue Model
Operating Costs
Profit Projection
Create a Business Model
Reflect

Learning Objectives

In this module, you will learn how to…

Develop a revenue model
Evaluate operational costs
Determine profit projections

How to Develop a Business Model

Businesses are successful when they are able to make enough money to support themselves and generate a profit. To achieve this, you’ll have to do some planning and develop a business model, which explains how you plan to make money (revenue). This is different from your business plan, which is includes much more information about how you’ll start you business. You’ll need to think about all of the costs of the different activities, resources, equipment, and materials that are needed to keep your business running and how it will make a profit after you pay all your bills. There are different ways to set up your business, as you saw in Business 1—there are nonprofits, for profits, social enterprises, and many more. Think about what type of classification you would like your company to be while you start building your business model. Remember, no matter what kind of business you are in, revenue is needed to generate the long-term sustainability for your company.

There are a lot of different pieces to a business model, but we are going to stick to 4 main parts:

Starting capital (seed money): initial money that is invested in your business to start your business
Revenue model: a plan to receive money for your goods and/or services
Operating costs: these include both variable and fixed costs you incur while operating your business. Things that you need to pay for that are constant are called fixed cost and things that change depending on other factors are called variable cost.
Profit projection: the money you have left over after paying bills— how much you make in total. This “extra money” left over can also be reinvested (i.e. hire people, expand your workspace, etc.) back in your business so that you can grow it.

Starting Capital

You’ve got a great app idea that you’re developing and you’ve got a great brand. Now you’ve got to think of a way to make money and get your business started!

You’ll have to start looking for investors to help you raise money (or capital) to get your business started. This is also called ‘fundraising’. Investors would be making an investment in you and your product, and in return you would get money to start your business. Once you’ve gotten your business started, investors expect to get their money back plus an additional amount (or partial ownership of the company) for giving you the starting capital. This is known as a return on investment, or ROI.

There are many ways to raise capital for your startup. Here are a few examples:

Crowdfunding - a large group (crowd) of people give small funds that amount to a large sum. It gives a unique opportunity to get regular people to directly invest in them, but it’s not recommended for long term funding. It is also helpful if you have a large social media base to tap into.
- Examples: Indiegogo, Kickstarter, Kiva, Go Fund Me
Angel investor - very wealthy individuals who invest their own money early on in the business, but expect equity in exchange. Equity is like partial ownership, based on how much money they put into the company.
- Examples: Peter Cowley, Jeff Bezos, Paul Buchheit
Venture capital - a group of professional investors (also known as a firm) who understand investing opportunities and risks in startup businesses. They do a lot of research to try and invest in startups that they think will become successful in the marketplace. The money they invest comes from a variety of sources.
- Examples: 3i, Khosla Ventures, SV Angel

All of the different types of investors accept a certain amount of risk with the hope of some reward over a certain period of time. This is the reason for their investment in the first place. They want to put in some money so that their money can grow through your business, but there is a possible outcome that they don’t get that money back. When you are developing your business plan, think about how you might use investors to build your plan, or if you'd want to use any crowdfunding resources to get your business off the ground. Keep in mind, this is optional!

Thought Exercise

Food Cart Example

Let’s think about a food cart business as an example. If you wanted to start your own food cart, you would need funding to get started. You could ask your parents to be investors in your business. When you ask your parents for the money, your parents will want to know:

How much money do you need?
What you are buying with the money they are giving you?
How much will they get back and when (return on investment, ROI)?

When you talk to investors, you will need to be prepared to answer some important questions. At the very least, they will want to know how much money you would need, understand how you will put that money to use, and what they will get back. This is where your business model will be important. Your business model should be able to answer their questions and more.

Let’s get started on your revenue model to start answering some of these questions!

Operating Costs

Before figuring out how much money you could make using your revenue model, let’s think about how much it takes to get there. This is where we have to determine the cost of all the things that are needed to run your business, or operating cost. There are many different kinds of costs that are involved. You’ll need to think about what costs you’ll have when you develop your app, which can include a variety of things that range from app store fees to a product you might sell through your app.

You can download our worksheet that you can use to get started. You might not need all the items listed and you can also try to cut some costs; for example your office space might be somewhere you can use for free.

download the worksheet

Revenue Model

A revenue model is a description or plan of how your business will earn money. Revenue is the money that a business raises from its normal business activities, usually from selling products and services to customers. You will have profit once you subtract your costs from your revenue, which is the money you have earned and get to keep.

[Revenue] - [Operating Costs] = [Profit]

There are many ways to create revenue models, but for mobile apps, there are just a few options.

We've given a few examples below, and you can click on the icons to find out more!

One-Time Fee

Charge a one time fee to download an app providing a unique service.

For example:

In-App Purchases and Subscriptions

Selling goods, services, or special features. Also known as 'freemium', where consumers pay extra fees to access special features.

For example:

In-App Ads

Being paid banner or pop-up advertising (interstitial ads which are usually placed in between activities).

For example:

In order to get started and make some of these revenue calculations, you’ll have to refer back to the consumer research you did in the Market Research unit. Think about the kind of users you’ll have and decide whether or not they would pay additional money for the features you are developing for your app. Will you want to create revenue through selling the app, selling ad space, in-app purchases, or a combination of these?

When developing your revenue model, you’ll also want to include the pricing of the things you are asking for. How much is your app worth to your target customer (i.e. demand or appeal)? Or the ad space? Or each of the in-app purchases? How much do competitors charge for their app? Work with your team to decide what works best for your app. You can also refer back to the competitor analysis you did in the Market Research unit to help you answer some of these questions.

Study revenue models of similar apps to get a better idea of how you want your revenue model to be. A good thing to keep in mind is that a study in 2013 showed that most apps are free. They mainly rely on selling goods and services through in-app purchases. For example, in order to download the Minecraft app you have to pay a fee, but you also can buy extra items to play the game. Your revenue model can be very simple by selling your app only, or can be complicated with multiple ways of making money (these are also known as revenue streams).

Try to think about all of the complex situations that might happen when you have customers buy or pay for things in your app. Will you make enough money to support your business? If your operating costs are more than your revenue over a period of time, your business will not be able to make a profit and keep it running. Ask a mentor and/or work as a team to make these important decisions. For more ideas on different revenue streams for mobile apps, take a look here or here.

And if it’s a little confusing, let’s review what we learned with our food cart example.

Here’s a video on the different types of revenue streams if you are interested to learn more!

Thought Exercise

Food Cart Example

You would need to decide between one of the following options for how you would want to generate revenue for your food cart:

Paid app models sell each food item for a set price, and decide on the price
In-app purchases give away food, but sell condiments and larger plates at a set price
In-app ads give away free plates of food, but sell advertising space on the plates

Here are some resources that you can consult to help price your product:

Sequoia Capital: Pricing Your Product Sequoia Capital is a well-known venture capital firm that invested in Apple, Google, PayPal, Stripe, YouTube, and Instagram
Mashable: HOW TO: Determine the Right Price For Your Mobile App
iBrainBursts: Google Android Revenue Model
Quora: What are some of the most successful mobile app revenue models?

Profit Projection

The last piece of your business model is the profit projection. First, let’s break this phrase down. Profit is the money you have left over after paying all of the bills you need to pay. Projection is an educated guess as to what you will have profited after a certain amount of time. Generally, the profit projection is the sum of all the calculations you had in your revenue model minus your total operation costs. You’ll calculate it by adding up the revenue and subtracting all the operation costs. Here's the equation as a reminder:

[Revenue] - [Operating Costs] = [Profit]

Remember, typically non-profits do not make profit, but they do make revenue to support their operating costs. If a non-profit makes a profit, that is likely to be invested back into the company.

In order to develop a projection, you’ll have to decide on how your business will grow. Do you expect more users buying the app? Or do you expect more users buying your in-app purchases? You’ll have to determine what factors will increase over time, or you’ll need to additional revenues from other sources. How much do you expect to make? There is a lot of uncertainty. Every business that is formed carries risk and uncertainty even after you have done your research and evaluation.

Here are a few guides that help you:

Create a Business Model

Now it’s time to put together your startup capital, revenue model, and operating cost to develop a business model. As a reminder, use the equation below to calculate your profit:

[Revenue] - [Operating Costs] = [Profit]

You can download our worksheet to use, or you can develop your own! Remember, your business model is only a very well educated guess on how you think your business will operate financially.

download the worksheet

Reflect

Your business model is done. Congratulations! We’ve learned a lot of new terms in a unit. Let's review some of the key terms you’ll need to develop your business model:

Startup capital - initial amount of money that helps you get started, typically through different types of investors
Revenue - total amount of money you get from your business activities (like sales)
Revenue model - a plan on how to make money, or income
Operating cost - the money you need to spend that is needed to run your business.
Profit - the money you have left over after paying bills

When it comes to entrepreneurship, there are a lot of complicated things to think about-- and sometimes you don't even know the answer. Sometimes it takes educated guessing to get it right and to think on your feet. Here are a few questions to consider after you’ve accomplished your business model:

What needs to happen so your business is successful?
How much money is required to get your business started and generating revenue?
Did you think about more features to add to your app for your profit projection?
Why did you choose the revenue model you did?
How do you expect your business to grow?

Now you’ll be able to put your business model to work! In the next unit you’ll develop your business plan, where the business model will be a key part.

Additional Resources

Business 2: Market Research

Business 2

Learning Objectives

In this module, you will learn how to…

Develop a consumer research plan
Ask the right questions for competitor analysis
Create a market research report for your app

Learn

When you have an idea and want to turn it into a business, it’s important for you to do some homework. You’ll want to understand how different things might impact your business and to see if there is a want or demand for your product. This is known as market research. Market research can be broken down into two parts: consumer research and competitor analysis.

Consumer research will help you understand the wants, needs, and beliefs of your target customer. By definition, a consumer is a person who consumes or uses something, while a customer is a person who has purchased something. In this case, we are going to use customer and consumer interchangeably. Your target customer is the person you are trying to sell to, or in other words the person who will be buying your products. It’s important to understand their perspective so you can create a mobile app that caters to them, so they will want to buy it.

Competitor analysis will help you get to know your competitors’ strengths and weaknesses and how your company is similar and different from them, so you can start setting yourself apart from them. Competitors are companies making things similar to your app and are trying to sell them to the same target customers as you.

Here are a few questions to consider:

Consumer Research

Does your target consumer experience the problem your product solves?
Are consumers aware that they have this problem?
Would your target consumer pay for a solution like yours? How much would they pay?

Competitor Analysis

Is your solution the only solution to the problem?
What are some features your competitors offer? How can you stand out from them?
How much are your competitors selling their product for?

Thought Exercise

Think of some of your favorite apps or products. Who is their target customer? Who are their competitors?

Consumer Research

There are many different ways to get information about your potential consumer. Here are a few tools that you can use for your consumer research:

Interviews are a great tool to give you insight on the thought process of your potential user and help validate your idea. To perform an interview, ask a potential customer a series of questions either in-person, or over the phone. You can also ask them over email, but it helps to hear their voice and their reaction to your questions.

There are different types of interviews that you can use. Problem interviews are typically used to gather more information about the problem you are trying to solve, so you can design a better solution (in this case, your app). Solution interviews help you understand how a consumer or user might use the app you develop-- you’ll need to have something that you can demo or show when you interview. For more information on interviews, click here.

Here are a few examples of questions you might use for each type of interview:

Problem Interview Questions:

If your app existed, would people use it? How often?
What solutions does your consumer currently use?
Where is there a need for your app's features or your solution?

Solution Interview Questions:

Which features are most important for your app to have?
How much would people pay for your app?
Is your app a good match for the consumer?

Surveys

Surveys can help you gather more data quickly, however you will get less specific data than when you conduct interviews. They are typically a set of questions that are designed to gather specific information from a group of people.

You’ll need to think about how you want to design the survey: the type of questions you want to ask, the people you want to ask, and how you want to deliver the survey. If you are interested in learning more about survey science for market research, click here.

If you’re ready to get started on surveys or interviews, here’s an outline of all the things you’ll want to consider from start to finish. Also, take a look at the examples below.

Product: Shazam

Survey Questions:

Do you enjoy listening to music?
- Yes or No
How often do you hear music you like but not know its name or who performed it?
- 1-10 scale where 1= Not Very Often, 10- Very Often
May we contact you to talk more about a new music identification app?
- Yes or No

Results (data gathered)

45 of 50 said "Yes", they enjoy listening to music.
22/50 reported a satisfaction of less than 5.
40/50 said "Yes" and left contact information.

Conclusions:

There is a good market size for the app.
Many people hear music they like but don't know the name of the song or who performs it.
People are interested in talking with us about a new music identification app.

Product: Angry Birds

Survey Questions:

Do you enjoy Puzzle games?
- Yes or No
How satisfied are you with current options for mobile phone games?
- 1-10 scale where 1= Not Satisfied, 10- Very Satisfied
Can we contact you to talk more about this?
- Yes or No

Results (data gathered)

30 of 50 said "Yes", they enjoy puzzle games.
12/50 reported a satisfaction of less than 5.
40/50 said "Yes" and left contact information.

Conclusions:

There is a good market size for the app.
Most people are fairly satisfied with their mobile game options.
People are interested in talking with us about a new game app.

Download the outline

Trend Research

Trend research will help you understand where the market has been and will give insight on where the market might go. There is already a lot of data that you can use to your advantage to get a sense of the market. There are many companies that are hired to do this kind of analysis! For example you can look at Gartner’s website, which is a leading information technology research and advisory company that forecasts the top 10 trends in technology. An alternate company is KPCB, which creates Mary Meeker’s report on internet trends. Here is a more digestible review of her very in-depth report.

Google Trends is a great resource for understanding interest in a specific topic. For example, you can see that Bangladesh has the most interest in mobile apps as an industry. Here is a helpful tutorial on how to use this powerful tool.

Competitor Analysis

Competitor analysis will help you recognize what makes your app more successful than others. You’ll have to take a look at other companies who are developing similar products (apps) as you to get an idea of their strengths and weaknesses, as well as compare and contrast their product(s) to your product. In the end, you’ll want to have a strong argument for why your app solves the problem better than your competitors. When doing your research, here are a few points that you should be looking for:

Branding & Public Image
- How well known is the competitor?
- Do they spend a lot of money on marketing?
- What is their reputation for quality product & customer service? (Look at their reviews on Google Play)
Market, Pricing, and Revenue
- How do they make money?
- Where is their funding coming from?
- How big is their user base?
- How much does the app cost?
Technology
- What kind of features does the app have?
- What kind of features is it missing?
- Do the features meet the customers' demands?
- What concerns do users have from using their app?

It can be difficult to find this information, but here are a few places to look:

Look for relevant apps on the Google Play and iOS App Store
Use Google searches to find competitor apps & startups
- Tips for running stronger searches
- Search the internet effectively
Use Wikipedia articles about the startup/app to get stats on revenue, years in operation, size of team etc. (Whatsapp for example)
Use Google Trends to understand interest in a specific topic
Study competitors’ websites, social media, blogs, articles, sales material, white papers, and advertising to get a full picture of their success and strategy.

Create a Market Research Plan

Start building your market research plan! Outline your plan with all the necessary things you’ll need to create a strong market research report. With this report, you’ll be able to construct a strong argument in your business plan to show that your app is better than the rest! Here’s a worksheet to help you with building your plan.

Resources:

Survey Gizmo: How to Develop a Market Research Plan
Entrepreneur: The Best Ways to Do Market Research for Your Business Plan
Business.com: Creating a Market Research Plan

download the worksheet

Apply

Start researching using the market research plan you developed. Utilize the resources that we have provided and look for a few of your own. Gather your information so you can make a strong argument on how your app is more innovative than the others that are out there!

Create your market research report, which will be added later your business plan. The report should be short, concise, and provide facts and figures that show your app will do well according to your research. Here are a few:

Focus Group Tips: How to Write Qualitiative Market Research Reports
Small Business: How to Write a Market Research Report
Demand Metric: Market Research Report

Reflect

Once you’ve conducted your market research, take a step back and think about what you’ve accomplished! You were able to perform consumer research & competitor analysis, and are develop a market research report. Now look back and ask yourself:

Do you feel well prepared and understand the market you are entering?
Are you going to make any changes to how you develop your app?
What are your strengths and weaknesses compared to your competitors?
What will be your selling points against your competitors? What sets you apart?

Additional resources

Entrepreneur: Marketing research basics
Steve Blank’s The Lean Approach: Customer Acquisition and Archetypes
Udacity: Customer Development

Business 1: Types of Businesses

Business 1

Types of Businesses

Business Types
Real-World Examples
Mission Statement
Reflect

Learning Objectives

In this module, you will…

Learn about different types of businesses
Think about what type of business you want to create
Write a mission statement

What is a Business?

Understanding how to start and run a business is a very important part of being an entrepreneur! You’re starting to learn how to build your app and to think about the problem it will solve. Now it's time to think about your business.

What comes to mind when you hear the word 'business'? You might think of a local farm stand, a grocery store, a bank, or even a big social media company like Facebook or WhatsApp. A business is any organization or person that is doing something in exchange for money or another good. Businesses can make, buy, or sell goods (like a company that makes cars), or they can provide services (such as a mobile phone service company).

To run a business, you don’t need a storefront, a lot of employees, or even a physical product to sell. You don’t have to be a grown up to start your own business! There are plenty of young people who have started their own businesses. For example, Maddie Bradshaw started her business at the age of 13. She couldn’t find any school locker decorations she liked, so she decided to make and sell her own. She realized that the best person to understand what young people like and want to buy is another young person!

Different Types of Businesses

Not all businesses have the goal of just making money. Some have different goals such as helping feed hungry people, or providing students with a better education. Making a profit (revenues minus expenses) from their businesses over time, allows them to be sustainable. In this section, you will learn about three types of businesses: for-profits, non-profits, and social enterprises.

Check out the table below to learn more about these three types of businesses.

For-profit

Social Enterprise

Non-profit

Goals

Make Money

Earn profit while meeting a consumer or business need in society.

Make Money & Do Good

Keeps some of the profit earned from doing something good, like social issues.

Make Money to do Good

Wants to do something beyond making a profit, like dedicated to furthering a particular social issue(or addressing a problem in their community).

Characteristics

- Maximize profit by selling goods, products, or services to customers.

- May have a social mission (a goal to do good in the community) but it is not operated to maximize that.

- Can be structured as for-profit or non-profit.

- Maximize social impact and profit for external shareholders.

- Some of them make profit and use that profit to do social good.

- Making a social impact is the driving force in the business.

- Need money to sustain themselves and pay employees just like any other business.

- Can earn money by selling product and services, accepting donations, or get funding through grants.

Real Examples

So, if we think of our food cart example in each of these business models, it may look something like:

For-Profit Food Cart: You start your food cart with the main goal of making money by selling delicious food to people. You spend the money you earn on yourself and on improving your business and food quality.

Social Enterprise Food Cart: You start a food cart with the main goal of raising awareness of hunger in your community. You tell your customers that for every three meals you sell, you will give one meal to a person in need. You spend some of the money you earn on improving your business and food quality, some of it on yourself, and some of it on providing the meals for the hungry.

Non-Profit Food Cart: You realized that instead of running a food cart and donating the money you earn to the underserved community, you might make a larger impact if you helped kids from underserved communities run their own successful food carts. You get a donation from a local bank for your program. With this donation, you run a program called “How to Run a Successful Food Cart” in the community and help others succeed.

Social enterprise is a relatively new category for companies, so don’t worry if you're a little confused. For simplicity, think of social enterprise as being in between for-profit and non-profit business. It is up to the business to decide how far they want to lean to either side.

Want to learn more about social enterprises? Watch this video:

Here's a couple more videos about social enterprises:

How to Start a Social Enterprise, Greg Overholt at TEDxYouth@Toronto
How to create a successful social enterprise, Marquis Cabrera at TEDxTeachersCollege

For Thought

There are not always clear lines between for-profits and non-profits, but there might be different tax responsibilities depending on how the business is structured and restrictions on how it can spend the money earned. In most countries, all businesses need to pay a tax to the government. The amount of tax they have to pay is greatly impacted by what type of business it is.

For example, in the United States, if you are a non-profit, you do not have to pay as many taxes, and those who donate to you can get a tax break as well. However, it is not enough to just say you are a non-profit or a social enterprise. You will need to follow rules and prove that you are following them. Each country’s law and rules are different. It is out of the scope of this competition to check and follow these rules but they are something that you should keep in mind when starting a business outside of Technovation!

Real-World Examples

In the Ideation Unit, you were introduced to sustainable development goals.

Let’s think about some real businesses that are trying to solve these challenges. What types of businesses do you think they are? Can you think of any additional companies that are helping the world?

Environment

(clean water, climate action, clean energy, etc.)

Gender Equality

Health

Peace

End Poverty

Education

Teach for America
Kipp
TED
Iridescent (Technovation's parent organization!)

Develop Your Mission Statement

As you develop your business during Technovation, you will likely realize that your company falls somewhere between for-profits and non-profit, with social enterprise being in the middle. That is completely okay. Your company will have the goal of solving the problem that you identify, but you will also want to generate revenue (money) so you can keep the business running or scale it up (grow its size and impact). One thing that will help you stay true to your original goal of your business is to always stay close to your company's mission statement.

A mission statement is a formal summary of the aims and values of a company, organization, or individual. Mission statements help companies determine what is important and what is not, and clearly state who will be served and how. A mission statement is usually short and simple sentence that outlines what the organization’s purpose is and how it accomplishes that.

Create a mission statement for your business with your team and share it with your mentor. Your mission statement can change as your company grows but remember that this is the “heart” of your business. Try to stay true to this statement.

Tip: If you are stuck, look at some other organizations tackling hard challenges. Look at their mission statements and see what you can learn:

UNICEF: “UNICEF is mandated by the United Nations General Assembly to advocate for the protection of children's rights, to help meet their basic needs and to expand their opportunities to reach their full potential.”
Kiva: “Kiva’s mission is to connect people through lending to alleviate poverty. We celebrate and support people looking to create a better future for themselves, their families and their communities.”
Amnesty International: “Our vision is of a world in which every person – regardless of race, religion, ethnicity, sexual orientation or gender identity – enjoys all of the human rights enshrined in the Universal Declaration of Human Rights (UDHR) and other internationally recognized human rights standards.”
Nike:"To bring inspiration and innovation to every athlete* in the world." The legendary University of Oregon track and field coach, and Nike co-founder, Bill Bowerman said, "If you have a body, you are an athlete."

Thought Exercise

When you are developing your mission statement consider the questions below and make sure your mission statement addresses all of them.

What do we do?
How do we do it?
Whom do we do it for?
What value are we bringing?

Decide on a Business Type

Now that you are more familiar with different types of businesses, it is time to start thinking about the business you want to build with your team. Answer the following questions:

What type of business do you want yours to be? (for-profit, non-profit, or social enterprise)
What do you want to accomplish by opening your business?
What do you want the mission to be?
What is your vision for the business?
How do you want your profit to support your mission?
How do you think you can sustain (keep it running) your business?

These are all questions you should ask when developing your business. You don’t need to have the answers to all these questions today but it is important to keep thinking of these as you build your business plan. You can always change the type of business as you further develop your app and business plan!

Reflect

Why do you think there are different types of businesses?
What do you think advantages of different types of business are?
What type of business do you think will be best in solving the community problem you are trying to tackle?
How do you think your mission statement can help your business?

Entrepreneurship 10: User Adoption Plan [Junior Division]

User Adoption Plan [Junior Division]

Entrepreneurship 10

This lesson will help junior teams earn points in the User Adoption Plan section of the rubric.

In this lesson, you will...

Learn about user adoption plans
Use this template to help you write your plan
[Junior teams] should review the competition junior division rubric’s user adoption plan section to see what judges will look for in a good user adoption plan.

This lesson is for Junior Division teams. Senior Division teams are required to submit a 5-10 page business plan.

Key Terms

User Adoption Plan - a document that has details how you will get people to use your product

Translations of this Lesson

Learn

User Adoption

Activity

Plan and Write your 1-2 Page User Adoption Plan

Reflection

Reflecting on your User Adoption Plan

Additional Resources

User Adoption Plan Examples

User Adoption
Activity: Plan and Write your 1-2 Page User Adoption Plan
Reflecting on your User Adoption Plan
User Adoption Plan Examples

In this lesson, you will create a user adoption plan. The main focus, of course, is users! In your plan, you want to describe two things:

The users who have already tested the app or invention and what feedback they’ve provided
How you will get more people to try out the app or invention over the next year

User Adoption

A lot of what you did for Market Research in Ideation 7 will help you here. You’ll want to summarize what you learned about the users your product is designed for and how you have interacted with your target users. Your user adoption plan should include:

A sketch of your customers, including size and demographics
(Optional) Competitor analysis: in terms of getting users to adopt your product over competitors
Who you got to test your product and how you engaged them
Description of how your ideas for your product changed in response to your target user feedback

Future Plans

In this section, you want to explain how you will promote your product to potential users. You’ll also want to include details like how people will hear about your product, and how users will get and possibly buy your product. Essentially, you want to explain how you will show people your product, how you will get people to use it, and what happens once people have tried your product. In order to describe this, you’ll need:

Messaging that is clear and explains your product’s purpose
An in-depth strategy for how your product will reach target users
(Optional) Plans to partner with organizations who are working on the same problem, as a way to engage more users

Activity: Plan and Write your 1-2 page User Adoption Plan

Now that you know what it takes to make a user adoption plan, you can prepare to write one! Use the template to make sure you cover all necessary parts.

Link to Worksheet

Reflection

Writing a user adoption plan is a big accomplishment, and one that should make sure your product gets used by the people who need it! Ask your mentor or other team members to read over the user adoption plan.

After your mentor or your team have looked over the plan as a group, make sure to incorporate their feedback. It helps to get different people’s point of view.

Additional Resources: Business Plans Examples

Technovation Team Examples

COLBY User Adoption Plan

Previous Lesson

Curriculum Table of Contents

Next Lesson

Entrepreneurship 10: Looking at App Businesses

Looking at App Businesses

Entrepreneurship 10

Technovation and HSBC have teamed up to bring you this is a bonus lesson! This lesson is not mandatory to complete but will bolster your entrepreneurial knowledge.

In this lesson, you will...

Look at an example of a real life financial report and compare it to your own projections

Key Terms

Financial Report - Report of a company’s financial results that includes profits, costs, and revenue
Cost of Revenue -the total cost incurred to obtain a sale and the cost of the goods or services sold

Learn

A Case Study

Activity

Reflect on Your Plan

Reflection

A Budding Entrepreneur

Additional Resources

A Further Look

A Case Study
Activity: Reflect on Your Plan
A Budding Entrepreneur
A Further Look

A Case Study

Throughout the Entrepreneurship lessons, we have gone over many topics that will prepare you to be successful in the business world. Let’s see these concepts in action in the real world with one of the most famous app companies out there: Twitter.

Twitter’s Financial Report

Source: Twitter

Above is an excerpt of Twitter’s Financial Report. Specifically, it’s a summary of their financial data from 2015 to 2019. It’s a lot to look at! We’re going to be looking at a few specific points here, but make note of how many different metrics Twitter is tracking. Accurate data recording is a great help in making future decisions. With that said, let’s dive deeper.

The first highlighted line is Twitter’s reported Revenue. You learned what revenue was in Entrepreneurship 7. Do you remember what it is?

Revenue is...

So we can see that Twitter made $2-3 million in revenue for each of these years. That’s pretty impressive! But let’s look at the next highlighted line: Net Income. You might know this more familiarly as Profit, which we discussed in Entrepreneurship 8. Do you remember what Profit means?

Profit is...

As you can see, Twitter actually had a negative profit for the years 2015-2017. Isn’t it a bit surprising to see from a very famous app company that made millions of dollars? There are reasons for how this works, but that’s a topic for another time. The point to take away here is that even big companies at Twitter can take a while to become profitable. With that said, let’s see what some of Twitter’s expenses are.

These highlighted sections are Twitter’s Operating Costs. You’ll also remember this from Entrepreneurship 8.

Operating Cost is...

Let’s explain each one so that we can see how Twitter spends its money.

Cost of Revenue

These are the direct costs incurred in order to make a sale. In the case of Twitter, this includes things like the cost of maintaining servers. Notably, this does not count indirect costs like the salaries of developers.

These types of costs account for over 30% of Twitter’s operating costs.

Research and Development

This is the cost of the creation of new products and features for Twitter.

Let’s make a note that about 20-30% of Twitter’s costs is devoted to future development. It’s important to plan for the future!

Sales and Marketing

This is the cost of the division involved with things like marketing, communication, and customer service. A lot of what goes into this cost is what we went over in Entrepreneurship 6!

Let’s also note that sales and marketing accounts for around 30% of Twitter’s costs.

General and Administrative

This is the costs for things like employees involved with roles outside of those mentioned above. For example, consultants and lawyers would be costs that fall under this category.

This accounts for about 10% of Twitter’s costs.

A simplified way to summarize Twitter’s operating cost is as follows:

30% - Cost of Revenue
30% - Research and Development
30% - Sales and Marketing
10% - General and Administrative

One way to think about these percentages is that it gives us some insight into how Twitter values spending money. One may say that for Twitter, it’s equally important to 1) maintain basic operations, 2) invest into future development, and 3) market their product to a growing audience.

Activity: Going Back to Your Plan

Go back to the work you did on this worksheet from the previous Entrepreneurship lessons. Reflect back on your thought process when you calculated your own Revenue and Profit and consider the following:

What was the reasoning behind the projected costs of running your business?
What was the reasoning behind your projected profit?
After seeing Twitter’s financial report, is there anything you would adjust?

You don’t need to imitate Twitter, but it’s good to see what some real life companies are doing!

Reflection

HSBC and Technovation believe in taking steps to better prepare you for your future. There’s a lot of lessons about entrepreneurship we can learn from many different sources, and real life being one of the best teachers!

You’ve also given a lot of thought into how you’ll market your app and create your business. As you finish all these Entrepreneurship lessons, remember that the most important thing is that this is one of many means to pursue your passion. You’re well equipped to venture into the world of entrepreneurship!

Additional Resources: A Further Look

Previous Lesson

Curriculum Table of Contents

Next Lesson

Entrepreneurship 9: Business Plan

Business Plan [Senior Division]

Entrepreneurship 9

Technovation has teamed up with the help of HSBC to bring you this lesson! This lesson will help senior teams earn points in the Business Plan section of the rubric.

In this lesson, you will...

Learn about the different parts of a business plan
Use this worksheet to make a plan for writing
Write your business plan
Senior teams should review the competition senior division rubric’s business plan section to see what judges will look for in a great business plan

This lesson is not mandatory for Junior Division, but Junior teams who want to learn more about building a business are encouraged to read it. Only Senior Division teams are required to submit a 5-10 page business plan. Junior teams will write a User Adoption Plan.

Key Terms

Business Plan - a formal document that has important information about your company and how you will run it

Translations of this Lesson

Learn

The Business Plan

Activity

Plan and Write your 5-10 Page Business Plan

Reflection

Reflecting on your Business Plan

Additional Resources

Business Plan Examples

The Business Plan
Activity: Plan and Write your 5-10 Page Business Plan
Reflecting on your Business Plan
Business Plans Examples

The Business Plan

In this lesson, you will create a 5-10 page business plan. A business plan is a proposal about how you will run your entire company. It is a formal document that has important information about your company, your goals, and how you will achieve your goals. Think of it as a set of instructions that describes how and why you are building your business. It will incorporate many of the things you’ve already learned so far– you are just putting all of it together!

Watch this video to get more details about the parts of a business plan.

Parts of a Business Plan

Without a business plan, it is difficult to build a business. It’s like building a house without any blueprints. A plan outlines the roles, responsibilities, and future for your business.

Here are the parts of the business plan that you’ll need to submit. Remember, your business plan can include charts and images that help explain your ideas - it doesn’t have to just be words!

Executive summary – A short and concise description of your business.
Company description – Information on what you do, how your business is different from others, and who your business serves. Can include your mission and vision.
Products and/or service description – Define what products and/or services you sell, explain why it benefits your customers, and how your mobile app will be developed. Screenshots of how your app or AI invention works could be useful here.
Market analysis – Give background on the market that you plan on entering. This is where you will include all of your market research, like consumer and competitor research, from Ideation Lesson 7: Market Research. Remember to include visuals like charts and graphs when you can.
Strategy & implementation – Here, you will explain how your business will run or operate for the next 3-5 years. This will be taken from your Branding and Business Model.
Financial plan & projections – This is a summary of how you will be spending money, making money, and using the money for the future, which is information you developed from your Business Model. Again, visual information is useful to help others understand your plans.

You can learn more about each section below and see some tips from HSBC.

Executive Summary

The Executive Summary is the first section of your business plan and should be no longer than 1 page. This is the first impression your reader has of your product and your business. It’s your chance to capture their interest and make them want to learn more. You can think of this like a trailer for a movie—it has to give the reader an idea of what your business is, but also entice them to keep reading.

Although this section goes first, you should consider writing it last! That way, you know all the details of your business plan and can summarize your thoughts well. The Executive Summary for a standard business plan should include:

Team name
Team member names
Your business name and location
Product (mobile app or AI invention) name
The products and/or services offered