Entrepreneurship
Lecture 2
Idea Analysis
Dr. Rana Muhammad Asad Khan
Assistant Professor
masadkhan87@[Link], [Link]@fcm3,[Link]
03314438163
Department of Mineral Resources Engineering
Pak-Austria Fachhochschule: Institute of Applied Sciences and Technology, Haripur
1
Traditional Business vs Entrepreneurship
Creative, innovative, technology-based, scalable, less
capital required
Idea Analysis
Brainstorming – Manual effort precedes creativity
Select the idea through a systematic analysis
Simple Criteria for Idea Assessment
Problem
Solution
Insight
Worthy Problem
Popular
Growing
Urgent
Expensive
Mandatory
Frequent
At least one of them or multiple
Dilemma
Solution in Search of a Problem
Unfair Advantages
Related to Growth
5 Types:
•Founders – 1 of 10 in the world to solve it
•Market – 20% per year
•Product – 10X better than competition
•Acquisition – acquire market with less cost, network effect
•Monopoly – Boolean, winner takes all
Market Types
Business to Consumer (B2C)
Business to Business (B2B)
Business to Government (B2G)
CAC and CLV
Customer Acquisition Cost (CAC)
Customer Lifetime Value (CLV)
CAC and CLV
Customer Acquisition Cost (CAC)
• The total expense that a business incurs to acquire a new customer.
• This includes all marketing and sales expenses over a specified period, divided by the
number of new customers acquired during that period.
• CAC is a key business metric used to evaluate the efficiency of a company's marketing
efforts and to understand the value that new customers bring to the business.
CAC and CLV
Customer Acquisition Cost (CAC)
• CAC is crucial for business it helps in determining rate of return on investment (ROI),
informs budgets allocations, and instrumental in planning for growth and
profitability.
• Optimizing CAC involves not only reducing the cost to acquire each customer but
also improving the value each customer brings to the company, thus ensuring a
healthy balance between expenditure and revenue.
LTV & CLV
• Lifetime Value (LTV): represents the total revenue a business can reasonably
expect from a single customer account over the duration of their relationship with
the business.
• It's a crucial metric for understanding the long-term profitability of a customer and
helps businesses make decisions regarding customer acquisition, retention,
and loyalty programs.
Complexity vs Utility
Not Good
Complexity
Desirable
Utility (Market Size)
SWOT Analysis
SWOT Analysis
Business model canvas
Business model canvas =
Fundamental elements of a business or product,
structured in a coherent way.
Why we use it
• Framework to speed decisions.
• A process of making connections between your idea
and a business.
• Explores how customer decisions influence your
company’s goals.
• Provides clarity on how the business idea will likely
develop.
Why we use it
Right
Left side:
side:
business
customer
focused
focused
External and internal elements meet at the value
proposition - the exchange of value between your
business and your customer/clients.
A business hypothesis is
• the starting point for further investigation
• a proposed explanation
• based on limited evidence
• without any assumption of truth
Is this a business hypothesis?
The customer wants to spend less money for the same or
similar product/service.
Is this a business hypothesis?
The customer wants to spend less money for the same or
similar product/service.
You need an equal chance of approving or disproving the
hypothesis. In other words, you need the Yes and the No
from your interviews.