UNIVERSIDAD NACIONAL

DE INGENIERA
Facultad de Ingeniera
Industrial y de Sistemas

MICROECONOM IA

Ing. Margarita D. Mondragn

Clase 3 Agosto 31, 2015

Agosto Diciembre 2015

Six Questions To Determine If Your New Idea Is A Real

Business

Do You Have A Compelling Value Proposition?

It's forever worth repeating: Great ideas are only great business ideas if you can
convince people to pay for your product or service at a price above what it costs you
to deliver it. Just because you think your idea is great doesn't mean anyone else
does--or if they do, it doesn't mean they would be willing to pay enough to cover
your electric bill.

Is There A Viable Market For Your Product Or Service?

It's not enough to find a few people who are willing to pay for your new product or
service--you have to find more than enough of them to support a vibrant
commercial enterprise. Professional investors (like venture capitalists) are
especially interested in this question. They don't want to write checks to launch
companies with limited growth potential, even if they'll likely be profitable. On the
flip side, beware the lure of big numbers--just because there are 50 million U.S.
dog owners who spend some $43 billion on their pooches annually doesn't mean
enough would be interested in your new canine cologne. Finally, never count on
creating markets from scratch--there may well be a reason they don't exist.

Can You Cover Your (Honest-To-Goodness) Development Costs?

"Most companies that fail do so because they are lacking capital." We didn't say
it; venture capital maven John De Puy, chief executive of Oaktree Ventures, did.
While investors won't wave blank checks at you, they don't want you to fail
either. The key here is honesty: However much you think you need to bring your
product to market, tack on a healthy cushion; add more for tech-heavy products
that may (read: will) need extra months of tweaking. Can't scare up enough
scratch to get out of the garage? The market may be telling you something.
"You won't really know whether you have a business opportunity until you try to
get funding," says Charles Holloway, director of the Center for Entrepreneurial
Studies at the Stanford Graduate School of Business.

Can You Reach Your Target Market In A Cost-Efficient Way?

Even if you have an attractive product, enough capital to build a working
prototype and a potentially large customer base, you still might go broke
reaching those consumers. Post cards, press releases and grand
openings require cash, after all. A decade ago, a young America Online
spent so much money flooding the world with free trial software that it
tried to mask the outlays by capitalizing those expenses on its balance
sheet. Even established businesses have to keep spending to attract
customers. In 2007, for instance, online retailer Amazon.com spent
$344 million--2.3% of its $14.8 billion in revenue--on marketing. Other
businesses, such as social-networking sites Facebook and News
Corp.'s MySpace, keep expenses down by relying on viral marketing-but that may not work when it comes to peddling dog cologne. (For
more on smart marketing, check out

Can You Sustain A Competitive Advantage?

Great ideas attract competitors and substitutes. Having a real business means being
able to survive the fight. Being the first to market may work to your advantage in the
short term, but sustaining that advantage could require additional steps. The question
beneath the question here is simply: What is your competitive advantage? If it's
technology, can you patent it? (Check the United States Patent and Trademark Office
database first.) If it's a commodity item, can you brand it? (Think Kleenex.) This
question also requires identifying potential weaknesses and finding ways to shore
them up--say, through outsourcing and partnerships. Great business ideas require
great execution; wasting resources just to be mediocre is small-business suicide.

Are You Committed Enough?

Just as you probably will underestimate the amount of startup capital you'll need, so
too will you misjudge the amount of effort launching a successful business will take.
Fair warning: This is hard work. If you're not ready to give everything--and then some-it doesn't matter how great your great idea is.

Marketing Strategies
Six Marketing Tactics Worth Paying For
Mary Crane, 05.17.07, 6:00 AM ET

Survey The Landscape

Too few entrepreneurs bother to define the market--and its willingness to pay--for
their product, says Leonard M. Lodish, professor or marketing at the Wharton
School. Market surveys--online, direct-mail or by phone--can help, though they can
cost up to $10,000. Online surveys are easiest. Zoomerang charges $599 for a year
subscription to its surveys service; Survey Monkey offers subscriptions starting at
around $20 per month.

 Scott Barbour/Getty Images

Get Friendly With Google
After you've shelled out a few grand for a user-friendly Web site, budget another few
for getting noticed by the big search engines like Google and Yahoo!. You can buy
keywords like Google's AdWords, which help direct customers to your site (see
"
After you've shelled out a few grand for a user-friendly
Web site, budget another few for getting noticed by the big search engines like Google

Buff Your Reputation With A Board Of Advisers

Small businesses are short on a lot of things--including credibility. One way to buff up
your profile (and even raise some additional capital) is to shell out a few grand in
stipends for a reputable board of advisers. According to Compensation Resources,
almost 91% of firms with $50 million to $100 million in revenue pay their advisers;
average compensation: $4,800 per year. Consulting services may cost a bit more. (For
more on this topic, check out "
.") Along the same lines,
budget up to $3,000 a year for membership dues to industry organizations, chambers
of commerce and other niche professional groups. The higher your profile, the more
clout you'll have with suppliers, partners and customers.

Call Customers To Action

Not all e-mail marketing campaigns are created equal. Those that give customers a
call to action--like Diaper.com's referral program (see "
")--will get more people onto your Web site or into your store. E-mail marketer
Constant Contact charges $15 a month to blast e-mails to up to 500 addresses; $30
will get you up to 2,500. StreamSend charges $6 per month for 500 e-mails and up to
$50 per month for 50,000 e-mails. Those prices include testing presentations in
different e-mail formats--such as Yahoo! mail and Google mail--and tabulating the
response and bounce-back rates.

 Photos.com
Create A Community
Word of mouth is still the most powerful form of marketing for small businesses. Lure
customers online by launching a blog where they can network, share information and
hopefully talk about how cool your company is. Blogs are generally inexpensive but you
will burn man-hours updating and monitoring the site.

Test--And Test Some More

No one hits on the perfect marketing strategy on their first try. Instead of placing all your
bets on one radio advertisement or telemarketing campaign, try concurrently testing two
or three strategies on targeted groups of customers and in limited areas. "It's hard to
convince companies to do this because they want to do everything rapidly, but then they
end up wasting a lot of money," says Wharton's Lodish.

Five Ways To Make Money Off Your Homeland

 Bernhard Weber/IstockPhoto
Your roots are important. Better yet, they just might fatten your
wallet. There are plenty of customers looking for a little culture in
their lives--or just a taste of a home they left behind. Here are five
ideas to get you started.

Bring It In
Peddling exotic products from your native country can fill your coffers. To get started
as an importer, you need a customs broker to navigate the transaction process--and
the barrage of fees. A typical breakdown for U.S. importers, courtesy of James
Redman-Gress, a customs broker from Charleston, S.C.: Customs fees can run up
to 30% of the value of the merchandise, while customs bond fees collected by the
broker, might be $3 for every $1000 worth of goods. If you import frequently, you
could pay a one-time annual fee of perhaps $400. Then are the shipping fees: A
standard 40-foot ocean container from Egypt to South Carolina runs in the
neighborhood of $4,000. Any imported food products must be registered with the
Food and Drug Administration, and all garments should bear a Registered
Identification Number issued (for free) by the Federal Trade Commission.

Ship It Out
Exporting may require a license--it depends on what you're shipping and where
it's going. U.S. exporters should get an Export Control Classification Number
from the Department of Commerce's International Trade Administration. You will
also need a 10-digit Schedule B code to identify the product (for this, check out
the Schedule B search engine at www.census.gov). Like importers, you will pay
a flurry of fees to get your products to customers. For a host of exporting
resources, organized by industry and location, visit Export.gov, part of the
International Trade Administration.

Say What?
Translating written text or spoken word while preserving the right tone and nuance is a
valuable skill. From 2004 to 2014, employment for translators and interpreters in the U.
S. is projected to increase 18% to 26%, compared to a 10% increase in the overall
workforce, estimates the U.S. Department of Labor. One way into this business (though
not required) for U.S. residents: Pass a three-hour, open-book exam given by the
American Translators Association. According to a 2006 survey by the ATA, the reported
gross income for full-time translators and interpreters ranged from $50,000 to $60,000.

Show Them Around Town

Your knowledge of local culture gives you an edge in the travel sector. But don't just
book the trips--guide them. And find a niche: The more specific and scintillating the
experience, the more you can charge for your services. Travel entrepreneurs that
provide unique tourist experiences can rake in 20% to 30% net margins.

Roll The Dice

If you can't make hay on your homeland's products, try playing its currency. If you live in
France and think the U.S. dollar is due for a comeback against the euro, you could
exchange euros for dollars and wait for the greenback to recover. Professional traders
use currency futures contracts to put down a fraction of the initial investment, thus juicing
returns when things go right--but generating huge losses when they go wrong. Note:
Currency trading--while potentially lucrative--is only for those with steel stomachs and
capital to lose. A safer bet is a currency Exchange-Traded Fund, an investment vehicle
that rises and falls based on the underlying value of different currencies.

Entrepreneurs
The 20 Most Important Questions In Business
Brett Nelson, 11.21.07, 6:30 PM ET

Companies fail for a host of reasons. Bad luck plays a role, sure, but
disaster usually strikes because of a more fundamental flaw--in the
original idea, the strategy, the execution or all of the above.
When it comes to building a business, even
would agree
that no one can spot every opportunity or anticipate every threat. There
are simply too many variables. And in an increasingly competitive global
economy, those variables are changing faster than ever before.
What entrepreneurs can do is ask the core set of tough questions that
govern the fate of any enterprise. Armed with those answers, they stand
the best chance of beating some fairly dire odds: Studies estimate that
just two-thirds of all start-ups survive the first two years, and less than half
make it to the fourth.
Make no mistake: Digging for those answers is a grueling exercise--one
that takes serious intellectual and emotional honesty.

With any hope, the process begins long before money's been spent,
products are built and customers are lost real challenge, though, is to
keep digging as the business grows. New opportunities and threats
emerge, and yesterday's answers may not--and probably won't-suffice. Relentlessly asking the tough questions is how behemoths
like Wal-Mart, Microsoft and General Electric stay on top.

With that in mind, we present the 20 most important questions

entrepreneurs need to answer--and keep answering--to build their
businesses. Some highlights:

 Shutterstock
1. What is your value proposition?
This is the single most important question of the bunch. If you can't explain--in three,
jargon-free sentences or less--why customers need your product, you do not have a
value proposition. Without a need, there is no incentive for customers to pay. And
without sales, you have no business. Period.

2. Does your product address a viable market?

Entrepreneurs are passionate to a fault. Many fall in love with an idea before
confirming that there's any viable market for it, let alone one large enough to attract
investment capital. If a market doesn't yet exist--the toxic term of art here is "white
space"--they assume they can create one. (Hint: There may be a reason for all that
white space.)

3. What differentiates your product from competitors'?

Few companies can rely on--let alone afford--clever marketing schemes to
separate themselves from the competition. Yes, Starbucks made people believe
they wanted $4 caffeinated concoctions, and Louis Vuitton lulled people into
shelling out $1,500 for denim handbags, but those are the exceptions that prove
the rule. If you want to win in business, you need to offer something tangibly
valuable that the competition doesn't. Examples: rock-bottom prices (Wal-Mart);
ingenious product design (Apple); extreme convenience (Fed Ex).

4. How big is the threat of new entrants?

If you're smart enough to spy a profitable business opportunity, you can
bet competition isn't far behind. Some barriers to entry--patented
technology, a storied brand--are more fortified than others, but eventually
someone will find a way to do what you do faster, cheaper and maybe
even better. If not a direct competitor, then a substitute technology might
take a chunk out of your hide. (Think what digital film did to Kodak.) The
trick: building a loyal following before that happens.

5. How much start-up capital do you need?

Any early stage investor or small business consultant will tell you that most
businesses fail because they were undercapitalized. The lesson: Figure out how
much you think you need, and then add plenty of extra cushion.

6. How much cash do you need to survive the early years?

In case you didn't pay attention to the previous question, take this one to heart. It doesn't
matter how much money your business might make down the road if you can't get out of
your garage. Plenty of business plans boast hockey-stick-style financial projections but
run out of cash before the good times kick in. (Remember all those busted dot-com
companies from the tech boom?) Three words: Mind the cash.

7. How will you finance the business?

You have a few choices: Aunt Sally, credit cards (dangerous), angel investors, and if
you're really onto something, venture capital. Forget bank loans (at least until the cash is
flowing in a positive direction). As for selling shares to the public, what with all the
regulatory hurdles, you might find the price of that exposure a tad steep. If you can
bootstrap your business, do it; raising money is difficult and distracting. If you plan on
stumping for capital, consider how much equity and control you're willing to give up. (The
more you need the money, the stiffer the terms will get, so ask for it sooner than later.)
Finally, always remember to match the timing of cash inflows from your assets and the
outflows to cover liabilities. A mismatch can sting.

8. What are your strengths?

Google writes powerful search algorithms; Steinway works wonders with wood; Cisco
sniffs out promising new technologies and buys them. Figure out what you're good at
and stick to it. An obvious notion, perhaps, but plenty of zealous entrepreneurs lose
their way--especially when the world seems so full of possibilities.

9. What are your weaknesses?

You may know how to design a widget, but not know a thing about running an efficient
manufacturing plant. Apple designs and markets its nifty iPods and iPhones, but lets
someone else slap them together. Countless Webpreneurs farm out the design of their
sites and back-office payment systems. Wasting resources just to be mediocre is
suicide. Stick to core competencies and find trusted partners to handle the rest.

10. How much power do your suppliers have?

Convincing customers to buy your products is tough enough without suppliers giving you
a hard time. Basic rule of thumb: The fewer the number of suppliers, the more sway they
have. Take the steel industry, which relies on a handful of companies for its iron
feedstock. If two of those big guys should get together--as BHP Billton and Rio Tinto
have been discussing--they would have significant pricing power, potentially crimping
steel producers' margins. On the flipside, beware getting hooked on low-cost providers
who don't keep an eye on quality. ("Lead-laced" Barbie, anyone?)

11. How much power do your buyers

have?
Take a lesson from Delphi, the giant auto
parts supplier stuck in Chapter 11 despite
its $26 billion in annual sales: It's no fun to
be in a business where a few big
customers can demand price cuts with
each passing year.
Meanwhile, movie theaters--even while
besieged by video-on-demand and other
services--still manage to push higher
prices on the disaggregated masses.
The cost of a seat at a Regal
Entertainment Group theater in lower
Manhattan is now $12--up 20% in less
than three years.

12. How should you sell your product?

There is no one-size-fits-all solution to wooing customers. For two decades, Dell
Computer bypassed retailers and sold directly to customers, with limited tech support.
General Motors and Coca Cola rely on distributors to move their cars and cans. Clothing
companies like Ralph Lauren work both internal and external channels. And thanks to
daily, intensive sales training, privately held Lazy Days moves some $800 million worth
of RVs out of one sprawling location near Tampa, Fla. Whatever sales method you
choose, make sure it aligns with your overall business strategy.

13. How should you market your product?

Young companies have to get the word out, but they also can go broke doing it. A
decade ago, America Online spent so much money flooding the planet with free trial
software that it tried to mask the bleeding by capitalizing those expenses on its
balance sheet. (Regulators later nixed that accounting treatment, wiping out millions
in accounting profits.) What percentage of sales should go toward marketing? As with
sales, there is no one rule of thumb.

14. Does the business scale?

Bill Gates plowed piles of money into developing the first copy of Microsoft Office. The
beauty: Each additional copy of that software program costs next to nothing to produce.
That's called scale--and it's the difference between modest wealth and obscene riches.
What models don't scale? Think service businesses, where the need for people grows
along with revenues.

15. What are your financial projections?

You can't lead if you don't have a destination. Two critical milestones: 1) the point
where more cash is coming into the business than going out in a given period, and 2)
the point at which you finally recuperate your cumulative initial investment (including an
adjustment for the time value of money). Financial projections should be reasonable.
Paint too rosy a picture and seasoned investors will run; more to the point, you might
run out of cash.

16. What price will consumers pay?

Get this answer wrong and you could leave bags of money on the table--or
worse, send customers running into the arms of the competition. When Apple
sliced the price of its iPhone by a third after only two months on the market, even
loyal customers screamed, forcing chief Steve Jobs to apologize and offer a
partial rebate. Consultants get paid handsomely to help companies arrive at the
right price. For more affordable advice, check out "
." Wannabe consultants should read "
."

17. How do you protect your intellectual property?

Imagine slaving for years on a new cellphone battery that lasts more than two days, only
to watch it reverse-engineered and patented by someone else. Before you ask anyone
to crank out a few prototypes, file for a provisional patent. It protects your idea for a year
while you work out the kinks. For more on intellectual-property protection, check out
and
.

 Comstock
18. How do you keep the help happy?
What's Google worth without its super-geeks? Goldman Sachs without its number
crunchers (and their golden Rolodexes)? The local bar without old Jim manning the tap?
Not much, which is why attracting and retaining talent is critical to so many businesses.
For starters, that means crafting the
. Starbucks sets a fairly high
standard: Health benefits are available to any Starbucks employee who works at least
20 hours a week and has been with the company for more than 90 days.

19. How committed are you to making this happen?

About a year ago, Chuck Prince, recently resigned chief executive of Citigroup,
addressed a group at New York University's Stern School of Business. An audience
member asked what life looked like at the helm of such a colossal firm. Prince
responded that, save for a few exceptions, every evening for the next five months was
already accounted for. Fair warning: If you want to run the show, get ready to give
everything--and then some.

20. What is your end game?

Running a business with an eye toward flipping it to a strategic buyer is a lot different
than digging in for the long haul. (Will YouTube ever turn a profit? Who knows, but
that's Google's problem now; the same goes for MySpace and News Corp.) Not sure
whether you want to build the next great empire or just make a decent buck? Ask
yourself the following
.

Why go big at all?

Mapping out your long-term goals for the business is critical before you decide to kick
growth into high gear. Aiming to sell out in a few years? Fine. Suffused with competitive
desire? OK. Just want to be left alone to trick out your product, with little care for the
bottom line? Stay small.

Do you prize independence?

Most entrepreneurs do--that's why they start their own businesses. Early on, you can
make key decisions with impunity; better yet, you can do it on your own time clock. Not
so when the business starts growing and the to-do list scrolls past your feet. Worse,
you'll most likely have investors and board members to appease.

Are you inspired by creativity or more process-oriented?

Many entrepreneurs start companies on raw creativity. They envision a new niche--a
brand new world even. But such imagination can get in the way when it comes time to
install--and live within--the systems and processes necessary to accommodate growth.

 Shutterstock
Are you willing to make tough decisions for the
growth of the company?
Sure, your sister and college roommate helped launch
your business, but they may grow less useful as the
business outgrows them.
If you're not comfortable supplanting (or firing) them, stay
small.

 Comstock
Do you like speaking in public?
Companies of any significant size need a public face. Entrepreneurs who thrive on public
performances--weekly meetings, shareholder gripe sessions, even television interviews-have an easier time than those who prefer to stay out of the spotlight. (If public speaking
isn't your forte but you still want to grow, find a confident substitute who can sell your
story.)

Are you a consensus builder?

In most cases, the bigger your business, the more input you need from those around
you. That means being willing and able to marshal consensus. Entrepreneurs with a myway-or-the-highway mentality should think about staying small.

 Photos.com
If you say you need it on your desk by 9 a.m., will it get done?
Anybody can hand out pink slips, but leaders of growing companies have to go a step
further: They must command a certain degree of respect. As the stakes rise, you need a
few drill sergeants on board. Not willing to sacrifice a little camaraderie to reach new
heights? Put a cap on your growth plans.

 Shutterstock
Can you delegate?
The bigger your business, the less time you'll have to interact with your employees.
Clearly you can't know what's going on in every department all the time. If you can't
delegate, forget about growing.