Click here to watch the recording of the session from 17 Feb 2024
Read: Shark Pond is a Rotary service project in the form of an entrepreneur pitch show like Shark Tank…but friendly. Budding entrepreneurs are trained and then “pitch” (present) their business ideas to Rotarian guest judges who award them with start up grants to fund their business. The show takes place over video conferencing. Watch the video below and think about what the sponsors might be looking for when choosing an entrepreneur to support.
Discuss: Why do you think the sponsor in the video (Rich) choose to fund this entrepreneur (Agnes) instead of one of the other entrepreneurs who pitched at the event?
SHARE YOUR EXPERIENCES: Share with the group how many sales you have received last week. Show your income and expense log.
Read: Most business owners initially finance their business growth by relying on their own savings, by bootstrapping (doing work themselves and not relying on external help), and by obtaining loans or investment money from close family members or friends.
It is important to think carefully before going into debt. Debt can be a type of bondage. Below are some sources of capital that can help fund a business. Look over the charts below.
Group discussion: Are you considering any of these options for your business? If you are, discuss as a group the pro’s and con’s of using that method to finance your business.
What Entrapov Sponsors Want and How to Attract Them
Read: Entrapov provides interest free loans from Angel Investors using the Shark Pond competition as part of the application process.
Q: Who are Entrapov sponsors?
A: Americans or Europeans who believe in God. They are not rich but have enough money and feel blessed. They like to travel and learn about new cultures.
Q: Why do sponsors want to help an entrepreneur?
A: They want to feel like they are changing someone’s life for the better. They want to make a friend. They want to get videos and messages showing your successes. They think startup businesses are interesting. They like to travel and want to learn about new cultures.
Q: How can entrepreneurs get a sponsor to provide them with an interest free loan?
A: Work with your self reliance facilitator to do a good job on your Entrapov grant application (found at https://entrapov.com/grant-application/). After you submit your application, an Entrapov intern will contact you. Work with the intern to add photos to your application. In America we have a saying, “A picture is worth 1000 words.” Sponsors want to see photos of you and your family and of your business. They want to know about you and feel like they are helping someone. They think your life, family, and business is interesting. They want to be confident that your business will succeed. They will choose to support a business that has high margins, is inflation resistant, and has lots of demand from customers who can afford to buy.
Read: Below are some important financial words or terms that you will want to include in your requests to investors. Investors and grant sponsors use these words to compare businesses that they might want to invest in. It would be helpful for you to understand these words as you present your business in Chapter 12.
Group Activity:
Each class member takes a turn reading the financial word and its definition shown below. After a word is read and defined, the person next to the reader will use the word to describe their own business. For example, if Brother Mensah reads, “Revenue is money that a business receives from customers for selling services or products. It comes from total sales made during the month or year.” Then the person sitting next to him might say, “My egg farm has made $100 in revenue so far this month.” Then this person reads the next word and its definition (Revenue and expense logs…).
Revenue is money that a business receives from customers for selling services or products. It comes from total sales made during the month or year.
Revenue and expense logs are forms used to record revenue and expense transactions.
Expenses are money that a business spends to create services or products. They include all costs associated with your business. It is important to keep money from the business separate from money from your household. Expenses can be Fixed Costs or Variable Costs.
Fixed costs are expenses a business has regardless of how much it produces or sells. Examples of fixed costs might include rent payments and employee salaries.
Variable costs are business expenses that vary based on how much a business sells or produces. A variable cost could be the amount of money spent on raw materials or commissions paid for selling a product.
Income statements subtract expenses from revenues over a defined period of time. It states whether a business has achieved a profit or loss.
Cash flow is a measure of the amount of money that moves in and out of a business during a defined period of time.
Competitive advantage is a condition or circumstance that allows a business to operate more efficiently, offer higher quality, or provide greater benefits than other businesses. A competitive advantage enables a business to gain or keep more customers.
Demand means that customers are willing and able to buy at a high price.
Self salary is what you pay yourself as an employee of the business. This helps you keep the business’ budget separate from your personal budget.
Net profit is the difference between sales revenue and all costs (both variable costs and fixed costs). Also referred to as net income or the bottom line. Net profit is shown on an income statement. The percentage of money a business keeps after both the variable costs and the fixed costs are subtracted from its sales revenue.
Net profit margin is the percent of sales revenue that is re-invested into your business each month as savings for future unplanned expenses or growth. Net profit margin is important because it allows a sponsor or investor to compare businesses and see which have the highest potential for success.
Inventory includes the value of all products or materials on hand that a business can sell or use.
Grants are funds given for a specific purpose that typically do not need to be repaid.
Market test means selling simple products or services to people that could be your customers. The simple product tests if this customer really wants the product and has the ability to pay the price to purchase it. This happens before an entrepreneur invests lots of time and money in creating a business.
Wholesalers are businesses that sell large quantities of products to retailers.
Entrapov Income Statement Template
You will need to create an income statement like the one shown shown below to help sponsors understand your business. Income statements help sponsors decide which business they want to support.
Fill in the income statement on the following page with information about your business. Month 1 is the first month you started selling your products or services. Fill out the form below using as many months of sales history as you have. If you have only been selling simple test products during this self-reliance course, add your weekly sales numbers to the chart below as if they were monthly numbers.
Below are numbers from Dalisey’s Virtual Assistant business. During 1 week she earned $30 from 10 orders made by her American clients. Her average order size is $3. She spent $6 in expenses from herself-salary, raw materials (commissions paid to Fiverr.com for referring clients to her), advertising, transportation, and other. So her average expenses per order are $0.60 ($6 divided by 10 orders = $0.60 in expenses per order). Her net income is $24 ($30 revenue minus $6 expenses). Her profit margin is 80% ($24 net income divided by $30 revenue).
Homework
Ⓐ Record a pitch video to introduce yourself to potential sponsors. The video should:
- Show your face looking at the camera
- Say your name, where you live, the name of your business, and what problem your business solves for your customers
- Explain what your product is and how it works
- Explain how you will use the grant money if you are given a grant
- Thank the sponsors for their consideration
- Think about what the sponsors might want to know about you based upon what we learned in this week’s lesson
Ⓑ Gather photos of yourself and your business that can be sent to Entrapov sponsors with your video.
Ⓒ I will continue to use a revenue and expense log every day to track the sales and expenses from my business.
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