Diving into Entrepreneurship

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DIVING INTO ENTREPRENEURSHIP
Melissa Liu
CEO
2025 Consulting / 2025 Labs

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Why Diving into Entrepreneurship?
• Fear may be involved
• You can practice and plan…but it still
involves a leap of faith
• Done well, it may look easy…but it’s actually
a lot of work
• It’s also uncertain – you may crash and burn, you may fail,
you may look like a “fool” in front of a crowd
• But it is exhilarating!
I was a high
school diver, but
this is not me

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What is entrepreneurship?
• People may envision Uber, Twitter, AirBNB
• Not every new company starts and develops like these
• May be a technology company – or not
• May be Angel/VC funded – or not
• May be planned to become a $ billion company – or not
• May be about a “revolutionary new idea” – or not
• Entrepreneurship = The act of starting (and building) a
new company that did not previously exist

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Data on entrepreneurship and women-owned business
• Women own 36% of all businesses, according to US
Census data from 2012, a 30% increase from 20071
• 13% of all US adults are involved in entrepreneurship2
• Female entrepreneurs start companies with less capital than male
entrepreneurs3
• In 2014, 15.5% of all US based startups receiving VC funding had
at least one female founder, up from 9.5% in 20094
• “Virtually all net new jobs created in the U.S. between 1980 and
[mid-2000s] were created by firms that were five years old or less”5
2 Forbes, “U.S. Entrepreneurship hits record high”, 2013
1 Forbes, “Why The Force Will Be With Women Entrepreneurs in 2016 ”, 2016
3 National Women’s Business Council, “Access to Capital by High-Growth Women-owned Business, ” 2014
4 TechCrunch, “Female Founders on an Upward Trend, according to CrunchBase”, 2015
5 CNN, “U.S. economy won’t grow fast until we unleash entrepreneurship”, 2016

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Getting started – some initial milestones
Iterate, build, re-plan, manage from here
Legal Entity and Filings Now you have a business!
Start-up Financing Enough $ to get started
Start-up Team Resourcing
Whoever you need to be able to sell
something – could be just you
Product: Something to Sell Product or service you can sell
Company “Presence”
Collateral to make your company look
legit – web site, business cards, etc.
Bank Account
Place for you to take payments and
pay bills
Sales
You working on selling something to
someone
Taxes and Corporate Filings
Reporting of the state of your
company for taxes and legal filings
Real business
Can take money
Can sell
Have revenue

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Getting started – some initial milestones
Iterate, build, re-plan, manage from here
Legal Entity and Filings Now you have a business!
Start-up Financing Enough $ to get started
Start-up Team Resourcing
Whoever you need to be able to sell
something – could be just you
Product: Something to Sell Product or service you can sell
Company “Presence”
Collateral to make your company look
legit – web site, business cards, etc.
Bank Account
Place for you to take payments and
pay bills
Sales
You working on selling something to
someone
Taxes and Corporate Filings
Reporting of the state of your
company for taxes and legal filings
Real business
Can take money
Can sell
Have revenue
• Getting to sales does not mean that you have a viable
business model…
• ... or that you can ever achieve viability with your current
plans and directions
• But it is a start
• You will learn from your experiences to here, and you can
evolve your business from that point
• We will come back to the business model topic…

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Mall Map: simple overview of a business
Product or Service – something to try to sell
Revenue Model Cost Model
Customer Acquisition
Legal Entity and Filings
“Presence”: Marketing, Web, Media
Organization, Hiring, Contracting
Cost of Doing Business
Revenue Generating
Product Related Costs
* Area of legal complexity
May take
iteration to
get to a
viable
business
model
Business Model: Drives your profit
Financial Management
IT, Operations, etc.
* You are here (maybe)

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What is a legal entity?
Sole Proprietorship
• You own the business as
an individual
• Its bank account is your
personal bank account
• Its debts are your
personal debts
• No “corporate veil” for
liability
Incorporated Business
• Business has been
“incorporated” into an entity
distinct from its owner(s)
• C Corp
• LLC
• Non-profit 501(c)3
• S Corp
• Business has its own bank
account attached to the
business name
• Protection of “corporate
veil” (usually)

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Business Models: Product vs Technology
Example 1: Software
“Product” Customers Revenue Model
Packaged software
(Office or Intuit - traditional)
• User/Purchasers of the
software
• Businesses
• OEMs (pre-installed PC)
• $ per package sold
• Site license, volume discount
Subscription Software
(e.g., Office 365, Intuit
Online)
• User/Purchasers of
subscriptions
• Can also be businesses
• $ per time period of
subscription
• $ per period per user, etc.
Free Software
(e.g., Google Docs,
Facebook)
• Purchasers of ads
• Purchasers of data
• $ per eyeballs or time
watched, etc.
Can be differentiation between what you are building vs what you are
selling. The same “thing” could be sold through different models

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Business Models: Product vs Technology
Example 2: “Radio”
“Product” Customers Revenue Model
FM Radio
• Advertisers • Ad revenue
• Sold by duration, peak
times, etc.
Sirius XM
• Subscription purchasers /
listeners
• Car manufacturers?
• $ per time period of
subscription
Pandora
• Companies that buy ads
• Consumers who pay for a
subscription
• “Freemium” (ad-supported)
• Subscription-supported
(ad-free)
Customer = The person who pays. Others are “users”, “listeners”, “readers” –
fans who help you attract paying customers

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Some key decisions
Goods vs Services
• Physical goods: inventory, shipping
logistics, sales tax, manufacturing
and/or assembly time, etc.
• Services: labor logistics, retention
• Companies can be both gds and svcs
• R&D companies: Can be either, also
have up-front cost of development
For-Profit vs Non-Profit
• Most businesses are for profit
• Non-profit public benefit companies
have many regulatory requirements
• For-profit entities: C-corp, S-corp,
LLC, sole proprietorship
• Pass-through vs corporate tax
Sole Founder vs Partners
• For some people, it’s better to have
partners
• Complementary critical skills
• Partnerships don’t always work and
sometimes dissolve
• It can be ugly!
In-source / Out-source / Skills
• What you (and partners) can do vs
what you need help with
• E.g., outsource web site, logo
creation, manufacturing, etc.
• Cost vs internal skill-sets
• Skills you want vs skills you don’t

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Recap: Product development in a startup environment
• Expect to iterate on:
• products
• customers
• revenue model
• You might find that you can sell to happy customers – and
lose money doing it
• May need to iterate on your business model
• Lower product cost, higher sales price, different market, volume/
scale, etc.
• Some companies get pretty far with an unproven – or
bad? – business model
• This works if you are well-funded; not everyone has this option

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We interrupt this story for a few tidbits…
• Steve Blank, “Not All Those Who Wander Are Lost”
• Story about the marketing guy who feels he’s meeting goals
because he has made a bunch of calls (activity-based metric)
• Goal in startup marketing is not activity-based – it’s actual sales
• Guy Kawasaki, Pioneer Summit 2015
• “All you need is someone to build it, and someone to sell it.
Everything else is bullshit”
Stay focused on selling, and the things you need to do to enable it. Those
are your most critical activities.

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Customer acquisition – some market traits
• Cost Sensitivity:
• Customer’s own money or OPM
(“Other People’s Money”)
• Budget constraints
• Sales Lead Time:
• Size of the organization &
bureaucracy
• Legal/regulatory oversight and
controls
• Individual characteristics within
a market will vary
• Wealthy consumers vs not
• Small, growing businesses vs large
struggling businesses
• But a market overall will tend to
have some characteristics
Cost Sensitivity
Sales Lead Time
Consumer
Large
(stable)
business
Individual customer characteristics vary
Small
business
Gov’t
Well-
funded
startup
Non-profit
(LT varies)
Disclaimer: This is the experience of a two-time
entrepreneur, not a marketing professional

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Customer acquisition / marketing / sales
What you might see
Social media
ad placement (mobile, print, web)
search key words
direct mail
cold calls / emails
personal contacts
formal bidding process
consumer governmentcorporate

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Funding your startup
Pre-revenue /
customers
(Seed Stage)
Revenue /Customers
(Early Stage)
• Bootstrap
• Friends and family
• Crowdfunding
• Angel (individuals
with $)
• Micro-VC
• Accelerator /
incubator
• Corporate seed
money
• Founders money
(“bootstrapping”)
• Friends and
family
• Small business
loan?
Getting Started
• Retained earnings
• VC
• Corporate capital
investment
• Debt financing
• Etc.
$
$$
$$$-$$$$

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Taxes, taxes, taxes!
C-Corp, LLC taxed as a corporation, but not sole prop. or
pass-through entities
Corporate taxes:
LLC taxed as a “pass-through” entity, sole proprietorship,
S-Corp, wages from a C-Corp (double taxation)
Individual taxes:
W-2 employees (including you: you will pay employment
taxes for yourself through corporate or self-employment)
Employment taxes:
Any pass-through or sole-proprietorship will pay
employment taxes through self-employment taxation
Self-employment:
Business license fees (state/local), e.g., for a license
certificate that must be shown in the place of business
License fees:
Collecting, remitting, reporting taxes for physical products.
Rates and taxation varies by state and locality
Sales taxes:

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Employment and employment law
• Employment laws can be complicated and change often
• Know the difference – employee versus contractor
• Where work is performed, equipment, supervision/control, etc.
• Overtime regulations – recently changed
• Minimum wage laws (federal, state, local)
• Letter of the law vs. spirit of the law
Disclaimer: I’m not a lawyer, or a CPA; this is not the substitute for advice
from a professional…but these are some areas you should keep in mind

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Final Thoughts
It’s work – but it’s worth it!
Any one idea may well not work out…
… but there are always other businesses
that could be started
Know the financial risk you can handle
Questions?
Your picture here

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Thank You!
Find me at:
Email: mliu@2025consulting.com
LinkedIn: linkedin.com/in/melissaliu