BSM 600 Lecture Notes - Lecture 9: Retained Earnings, National Technical Research Organisation
25 May 2016
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Document Summary
Firm needs to ask itself these questions. 1000 ideas -> 1 gives you returns = great. End result (want to get returns quickly, now, 6 months, if i have to wait then why do i have to wait) -> related to profits. Pain statement: what is the pain in the market that i"m trying to solve, need in the market, not available in market now but we can develop it with our entrepreneurs. Tell them total cost of the project. Tell them who else is in it with me, need you to fund the rest. Tells the entire story, story as a whole makes sense. Cost of capital becomes important (am i paying a lot up front, later, what is the timeline for cost of capital) Uncertainty: cannot assign a number to it, do not know what the number is going to be, cannot really manage it. Risk: assigned some kind of number, calculated, know how to evaluate it.
