2. Slide to remind
students of
deliverable
• Maybe the schedule of the remaining
work days

3. Costing & Modeling

5. Deliver:
Solutions are evaluated for viability and
long-term sustainability to discover
which are true opportunities.
Entrepreneurs deliver these solutions by
mobilizing resources, venture planning
and leveraging networks.

6. Deliver:
Solutions are evaluated for viability
and long-term sustainability to
discover which are true opportunities.
Entrepreneurs deliver these solutions by
mobilizing resources, venture planning
and leveraging networks.

7. Costing:
• Research costs of inputs, labor,
products, transportation, etc. to
determine
Modeling:
• Creating a guesstimate of how much
money you might earn and spend

8. Costing Basics
There are two basic types of cost that
you need to keep in mind:
• Fixed
• Variable costs

9. Costing Basics
Fixed costs: Fixed costs don’t vary with
the level of production. A good example
is a lease on a building.
Variable costs: Unlike fixed costs, variable
costs change with
the level of production. For example,
material used in production is a variable
cost. (from Dummies.com)

10. An Example

12. Example
Fixed costs: website, office, stencils, some
labor, brooms, cleaning supplies
Variable costs: paint, paint brushes,
transportation costs

13. Example
Fixed costs:
R1000 (Website)
R1000 (Stencils)
R400 (Cleaning supplies)
R2400 to start
Variable costs:
R100/game (paint)
R15/game (paint brushes)
R50/game (transportation costs)
R165/game (total cost)

14. Modeling Basics
Look for:
•Size of “market” (potential purchasers)
•Guess number of which could be purchases
• Google is maybe the popular product in
the world and only 65% of people use it
• Only 42% of people drink Coke
• Be conservative
•Guess how much they will pay
•Multiply!

16. Example
Best guess:
~26,000 schools in SA (“How many
children in SA?”)
x 2% (520) will pay (Guess)
x R200 (Guess—could ask creche)
R104,000 (money we earn)

17. Example
Fixed costs:
R2400 to start
Variable costs: (520 games)
R165/game (total cost)
X 520 games
I
R85,800

18. Example
Total costs:
R2400 (website, stencils, cleaning supplies)
R85,000 (cost of paint/brushes/transport)
R87,400
Total money earned:
R104,000
Profit: R104,000 - R87,400 = R16,600

19. Deliver:
Solutions are evaluated for viability and
long-term sustainability to discover
which are true opportunities.
Entrepreneurs deliver these solutions by
mobilizing resources, venture planning
and leveraging networks.

20. From Before:
Market Research for your solution(s)
Focus on:
• Competitors
• Complementary Partners/Products
• Costs
• Size of need/market

21. DO YOUR BEST to Cost and
Model your BUILD Lab solution.

22. Copyright © African Leadership Academy, 2011