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  1. 1. Business & Strategic Planning for Scientists NIH SBIR/STTR Conference Bethesda, Md. July 2005 Rohit K. Shukla CEO, Larta Institute
  2. 2. So, You Want to be An Entrepreneur <ul><li>Do you have the right attitude? </li></ul><ul><li>Do you have drive and stamina? </li></ul><ul><li>Do you have the right temperament? </li></ul><ul><li>Can you make tough decisions? </li></ul><ul><li>Are you a person of integrity? </li></ul><ul><li>Can you deal with setbacks? </li></ul><ul><li>Do you know your personal financial needs? </li></ul><ul><li>Can you afford to take the risk? </li></ul><ul><li>Is your family on board? </li></ul>
  3. 3. You Must Have an Entrepreneurial Attitude <ul><li>You must: </li></ul><ul><li>Be positive and optimistic </li></ul><ul><li>Be persistent with a great deal of drive and stamina </li></ul><ul><li>Enthusiastically attack problems and see them as opportunities </li></ul><ul><li>Want to be your own boss </li></ul><ul><li>Be willing to roll up your sleeves and do whatever it takes. </li></ul><ul><li>Be able to lead the charge </li></ul>
  4. 4. Can you make the tough decisions? <ul><li>Be decisive </li></ul><ul><li>Believe in your decisions and stand behind them. </li></ul><ul><li>If they don’t work out, be ready to admit mistakes and try another route. </li></ul><ul><li>Sometimes needs of the business come ahead of the needs of individuals </li></ul>
  5. 5. You need the right temperament. <ul><li>You must have patience </li></ul><ul><li>You need a sense of humor </li></ul><ul><ul><li>“ There must be a pony under all of this horse sh-t” </li></ul></ul><ul><li>You need to deal with stress positively </li></ul><ul><li>You can’t be afraid to make “mistakes” </li></ul><ul><ul><li>Admit them and move on </li></ul></ul><ul><ul><li>Don’t blame </li></ul></ul><ul><ul><li>“ It’s in the past” </li></ul></ul><ul><li>You need to be able to “roll with the punches” </li></ul><ul><ul><li>Setbacks are learning experiences, not failures </li></ul></ul>
  6. 6. Know Where You Are Going <ul><li>Be honest about your personal goals. </li></ul><ul><ul><li>Are you looking to cash out? </li></ul></ul><ul><ul><li>Are you looking to grow a business to pass along to your children? </li></ul></ul><ul><ul><li>How long are you willing to work at this? </li></ul></ul><ul><li>Are your goals compatible with the other stakeholders? </li></ul>
  7. 7. . Can you afford to take the risk? <ul><li>Make sure your family is on board </li></ul><ul><li>Don’t think you can leave your personal problems at home or your business problems at the office </li></ul><ul><li>Don’t underestimate the time or cost to reach success </li></ul><ul><li>Can you really afford to quit your day job? </li></ul><ul><li>Lower your personal overhead before you get into trouble </li></ul>
  8. 8. Is Your Business Idea Viable? <ul><li>A great idea doesn’t necessarily make a great business. </li></ul><ul><li>How do you know if “the dogs will eat the dog food?” </li></ul><ul><li>What problem do you solve? </li></ul>
  9. 9. Typical Early Stage Issues <ul><li>R&D: Proof of Principle, Prototype, Patents, Beta Test, Standard Cost </li></ul><ul><li>Manufacturing: Build or Buy, Manufacture or Assemble </li></ul><ul><li>Market: Product Definition & Positioning, Trade Mark & Branding </li></ul>
  10. 10. Typical Early Stage Issues <ul><li>Management Team:CEO, CFO, BOD, Advisors </li></ul><ul><li>Capital: Plant, Property & Equipment </li></ul><ul><li>Business Plan: Vision, Strategy </li></ul><ul><li>Finance & Investment: Source of Funds, Exit Strategy </li></ul>
  11. 11. 4 Elements of Strategic Planning <ul><li>Honest self-assessment </li></ul><ul><ul><li>must be ruthless, and evaluates strengths, weaknesses, opportunities and threats (SWOT). </li></ul></ul><ul><li>Goal setting </li></ul><ul><li>Resource landscaping </li></ul><ul><li>Business plan </li></ul><ul><ul><li>outlines strategic plan </li></ul></ul><ul><ul><li>must capture the attention of the audience you are targeting and convince them of your viability as a new business </li></ul></ul>
  12. 12. SWOT <ul><li>Tough introspection of what you have to offer, and what obstacles you face. </li></ul><ul><li>Ask the hard questions. Sugar-coating will not help your cause. </li></ul><ul><ul><li>What am I offering? </li></ul></ul><ul><ul><li>Is it a “nice to have” or a “need to have”? </li></ul></ul><ul><ul><li>Who are the big players and what is the market size? </li></ul></ul><ul><ul><li>Are there threats on the horizon aside from the established players? </li></ul></ul><ul><li>Strengths, Weaknesses, Opportunities and Threats are inevitably interlinked, so be careful not to confuse strengths with opportunities or weaknesses with threats. </li></ul><ul><ul><li>Strengths and weaknesses apply primarily to yourself and what you are offering. </li></ul></ul><ul><ul><li>Opportunities and threats are outside factors that will affect your endeavors. </li></ul></ul>
  13. 13. Objectives and Goals <ul><li>Develop objectives and goals with specific timeline and clear milestones that show progress in the attainment of the goals. </li></ul><ul><li>Focus and refine your goals until they are specific, realistic and achievable. </li></ul><ul><li>For example, what is your hoped for exit, what is the end goal? </li></ul><ul><li>Goals will reveal your vision for the business, but should also include goals relating to financing. </li></ul><ul><ul><ul><li>Angel investors or venture capital? </li></ul></ul></ul><ul><ul><ul><li>Bank loans, or family and friends for funds? </li></ul></ul></ul><ul><li>Involve others in this process: founding team members, advisors, mentors and other influencers. This will increase the accuracy of your timeline and the quality and credibility of your plan. </li></ul>
  14. 14. Resource Landscape <ul><li>Your resource landscape outlines who and what you have that will help you achieve your objectives. </li></ul><ul><li>Not merely an exercise in listing financial resources. </li></ul><ul><li>Include service firm relationships, management consultants, partnerships, marketers, etc. </li></ul><ul><li>Look closely and figure out what is still missing. </li></ul><ul><li>What other resources can you recruit? </li></ul><ul><li>Do not limit yourself by only utilizing your established resources </li></ul>
  15. 15. Business Plan <ul><li>Operational statement of your strategy </li></ul><ul><li>A window by which others will view and judge your strategic plan </li></ul><ul><li>It should evolve and will require modifications and updates over time </li></ul><ul><li>Your business plan needs to include elements of the SWOT and your goals. </li></ul><ul><li>Describe how you will leverage your strengths and opportunities to minimize your weaknesses and threats. </li></ul><ul><li>Include research about market size and realistic assumptions about competitors, barriers to market penetration, realistic potential cash flows, projected sales and profits, etc. </li></ul><ul><li>Make it credible and realistic, but impressive, or all your strategizing will never come alive. </li></ul>
  16. 16. Strategic Plan Elements <ul><li>Vision & Mission (Big Picture articulated) </li></ul><ul><li>Situation Assessment (SWOT) </li></ul><ul><li>Core & Supporting Strategies with Objectives (Goals and Objectives) </li></ul><ul><li>Resource Landscaping (Who, What, Missing?) </li></ul><ul><li>Actions: What, When, Who </li></ul><ul><li>Contingency Plans </li></ul><ul><li>Then, onto the Business Plan </li></ul>
  17. 17. From R&D to Product…. <ul><li>The Business Plan </li></ul><ul><li>Company Analysis </li></ul><ul><li>Industry Analysis </li></ul><ul><li>Customer Analysis </li></ul><ul><li>Competitive Analysis </li></ul><ul><li>Market Plan </li></ul><ul><li>Operations Plan </li></ul><ul><li>Management Team </li></ul><ul><li>Financial Plan </li></ul>
  18. 18. Business Plan <ul><li>Concise explanation of the business </li></ul><ul><li>Market the equity of your company </li></ul><ul><li>Present a clear and compelling strategy/ vision </li></ul>
  19. 19. Company Analysis <ul><li>Company Profile </li></ul><ul><li>Past Accomplishments </li></ul><ul><li>Unique Qualifications </li></ul>
  20. 20. Industry Analysis <ul><li>Market Size </li></ul><ul><li>Market Trends </li></ul><ul><li>Customers </li></ul><ul><li>Competition </li></ul>
  21. 21. Customer Analysis <ul><li>Customer Identification/Definition </li></ul><ul><li>Customer Demographics </li></ul><ul><li>Multiple Customer Targets </li></ul>
  22. 22. Competitive Analysis <ul><li>Defining Competition </li></ul><ul><li>Describing Competitors </li></ul><ul><li>Competitive Advantage </li></ul>
  23. 23. Marketing Plan <ul><li>Products and/or Services </li></ul><ul><li>Promotions </li></ul><ul><li>Price </li></ul><ul><li>Place </li></ul><ul><li>Customer Retention </li></ul><ul><li>Partnerships </li></ul>
  24. 24. Operations Plan <ul><li>Everyday Processes </li></ul><ul><li>Business Milestones </li></ul><ul><ul><li>Funding </li></ul></ul><ul><ul><li>Revenue Milestones </li></ul></ul><ul><ul><li>Employee Additions </li></ul></ul>
  25. 25. Management Team <ul><li>Description of Key Team Members </li></ul><ul><li>Management Team Gaps </li></ul><ul><li>Description of Board Members/Advisors </li></ul>
  26. 26. Do you have the right team to pull it off? <ul><li>Do have the right mix of leadership and experience? </li></ul><ul><li>Do you share the same work ethic and core values? </li></ul><ul><li>Are you a “team” or a group of individuals with talents in different areas? </li></ul><ul><li>Have you surrounded yourself with good service providers and advisors? </li></ul>
  27. 27. If you plan to have partners: <ul><li>How well do you know them? </li></ul><ul><li>How well can you trust them? </li></ul><ul><li>Do you share the same work ethic and core values? </li></ul><ul><li>Do you have a clearly written agreement that spells out EVERYTHING? </li></ul><ul><ul><li>Roles & Authority </li></ul></ul><ul><ul><li>Ownership (equal partnerships are a big mistake) </li></ul></ul><ul><li>What happens if you or your partner is unable to continue in the business? </li></ul>
  28. 28. Financial Plan <ul><li>Detailed Revenue Streams </li></ul><ul><li>Pro-Forma Financial Statements </li></ul><ul><li>Validating Assumptions and Projections </li></ul><ul><li>Sources and Uses of Funds </li></ul><ul><li>Exit Strategy </li></ul>
  29. 29. You Will Need Money <ul><li>Make a realistic financial forecast </li></ul><ul><li>Minimize your need for outside funds </li></ul><ul><li>Identify sources of funds </li></ul><ul><ul><li>Personal funds and credit cards </li></ul></ul><ul><ul><li>Friends & Family </li></ul></ul><ul><ul><li>Angel Investors </li></ul></ul><ul><ul><li>Venture Capitalists </li></ul></ul><ul><ul><li>Strategic Partners </li></ul></ul><ul><ul><li>Lending Institutions </li></ul></ul>
  30. 30. You Will Need Money <ul><li>How much dilution are you willing to live with? </li></ul><ul><li>Are you ready to be under the scrutiny of outside investors? </li></ul><ul><li>When should you raise money and how do you decide how much? </li></ul>
  31. 31. Bootstrapping <ul><li>Are you resourceful enough to bootstrap successfully? </li></ul><ul><ul><li>Get your customers and suppliers to finance your business </li></ul></ul><ul><ul><li>Keep your overhead low, low, low. </li></ul></ul><ul><ul><ul><li>Learn to live with used furniture and equipment, and Spartan offices. </li></ul></ul></ul><ul><ul><ul><li>Keep an eye out for liquidation sales and other bargains. </li></ul></ul></ul><ul><ul><ul><li>Don’t buy anything that doesn’t directly lead to new sales, new product or cost savings. </li></ul></ul></ul>
  32. 32. Know your exit strategy <ul><li>Do you want to sell out, or would you prefer to keep the business in the family? </li></ul><ul><li>Can you really grow the company to a size where an IPO is feasible? </li></ul><ul><li>If you feel that you can be acquired, identify possible suitors, and focus your business toward their needs </li></ul>
  33. 33. A Thought for Always <ul><li>“ Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” </li></ul><ul><li>- Mark Twain </li></ul>
  34. 34. Thank you!