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Business planning for startups

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A presentation on how to do better planning for startups.

A presentation on how to do better planning for startups.

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  • This is a summary of a 2-day course we do called launch.
  • Just a very quick overview of my journey and how I got here. My journey to entrepreneurship began with wanting to chase a little bit of Olympic glory. Rowing got injured I couldn’t row any more so I started a rowing business. Where I had a factory in Germinston making carbon kevlar rowing boats. The same stuff they make rocketship and lance Armstrong’s bike out of. But soon realized that chasing Olympic glory was a whole lot more fun than building rowing boats. So I quit the business sold out to my partner and decided to get into entrepreneurship education. Starting off lecturing at the university like UJ and WBS. I soon realised what they were teaching entrepreneurs really wasn’t that helpful. So I decided to study the problem doing my masters and now my PhD in predictive models study what really do you need to do to make a business successful. And since then have helped literally hundreds of entrepreneurs get there businesses of the ground.
  • I am going to start my talk right at the beginning with Jean Bastist say the French economist that coined the world entrepreneur which means to undertake.
  • Now George Bush in one of his Bushisms said that, “The problem with the French economy is they have no word for entrepreneur.” Apart from the being totally ridiculous statement as entrepreneur is a French word. Mr. Bush is right in his proposition that entrepreneurs create jobs and wealth and solve important problems in society. Sadly a lot of entrepreneurs struggle.
  • This slide taken from the 2011 gem report and StatsSA says there are about 2,5 million people are all jacked up stary eyed ready to take on the world and are in the process of setting up a business. But unfort, 2,39 million people have subscribed to the notion of if life gives you lemons, say damit and bail and are in the process of closing down the business. So there are a lot of people trying to start business and not succeeding, which is a problem.
  • Research models were you can break up businesses into different groups
  • This is one thing were the idea of business plan as spread all over. Of the studies that have looked at business plan nearly all of them show that business plans don’t have an impact on performance, or worse they actually hinder performance. And there are very real reasons why spending a week or 2 writing a business plan is a bad idea.
  • Also, when you look at the best.
  • Neither did the founder of Intel corporation the largest manufacture of micro-processors build a
  • Baby in topless bar. Julius Malema in builders warehouse.
  • Company White water rafting, survival training, fishing & canoeing. Fine in Summer, but in winter when it was dark and cold – tourist wanted as much to do with him as, a modelling agent would want to Quaizmodo. So, he travelled the world and thought that he would hold a ice art exhibition. However, day before the exhibition the tempraturesunually rose and all the art melting. Being a quick witted fellow. Bergvist decided to hold a seminar on how to make ice art. What he found is that a number of the guest started making igloos and talking about wanting to spend a night in an igloo. So, he chucked on the ice scuplture idea as so the ice hotel was born. 33,000 vistors now visit the Ice Hotel every year and 11,000 guest stay over night making Bergvist very successful in the process.
  • Evan Williams is an entrepreneur that founded 2 of the top 10 internet sites. Blogger and Twitter. What is interesting about both start ups is that his initial plan or “guess” were different to the final business. Pyra Labs which become blogger was initially a project management software company, a note taking feature of the software was spun off at blogger. Odeo was a podcast company that he realised as going no where, his guess was wrong, he through decided do a brainstorm session that resulted in twitter.
  • Plan -> Action -> Learn -> Adapt -> Results Make Plans -> Take Action -> Get Feedback -> Record Results 1) Proof of Concept 2) Minimum Viable Business Model 3) Business Model Optimization 4) Early Growth 5) Late Growth
  • And at each of those stages you have prove that your business model makes sense.
  • What is pre-mature scaling. No it is not scaling the fish before it’s dead, or getting on the bathroom scale before it is ready for you.
  • It is when you start growing a business before you have found product-market fit.
  • One of the best examples of pre-mature scaling was webvan.
  • A recent study done last year by a group of researchers in silicon valley 3,200 internet start ups found that a full 74% of internet start ups failed because they tried to grow the business. Before they had found product market fit.
  • They also found that business that found product-market fit grow at about 20 times faster than startups that scale to early. The bottom line is you don’t want to start making moves on that girl until you know she is very interested and will be willing to stick around.
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is
  • Have recycling product 3 billion francs with one product line
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Lets turn it into a tool. Very quickly you map out a business model. What is powerful is Channels - Only through there own channels. Failed business model
  • Failed business model It was the same product but one the business model failed. The other one it succeeded.

Transcript

  • 1. The Startup Business Plan Model
  • 2. JEAN-BATISTE SAY paulshawsmithscientific business strategy
  • 3. GEORGE BUSH paulshawsmithscientific business strategy
  • 4. 1,04 m own a business more than 3.5 yrs old 2,5 m are setting up a business 44,4 m are not entrepreneurial Source: GEM (2011) and StatsSA (2010) 2,39 m discontinue a business 1,94 m own a business less than 3.5 yrs old
  • 5. most startups fail
  • 6. but there is a small group of startups
  • 7. where almost everyone succeeds
  • 8. most of the difference between these startups vs.
  • 9. can be explained by decisions FEW
  • 10. 1 Burn the business plan
  • 11. Source: Lange, Mollov, Pearlmutter, Singh and Bygrave (2007) “new ventures launched with formal written business plans do not outperform ones launched without them.”
  • 12. Business Plan? Source: Bhide (2000) 21% 79% Yes! No!
  • 13. No!
  • 14. No!
  • 15. No! No! No!
  • 16. Doh!?!
  • 17. 2 Be flexible
  • 18. AMAR BHIDEWhat is a business plan? WAGs
  • 19. Guess? Guess? Guess? Guess? Guess? Guess? Guess?Guess? Guess?
  • 20. Did you change or adapt your original idea? Source: Bhide (2000) 33% 66% No! Yes!
  • 21. Great Idea
  • 22. Better Idea Learn
  • 23. Better Idea Learn Learn
  • 24. Better Ide Learn Learn Learn
  • 25. Success Learn Learn Learn Learn
  • 26. Learn
  • 27. Learn Learn
  • 28. Learn Learn Learn
  • 29. Learn Learn Learn Learn
  • 30. Learn Learn Learn Learn Success
  • 31. Yngve Bergvist
  • 32. Evan Williams
  • 33. 3 Test your plan
  • 34. Guess TestLearn
  • 35. Guess? Guess? Test Guess? Test Test Guess? Test Guess? Test Guess? Test Guess? Test Guess? Test Guess? Test
  • 36. When do you know to stop searching?
  • 37. 4 Don’t grow until you hit Product-market fit
  • 38. Pre-mature Scaling
  • 39. Idea (Theory) Skip the fact finding Grow the business No Facts
  • 40. paulshawsmithscientific business strategy
  • 41. paulshawsmithscientific business strategy
  • 42. of high growth internet start ups fail due to premature scaling. Source: Start Up Genome Report(2011)
  • 43. times faster than startups that scale prematurely Startups that scale properly grow about Source: Start Up Genome Report(2011)
  • 44. Learn Learn Learn Learn Learn Learn Learn Learn Plan A Plan A1 Plan A2 1 2 Plan A3Plan BPlan B1 3 Plan B4Plan B3Plan B2 45 6 7 8 Use the business model canvas
  • 45. Alex Osterwalder
  • 46. How business model generation became a bestseller
  • 47. How Xerox innovated their business model
  • 48. Apple iPod + iTunes
  • 49. Product Innovation Business Model Innovation
  • 50. The could copy competitors They invented new business models
  • 51. Can’t prove in new BM In advance Had to test their business models in the real world
  • 52. Customer Segments
  • 53. Value Proposition
  • 54. Distribution Channels
  • 55. Customer Relationships
  • 56. Revenue Streams
  • 57. Key Resources
  • 58. Key Activities
  • 59. Key Partnerships
  • 60. Cost Structure
  • 61. Marketing & Sales
  • 62. Marketing & Sales
  • 63. Marketing & Sales
  • 64. Marketing & Sales
  • 65. How much did the price of coffee consumption change in Swiss households over the last couple of years?
  • 66. 800% increase due to Nespresso
  • 67. What was Nesspro’s business model?
  • 68. Exercise: Create a Nespresso’s business model * * * * In groups of 3 – 6: You are the management of the Nespresso division Which customer segments will you target? How will you distribute? How will you sell & market? Who will you partner with? What are your key resources? * Time: 10 minutes * Design your business model for the Nespresso system * What are your key activities? What are your revenues? * What are your costs?
  • 69. Households (espresso fans)
  • 70. Households (espresso fans)
  • 71. Households (espresso fans)
  • 72. Households (espresso fans)
  • 73. Households (espresso fans)
  • 74. Households (espresso fans)
  • 75. Households (espresso fans)
  • 76. Households (espresso fans)
  • 77. Households (espresso fans) Nespresso.com
  • 78. Households (espresso fans) Nespresso.com
  • 79. Households (espresso fans) Nespresso.com
  • 80. Households (espresso fans) Nespresso.com
  • 81. Households (espresso fans) Nespresso.com
  • 82. Households (espresso fans) Nespresso.com
  • 83. Households (espresso fans) Nespresso.com
  • 84. Households (espresso fans) Nespresso.com
  • 85. Households (espresso fans) Nespresso.com
  • 86. Households (espresso fans) Nespresso.com
  • 87. Households (espresso fans) Nespresso.com
  • 88. Households (espresso fans) Nespresso.com
  • 89. Households (espresso fans) B2c distribution Nespresso.com
  • 90. Households (espresso fans) B2c distribution Nespresso.com
  • 91. JV with machine Manufactures
  • 92. For more on starting and growing businesses visit: www.startupcherry.com www.facebook.com/startupcherry www.twitter.com/startupcherry