Entrepreneurship 2: Executive Summary & Business Plan

Lecture 2: Executive Summary & Business Plan Dr Bernard Leong CTO & Co-founder MPS 812 Course Taught in: 1

The Big Picture 2

Layout of Business Plan & Execu4ve Summary• Execu&ve Summary• Introduc&on -‐ Type of Business• Problem & Opportunity• Technology/Service/Product• Management Team• Business Strategy & Route to Market• Opera&ons (Timelines & Milestones)• Financials and Valua&on• Exit Strategy 3 3

The Mantra• Name of your Company/Project/Idea.• Logo and Tagline.• Mission Statement 4 4

Type of Business• What is the Industry?• Product or Service based?• How Product or Service delivers?• Who are the customers to your business? B2B, B2C? 5 5

Industry Sample Introduc2on MaterialSoX aims to be the provider in crea&ng proprietary fabrics that can withstand Materials Engineering Product harsh condi&ons. We sell our fabrics to the users in the defence and coal/mining industry. RealTime is a Singapore based company that focuses on delivering an innova&ve real &me IT based Product adver&sing solu&on to brands. Our chief consumers are brand marketers and digital marke&ng agencies. 6 6

Problem & Opportunity• You are selling the solu&on to a problem.• What is the “blue ocean” you are exploi&ng?• Is there any interest in your business lately?• Lies, Damn Lies & Sta&s&cs 7 7

Opportunity Example Descrip2on Recently, the Singapore government has allocated S$13.5B into high technology research and development and placed their eﬀorts in three industries: biomedical sciences Facts/Sta&s&cs/News (S$5.75B), renewable energies and digital media. The solu&on we proposed is in the life sciences market, where we can reduce drug development process by a half with our technology. Based on the assump&on that Singtel has sold a 100K iPhones, we es&mate each smart Es&mate phone will purchase about 5-‐10 applica&ons and spent on average S$10 on them each month. 8 8

Technology or Idea• You must make your technology or idea understandable to your audience.• For an execu4ve summary, never put too much jargon into your descrip4on.• Make comparisons on how your solu4on can increase produc4vity and eﬃciency. 9 9

Technology Example Descrip2on MaterialSoX uses an improved composite ceramic material to build ﬁbres which can eﬃciently hold vehicles on muddy grounds. Materials Our solu&on supercedes the present ones with half the cost but twice the material strength to hold vehicles above muddy grounds. Our solu&on uses a proprietary based algorithm developed to resolve blurred objects Digital Media of movies in a format 1000 &mes beher than the formats which are adopted by the industry. 10 10

Team• Diversiﬁed and Complementary Skill Sets.• Get Grey Hairs and put them in your advisory board. • Don’t give too much 4tles to your team. • Be mature about your experience. 11 11

People Example Descrip2on John Ho is the CEO of MaterialSoX. Prior to joining this company, he was the Vice President, Sales in Nippon Fabrics, a MNC Experienced specializing in fabrics. His experience with the market will help to generate sales lead for the company. Larry Pang is the founder of Project AceFire. Currently a second year undergraduate, he has spent a year working in Prof Johnston’s Young Rookie mul&media laboratory. He will act as the CTO of AceFire and will seek to ﬁnd a CEO who can mentor and guide the team. 12 12

Route to Market• Who are your customers and how do you reach them?• 80-‐20 rule on market segmenta&on?• What are the marke&ng channels on your product?• What is the market size that your product size is likely to reach? 13 13

Market Research: Customers• Who are the customers for the products or services? Iden4fy common characteris4cs & behavior.• Who and where the major purchasers for the products are in each market segment?• Indicate the rela4ve reach for customers and how they purchase the product or service, and what inﬂuences their buying decision. 14 14

Market Size & Trends• The size of the market based on market segment, demographic by sex, region or country and poten4al proﬁtability.• The poten4al annual growth for at least 3 years or the compound annual growth rate (CAGR) of the business based on industry.• Major factors aﬀec4ng market growth, for e.g. industry trends, socio-‐economic trends, popula4on changes, government regula4on. 15 15

Compe&&on & Compe&&ve Edges• Realis4c assessments of compe4tors based on strengths & weaknesses. Iden4fy disrup4ve or alterna4ve products/services.• Unique Selling Point: how does your product diﬀer from exis4ng products and what’s the addi4onal requirements.• Unfair Advantage: How do you use your strength to covet market share for your product/service? 16 16

Es4mate Market Share, Sales & Evalua4on• Determine the scalability of the product.• Iden4fy possible partnerships, clients and trends of sales per unit in the next 3 years. • Evalua4on based on proﬁtability and plan for expansions for the produc4on facility or manpower into other markets. 17 17

How to Es&mate Market Size• Start with simple, reasonable and valid assump&ons.• Approximate to the closest ﬁgure (10K, 1M)?• Prac&ce makes perfect by making es&mates to problems. 18 18

Prac&ce Problems• What is the average number of internet users are there per household in Singapore? (Hint: Think about how many people per household.)• How many hospitals are there in the first &er ci&es in China? (Hint: define the first &er ci&es -‐ how many of them, then work out how many hospitals per city on average based on a certain radius?• How many seats are there on a A380? (Think from the numbering of seats) 19 19

• How many seats are there on a A380? (Think from the numbering of seats): –Start from seat number 30-‐65 in economy class, take an average of 10 seats = 350 seats. –First Class: 4 seats per land and only 4 rows = 16 seats –Business Class: 6 seats per row, and 15 rows = 90 seats –Economy class on 2nd ﬂoor = 11 x 8 = 88 seats • Total number of seats = 544 seats• Actual number: 450-‐654 (depending on which airline). 20 20

Route to Market• Who are your customers and how do you reach them?• 80-‐20 rule on market segmenta&on?• What are the marke&ng channels on your product?• What is the market size that your product size is likely to reach? 21 21

4 Ps of Marke4ng 22 22

Business Strategies 24 24

Business Strategies• How do you generate revenues and subsequently proﬁts for your business?• What is your business model?• How are the revenue sources available for your startup?• What business strategies do you use to generate revenues? 25 25

Business Model• Business Model: the summa4on of the core business decisions & trade-‐offs employed by a company to earn a profit.• Business decisions and trade-‐ offs fall in 4 groups: –Revenue Sources –Cost Drivers –Investment Size –Cri4cal Success Factors 26 26

Revenue Sources• How many diﬀerent revenue streams will the business model generate? • What is the source of each revenue stream (sales, service fees, adver4sing, subscrip4on)?• What is the rela4ve size & importance of each revenue stream?• How quickly is each revenue stream likely to grow? 27 27

Case Study: Travel Search Engine Consumers Travel Agent Flights -‐ Air Tickets Revenue Stream: Travel Agent charges a referral fee, an admin fee from the consumers. 28 28

Case Study: Travel Search Engine Consumers Travel Search Engine Flights -‐ Air Tickets Revenue Stream: Online adver&sing which replaces the consumer’s admin fee, and possible referral fee. 29 29

Business Strategy Example Descrip2on MaterialSoX engages directly with known industry partners in the fabric industry. The company does not deal directly with customer base but sells via resellers or fabric Partnerships/Licencing distributors. One alterna&ve strategy to generate revenues is done via licensing of the proprietary technology to other fabric producing companies. Real&me oﬀers the customers a free beta version of the soXware with limited features so that they can en&ce them to buy the Freemium Model premium version (with addi&onal features) of the soXware. The company is currently in nego&a&ons on strategic rela&ons with diﬀerent gaming companies. 30 30

Risks & Barriers to Entry• Who are your compe&tors?• How do you prevent your compe&tors trumping you?• What are the problems you face against them?• Don’t assume that you are the only one or have indefensible patents. 31 31

Barriers to Entry/ Example Descrip2on Compe2tors MaterialSoX faces the risk of a saturated and tradi&onal ceramics industry mindset not to adopt new technologies. To mi&gate the risk, Tradi&onal Industry Mindset the company will launch marke&ng campaigns and present the product in various conferences to provide industry players an awareness of the product. The compression format of RealTime soXware cannot be replicated based on the proprietary algorithm used in performing the Unique Selling Point compression. We are in the process of paten&ng the product to act as a deterrence against our compe&tors. 32 32

SWOT Analysis 33 33

Financials• How much do you need?• How much equity you want to give?• How do you raise that amount of money?• Can you bootstrap without raising funds? 35 35

Investment Size• How much cash is required to launch the business model?• How much working capital is required to sustain the business?• What are the 4mings of these cash needs?• Will the cash expended produce a sustainable and proﬁtable business en4ty? 36 36

Financials Example Descrip2on MaterialSoX seeks US$300K as an ini&al investment to build a proof of concept and will raise US$2M to bring the prototype to market. Fundraising The company generates revenues via sales in producing fabric for the defence and coal/ mining industries. Real&me generates revenues via the number of purchases made on the premium version and online adver&sing with the huge traﬃc Bootstrapping generated by visits from the site. The company seeks to bootstrap via hiqng 1M sales target within two years. 38 38

Who do you raise funds from?• Friends, Family and Fools.• Business Angels.• Super Angels*• Venture Capitalists.• Government Institutions.• Foundations and Agencies.• Private Equity Firms• Banks 40 40

Source: Meng Weng Wong and published on SGEntrepreneurs.comhhp://sgentrepreneurs.com/dummys-‐guide/2009/03/05/a-‐map-‐on-‐venture-‐capital-‐in-‐singapore/ 42 42

Exit Strategy• What happens to the company in 3 to 5 years 4me?• Possible Exits: – Ini4al Public Oﬀerings (IPO) – Trade sale/Merger/Management Buyout – Family/Company Succession – Wind it Down!• Exit Strategy depends on industry that the start-‐up is in. 43 43

Exit Strategy Example Descrip2on MaterialSoX hopes to exit in 3 years with a proﬁt margin of 20M via a trade sale to a Trade Sale/Buyout larger player within the industry, for example, Cepheus Ceramics. RealTime seeks to IPO in 3 years as an exit IPO strategy. 44 44

References• McKinsey & Co., “Starting Up”• Robert et al, “New Business Ventures & the Entrepreneur”• Kotler et al, “Marketing Management: An Asian Perspective”• Megginson & Byrd, “Small Business Management”• Timmons & Spinelli, “New Venture Creation”• Thompson, Strickland & Gamble, “Crafting & Executing Strategy” 45

http://sgentrepreneurs.com	1173
http://sgentrepreneurs.com	1173
http://www.bernardleong.com	871
http://fbanha.blogs.sapo.pt	485
http://franciscobanha.com	5
http://translate.googleusercontent.com	4
http://www.google.com	1
https://apps.akeles.com	1
http://paper.li	1
http://s.nsdsvc.com	1

Entrepreneurship 2: Executive Summary & Business Plan

by Bernard Leong on Aug 05, 2011

Accessibility

Categories

Tags

Upload Details

Usage Rights

10 Embeds 3,715

Statistics

Entrepreneurship 2: Executive Summary & Business Plan — Presentation Transcript