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42629 lecture 6 pt1

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Writing a business plan1

Writing a business plan1

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  • 1. Writing a Business PlanTim C. McAloonetmca@dtu.dkWith major contributions from: Internet sources, McKinsey & Venture Cup Unless otherwise stated, this material is under a Creative Commons 3.0 Attribution–Share-Alike licence and can be freely modified, used and redistributed but only under the same licence and if including the following statement:“Original material by Tim C. McAloone for course 42629 – Innovation and Product DevelopmentDepartment of Mechanical Engineering, The Technical University of Denmark”
  • 2. 2 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 3. Business plans – prior experience• How many of you have or have had your own business?• How many of you plan to have your own business in the next year?• How many of you plan to have your own business in the next two years?• How many of you plan to have your own business in the next five years?3 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 4. Key objectives of this lecture• What are the elements of a promising business idea• How to make your business idea irresistible• What to keep in mind when presenting your business in a plan• How to analyse your market and the competition• How to choose your target market• How to determine your market strategy• What a business system is, and what to look out for when designing one• What to include in your financial planning• How to consider and represent risks Main focus on new startups, but most of principles are valid for established business4 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 5. Today’s agenda• How to identify a business idea – concept and presentation• Developing the business plan 1. Executive summary 2. Product/service concept 3. Marketing strategy 4. Business model/system 5. Business case and risks 6. Implementation plan & Checklists• Video case exercise5 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 6. Today’s agenda• How to identify a business idea – concept and presentation• Developing the business plan 1. Executive summary 2. Product/service concept 3. Marketing strategy 4. Business model/system 5. Business case and risks 6. Implementation plan & Checklists• Video case exercise6 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 7. Elements of a promising idea7 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 8. Clear Customer Value • The key to success in the marketplace is satisfied customers, not great products • The product developer’s view: • Our device can perform 200 operations per minute • Our new device has 25% fewer parts • The innovator’s view: • Our new device will save the customer a quarter of the time and therefore 20% of the costs • Our new solution can boost productivity up to 25% • The product is merely a means of delivering value to the customer • The customer value expresses what is novel or better about the idea, compared to competing offers8 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 9. [Apple marketing material]9 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 10. Sufficient degree of innovation • Business ideas can be classified along the two dimensions products/services and business system • In each of these categories, you can develop something new or capitalise on something that already exists [McKinsey]10 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 11. Sufficient degree of innovation • Business ideas can be classified along the two dimensions products/services and business system • In each of these categories, you can develop something new or capitalise on something that already exists [McKinsey]11 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 12. Sufficient degree of innovation • Business ideas can be classified along the two dimensions products/services and business system • In each of these categories, you can develop something new or capitalise on something that already exists [McKinsey]12 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 13. Sufficient degree of innovation • Business ideas can be classified along the two dimensions products/services and business system • In each of these categories, you can develop something new or capitalise on something that already exists [McKinsey]13 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 14. Feasibility and profitability • “Back of the envelope” financial and resource assessment • Traditionally, profit calculations for a business are made as follows: • A company buys material or services, thereby incurring costs • It also sells products or services to customers, thereby earning revenues • Many new businesses do not, however, function according to this model, e.g.: • McDonalds, 7-Eleven • • •14 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 15. Elements of a promising idea15 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 16. Key questions – Business idea BUZZ GROUPS • Discuss for 5 minutes with the person next to you, what key questions you should have the answers for, if you are to successfully present and promote a new business idea.16 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 17. Today’s agenda• How to identify a business idea – concept and presentation• Developing the business plan 1. Executive summary 2. Product/service concept 3. Marketing strategy 4. Business model/system 5. Business case and risks 6. Implementation plan & Checklists• Video case exercise17 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 18. The good business planFive core qualities: • A good business plan impresses with its clarity • Concise, answers all questions • A good business plan convinces with its objectivity • Marketing jargon alone will irritate more than appeal • Don’t be too critical of own project though • A good business plan can be understood by the technical layman • Practice on your granny! • Use sketches, photos, mock-ups • A good business plan is written in one consistent style • Especially important if you are more than one person writing • A good business plan is your business card • Pay attention to detail18 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 19. Today’s agenda• How to identify a business idea – concept and presentation• Developing the business plan 1. Executive summary 2. Product/service concept 3. Marketing strategy 4. Business model/system 5. Business case and risks 6. Implementation plan & Checklists• Video case exercise19 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 20. Executive summary• Aim: To pique the interest of decision-makers and investors – Brief overview of the important aspects – Highlight the product/service, customer value, relevant markets, management expertise, financing requirements, ROI• Clear objective and concise description of business idea – Remember to describe your key audience• The executive summary should be a standalone document – It’s not just the intro or the abstract20 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 21. Today’s agenda• How to identify a business idea – concept and presentation• Developing the business plan 1. Executive summary 2. Product/service concept 3. Marketing strategy 4. Business model/system 5. Business case and risks 6. Implementation plan & Checklists• Video case exercise21 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark
  • 22. Product/Service concept• Describe the concept – This is the core of the business plan – describe it simply and crisply• Customer value – Must be better than current market offerings – The function of the product/service and the value transferred to the customer must be in focus – Define the business area in detail – and if your innovation is a range of products/services, define their uniqueness wrt. each other• Development status of your product/service – Include photos or sketches – A prototype would be even better – Describe patents and protection of your concept22 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012 Department of Mechanical Engineering, The Technical University of Denmark

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