• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Idea To Business
 

Idea To Business

on

  • 3,193 views

 

Statistics

Views

Total Views
3,193
Views on SlideShare
3,180
Embed Views
13

Actions

Likes
5
Downloads
210
Comments
1

3 Embeds 13

http://mpowered.web.itd.umich.edu 9
http://mpowered.studentorgs.umich.edu 2
http://www.slideshare.net 2

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

11 of 1 previous next

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
  • ujk
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Idea To Business Idea To Business Presentation Transcript

    • Idea to Business (Hint: it’s a journey not a task) Process Overview TL Faley, PhD Managing Director, ZLI April 3, 2008
    • Reality? Idea Business Plan Venture Financing Successful Company … And the steps you skip will destroy any chance of success WRONG
    • Non-Linear, Interdependent, Process Phases
      • Phase I: Business Design
        • Identifying opportunities and shaping business concepts
      • Phase II: Feasibility analysis and assessment
      • Phase III: Creating your business plan
      • Phase IV: Launching your business
        • Aligning the necessary resources (including money)
      • Phase V: Growing your business
      • Phase VI: Exiting your business
        • From succession planning to IPOs
    • Short Overview Articles
      • “ The Process of Business Creation ,” TL Faley, Inc. Magazine (on-line), August 23, 2005. http://www.inc.com/resources/startup/articles/20050801/process.html
      • “ Is your Business Idea Feasible?,” TL Faley, Inc. Magazine (on-line), October 4, 2005. http://www.inc.com/resources/startup/articles/20051001/analysis.html
      • “ Creating Your Business Plan,” TL Faley & PS Kirsch, Inc. Magazine (on-line), November 3, 2005. http://www.inc.com/resources/startup/articles/20051101/bplans.html
        • Business Plan Guide:
        • http://www.ey.com/global/Content.nsf/UK/_FG_-_Library_-_Guide_to_producing_a_business_plan
      • “ Growing Your New Venture,” TL Faley, Inc. Magazine (on-line), February 21, 206. http://www.inc.com/resources/startup/articles/20060201/venture.html
      • “ Making Your Exit,” TL Faley & TS Porter, Inc. Magazine (on-line), March 15, 2005. http://www.inc.com/resources/startup/articles/20060301/tfaley.html
    • A Staged, Gated Process to Plan Innovation Source Business Hypothesis Business Hypothesis Business Feasibility Study Business Feasibility Study Business Plan Other entrants Other entrants Hypothesis strong enough to merit deeper investigation? Business merit planning/launching? Opportunity What is the product or service? Who are your users? Why do they buy? How does your business make money? Customers Market Industry Company Team Full Plan and Investor Pitch Assessment Integration
    • Levels of Thinking/Planning
      • Business Design – Vector Direction
        • Structured, Detailed, but Qualitative
      • Assessment - Vector Dimension
        • Quantitative
      • Business Plan
        • Operating document
        • Specific to You, Today
    • ZLI Programs that can help
      • Dare-to-Dream
      • Michigan Business Planning
      • Mingle ‘n Match
      • Others
      • Details:
        • http://www.zli.bus.umich.edu/events_programs/
    • Dare to Dream encourages
      • ..the thoughtful development of student-led businesses
      • AND
      • ..the development of student entrepreneurial skills and understanding
    • ZLI Activities for 2007-08 Frankel Commercialization Fund Wolverine Venture Fund Michigan Business Challenge & Intercollegiate Competitions Entrepreneurial MAP domestic & international opportunities Marcel Gani Internship Program (includes self-hosted internships) Williamson CoE/RSB E-education Initiative Entrepreneurial Studies Courses Action-based Learning New Business Development Seminars ZLI Office Hours, Coaching and Executive Consulting Counseling Michigan Growth Capital Symposium Private Equity Conference Entrepalooza: Exploration of entrepreneurship across multiple industries and business stages Symposia/Events Zell and Mondry Entrepreneurial Scholarships Mingle ‘n’ Match Academics
    • Where you are
      • Some of you have identified a compelling unmet market need or emerging market
      • Some of you have identified a product that is the embodiment of some interesting technology or other innovation source
      • A rare few of you have product concepts targeted at specific users
    • Where you are not
      • None of you have a sustainable business design
      • So let’s first talk about how you get to a complete business design
    • Innovative New Business Design Process Pyramid Business Environmental Influences Persona (target market segment) Product Idea (Starter Concept) Community Enabler (ex. technology) Solution Positioning Statement Bus Hypothesis Product Offering Innovation Source(s) Building the Iceberg from the bottom up
      • Business Hypothesis
      • What is your product/service?
      • (What does your company do?)
      • Who are your customers?
      • Why will they use your product?
      • (Value proposition to the user?)
      • How does your company make money?
      • (Company’s value capture mechanism?)
    • Drucker’s 7 Sources on Innovation
      • Unexpected Occurrences
      • Incongruities
      • Process Needs
      • Industry and Market Changes
      • Demographic Changes
      • Changes in Perception
      • New Knowledge
    • Business Hypothesis: Core Elements of the Business Model
      • Core Business Elements:
      • Your Business Hypothesis
      • What is your product/service?
      • Who are your customers?
      • Why do they use your product?
      • How does your company make
      • money?
      Marketing Strategy Distribution Strategy Product Strategy (leading edge, service, low cost?) Business Partnerships/Alliances Cost Structures Core competencies/capabilities
    • Outputs of each portion
      • Business Formulation :
      • Explicitly determine Businesses’ Product Offering
        • Determine precisely what the business does
      • Determine Business’ Value Proposition
        • Both value creation & capture.
      • Product Concept Creation :
      • Determine core enabler benefits
      • Product concept brainstorming
      • Market segmentation
      • (persona development for new markets)
      • Determine Product Benefit / Customer Need Match(es)
      Timing Identify the Innovation source that enables the opportunity now Solution Positioning Statement BUSINESS HYPOTHESIS What is the product or service offered? (exactly what does the company do/provide?) Who are your users? Why will they use your product? How does your business make money? POSITIONING STATEMENT For ... (target segment) The ... (product/brand) Is... (most important benefits) Because... (reason why, underlying enabler) WHY NOW? Opportunity Drivers … which 7 sources of innovation Persona (target market segment) Product Idea (starter concepts) Community Enabler (ex. technology) Business Environmental Influences Bus Hypothesis Product Offering Innovation Source(s)
    • Take an initial guess at a business hypothesis Business Hypothesis Influence Diagram Business Positioning Assessment Product Offering
      • Working through the business environmental influences
      • Finding the Path to Commercialization
    • Business Hypothesis Elements
      • What precisely is your product/service?
        • What precisely does the company do?
      • Who are your customers?
        • What is your target persona? (Need-based market segment?)
      • Why do they use your product?
        • What Value do you create/problem do you solve for the user?
      • How does your company make money?
        • Value capture mechanism
    • What is your product or service?
      • What specifically does your company do?
      Distribution Sales Marketing Mfg Product Design Technology Raw Materials
    • Less is more
      • “ I have often said there are three types of business : making stuff, selling stuff, and servicing stuff . The usefulness of this for a startup is that too many business plans attempt to be in two or more different sorts of businesses... Being good at one thing is tough enough. Being good at two or more is even tougher! ”
      • --Charles Fry, serial entrepreneur
    • How do you make money?
      • Product retail sales: using value chain  HP
      • Product internet sales: direct to customer  Dell
      • B2B: commercial purchase on terms  Xerox, BASF
      • Advertising: provide ad space  Yahoo, ABC
      • Licensing: per unit revenue, payable  IBM, universities
      • Consulting: fee for service or impact  McKinsey
      • Services: per unit charges  H&R Block
      • Transaction fees: per activity  eBay
      • Subscription: content over time  Consumer Reports
      • Affiliate: referrals and partnerships  Amazon
    • Refining the top of the Pyramid Business Environmental Influences Bus Hypothesis Product Offering
      • Business Formulation :
      • Explicitly determine Businesses’ Product Offering
        • Determine precisely what the business does
      • Determine Business’ Value Proposition
        • Both value creation & capture.
      • Product Concept Creation :
      • Determine core enabler benefits
      • Product concept brainstorming
      • Market segmentation
      • (persona development for new markets)
      • Determine Product Benefit / Customer Need Match(es)
      Timing Identify the Innovation source that enables the opportunity now Solution Positioning Statement BUSINESS HYPOTHESIS What is the product or service offered? (exactly what does the company do/provide?) Who are your users? Why will they use your product? How does your business make money? POSITIONING STATEMENT For ... (target segment) The ... (product/brand) Is... (most important benefits) Because... (reason why, underlying enabler) WHY NOW? Opportunity Drivers … which 7 sources of innovation Persona (target market segment) Product Idea (starter concepts) Community Enabler (ex. technology) Innovation Source(s)
    • Business Positioning Evaluation Loop Business Hypothesis Influence Diagram Business Positioning Assessment Product Offering
    • Business Positioning Evaluation Loop Business Hypothesis Influence Diagram Business Positioning Assessment Product Offering
    • Where
      • Where is your proposed company in the value chain?
    • Value Chain: Material, Money, and information flow Design Manufacture Sales Consumer Distribution
    • Value Chains can be complicated…. The Commercialization of drugs
    • Value Chain Assessment
      • Value ($-flow) versus Supply Chain (material-flow)
        • ID Who has the Value Capture Power now?
      • Value Creation through:
        • Become a New Entrant (competitor of existing products; cheaper, better, faster)
        • Create a Substitute (alternative to existing solutions—different way of doing something; search engine v. yellow pages)
        • Aggregation/Consolidation
          • Industry consolidation to shift 5-forces equilibrium
        • Collapsing the Value Chain
          • Eliminating links out of the chain (ala Dell)
        • Addressing an emerging market (see innovation sources)
        • Other?
          • Exploit new technology (ex internet) to get economy of scale of services (ex: call centers)
    • What?
      • What are does your company really have?
      • What is the driving need/desire of the proposed buyer ?
      • What complementary assess (CA) does your company need to deliver its product that fulfills this need?
      • What complementary benefits (CB) does the company’s product also need to deliver in order to satisfy the complimentary needs of the customer?
    • Teece’s Framework: Determining the optimal value-capture vehicle for your Intellectual Asset Niche Business Potential IAs have no capturable value Strong New Business Potential License to or Partner with CA holder Intellectual Asset Position is: Strong Complementary Assets are: Weak Generic Specialized If control the IA and the CAs, then you have the potential to create an extremely well-positioned business. Note: This assessment assumes that you are the IA holder, but do not currently have the complimentary assets necessary to fully commercialize your IA. Ref: David Teece, 1986
    • Intellectual Assets (IAs)
      • Patent Basics
        • Rights
          • Prevent others from making, using, or selling the subject matter of the patent
        • Duration:
          • 20 years from date of application
        • Three criteria
          • New (novel)
          • Non-obvious (to someone skilled in the art)
          • Useful (utility)
    • Intellectual Assets continued
      • Copyright Basics
        • Rights
          • Reproduction
          • Creation of derivative works
          • Distribution to public
          • Public performance or display
        • Duration
          • Life of author plus 70 years
          • “ Work for Hire”
            • 95 years from first publication
            • or 120 years from creation
        • Subject Matter
          • Works of authorship
          • Fixed in any tangible medium
          • Expression, not concepts
    • Complimentary Assets
      • All those things necessary to transform the assets you have into the products/services your customers desire (and delivering it to them).
      • Advantaged Complimentary Assets:
        • Physical and intellectual assets:
          • Brand name
          • Manufacturing Plants
          • Distribution channels
          • Customer relationships
          • IP that others may need (blocking their ‘freedom to practice’)
          • Resources (ex: deep financial pockets)
        • Capabilities:
          • Manufacturing or design capabilities
          • Sales and service expertise
    • How?
      • How does the company plan on acquire/gaining access to its necessary complimentary assets?
        • Create/Develop/Reproduce?
        • Buy?
        • Rent/Lease?
        • Borrow?
      • How will the company pay for these?
        • Cash?
        • Equity?
        • % of Future Sales?
    • Business Positioning Evaluation Loop Business Hypothesis Influence Diagram Business Positioning Assessment Product Offering
    • Who?
      • Who holds the value capture power?
        • Porter’s Five Forces
        • Use Company Operating Margins for companies across the chain as a proxy for relative value capture strength
          • www.hoovers.com
    • Porter’s 5 Forces: Industry Analysis Industry Competitiveness Threat of New Entrants (Barriers to Entry) Bargaining Power Of Suppliers Threat of Substitute Products/Services Bargaining Power Of Buyers
    • Porter’s 5 Forces: Industry Value-chain Analysis Industry Competi- tiveness Threat of New Entrants Bargaining Power Of RM Suppliers Threat of Substitute Products/Services Bargaining Power Of End users Industry Competi- tiveness Industry Competi- tiveness Threat of New Entrants Threat of New Entrants Threat of Substitute Products/Services Threat of Substitute Products/Services
      • Who hold the “value capture” power?
      Can you Shift the equilibrium of the Industry’s Balance of Power?
    • Business Positioning Evaluation Loop Business Hypothesis Influence Diagram Business Positioning Assessment Product Offering
    • Innovative New Business Design Process Pyramid Business Environmental Influences Persona (target market segment) Product Idea (Starter Concept) Community Enabler (ex. technology) Solution (Positioning Statement) Bus Hypothesis Product Offering Innovation Source(s) What’s the difference?
    • Solution to Product Offering
      • Company Product Offering as a subset of “Solution”
        • Example: Users need faster processing computer
        • “ Solution” is a new, advanced processing chip
        • Intel/AMD own (expensive/specialized) complementary assets
        • Your Company Offering becomes a chip design and you partner with Intel/AMD/TSMC for mfg.
      • Company Product Offering as a superset of “Solution”
        • Example: Users need information on joint replacement therapy
        • “ Solution” is content/information
        • Efficient Channel to deliver content to user does not exist
        • Complimentary assets to create channel are cheap/generic
        • Your Company Offering becomes a web portal for joint replacement therapy information
    • Business Positioning Evaluation Loop Business Hypothesis Influence Diagram Business Positioning Assessment Product Offering
    • The Innovation Process Pyramid Business Environmental Influences Persona Solution idea, Starter concept Community Enabler (ex. Technology) Bus Hypothesis Product Offering First Down, then up.
      • Business Hypothesis
      • What is your product/service?
      • (What does your company do?)
      • Who are your customers?
      • Why will they use your product?
      • (Value proposition to the user?)
      • How does your company make money?
      • (Company’s value capture mechanism?)
      Solution (Positioning Statement) Innovation Source(s)
    • Talk to people!!
      • Especially potential customers!!!
      • Let them help you design the future
      • Be aware: People adopt to their surroundings -- accept what currently is
      • Need to “read between the lines”
        • The Why Chain
        • LOCA (Latent Observations / Constant Annoyances)
    • Outputs of each portion
      • Business Formulation :
      • Explicitly determine Businesses’ Product Offering
        • Determine precisely what the business does
      • Determine Business’ Value Proposition
        • Both value creation & capture.
      • Product Concept Creation :
      • Determine core enabler benefits
      • Product concept brainstorming
      • Market segmentation
      • (persona development for new markets)
      • Determine Product Benefit / Customer Need Match(es)
      Timing Identify the Innovation source that enables the opportunity now Solution Positioning Statement BUSINESS HYPOTHESIS What is the product or service offered? (exactly what does the company do/provide?) Who are your users? Why will they use your product? How does your business make money? POSITIONING STATEMENT For ... (target segment) The ... (product/brand) Is... (most important benefits) Because... (reason why, underlying enabler) WHY NOW? Opportunity Drivers … which 7 sources of innovation Persona (target market segment) Product Idea (starter concepts) Community Enabler (ex. technology) Business Environmental Influences Bus Hypothesis Product Offering Innovation Source(s)
    • Developing a Feasibility Study More Detail – More Quantitative COPYRIGHT © 2006 THE REGENTS OF THE UNIVERSITY OF MICHIGAN ALL RIGHTS RESERVED
    • Feasibility Study
      • Introduction
      • The Micro-Market
      • The Macro-Market
      • The Macro-Industry
      • The Firm (a.k.a. Micro-Industry)
      • Team: Mission, Aspirations, and Risks
      • Team: Can you execute?
      • Team: Connectedness
      • Summary
    • Business Assessment Framework TEAM DOMAIN Connectedness up, down, and across value chain Ability to execute CSFs Missions, aspirations, Propensity for risk Market Domain Industry Domain Macro-level Micro-level REF: The New Business Road Test , John Mullins © 2003. Market Attractiveness Industry Attractiveness Target segments benefits and attractiveness Sustainable advantage Large/growing? Move from Initial persona to other personas? Personas Porter’s 5 Forces Value-capture position (IA vs CA) (Teece, 1986) Product Differentiation (Intellectual Assets)
    • Opportunity  Assessment Building the foundation for the assessment phase The Business Hypothesis Market Domain Industry Domain Macro-level Micro-level Market Attractiveness Industry Attractiveness Target segments benefits and attractiveness Sustainable advantage Business Product Offering Intermediate Outcomes & Tools Opportunity Phase Assessment Phase Effort Community Map (user needs/desires & “Players”) Technology Map (benefits of existing, complimentary, future) Personas Solution (“starter”) Concepts Solution Positioning Statement Business Environmental Influences
    • Introduction
      • Use this opportunity to set up your audience
      • One or two paragraphs
        • Clear elaboration of the Core Concept
      • Should clearly answer
        • The hypothesis, model are you testing, e.g.
          • Integrated manufacturer
          • Consulting firm
          • Design and IP firm
      • Be clear about the product or services your company sells
    • Definition of Market Segment
      • Set of potential, actual customers
      • for
      • Your set of products & services
      • who
      • Have a common set of needs, wants
      • and
      • Refer to one another when making buying decisions
    • Micro-Market Pain
      • What customer pain will you resolve?
      • What are potential customers doing now?
        • A current solution does exist
      • Does your product offer clear and compelling benefits?
      • In the customers’ minds, are these benefits superior to what’s currently offered?
        • Is this better, faster, cheaper, prettier, etc.
      • Why now?
        • Connect timeliness of solution to the market pain
    • Micro-Market Pain
      • Are you offering a solution at a price your customers will pay?
        • What evidence do you have?
      • Remember
      • The market need will fuel the business growth and value
        • The product fills a need
        • Products, companies do not create a market
      Know the difference between customers and users!!
    • Relationship of Market Terms
      • Total Addressable Market
        • All microprocessors – or –
      • Target Market
        • Electronic device manufacturers – or –
      • Market Segment
        • Cell phone manufacturer – or –
      • Ideal or First Customer
        • Nokia or Motorola
      • Size: Now & Future
    • Porter’s 5 Forces: Industry Analysis Industry Competitiveness Threat of New Entrants (Barriers to Entry) Bargaining Power Of Suppliers Threat of Substitute Products/Services Bargaining Power Of Buyers
    • Macro-Industry: Porter’s 5 Forces
      • What is the threat of new entrants to this industry?
      • How great is the power of suppliers to set terms and conditions?
      • How great is the power of buyers to set terms and conditions?
      • Is there a threat of substitution from other products to steal your customers?
      • How intense is competitive rivalry ?
    • Macro-Industry: Top-level Issues
      • In what industry will you compete?
        • Requires careful definition
      • Based on all five forces, what is your overall assessment of attractiveness of the industry?
      • If your industry is a poor performer overall, are there specific and persuasive reasons why you will fare differently?
      • What will likely change in response to the success of your venture?
    • The Firm: “Proprietary-ness”
      • What proprietary elements do you have that other firms cannot duplicate?
          • Patents, copyrights, trade secrets, etc.
          • Key managerial personnel (see Team)
      • Can your business develop a competitive advantage?
        • Superior processes
        • Access to resources, customers
    • The Firm: Financial Issues
      • Key issues to understanding the economic viability of your business model
          • Have you identified all your revenue streams and relationship between them?
            • E.g. Software sales and recurring seat licenses
          • How long before you start generating revenue?
          • How much will it cost and how long will it take acquire and retain customers?
          • Will your revenue, bootstrapping, fit with the “start” that a capital investment will provide?
    • The Firm: Financial Issues
      • Key issues to understanding the economic viability of your business model
          • What are the key items in your cost structure?
            • Necessary technology and product development
          • How much cash must be tied up in working capital, inventory, etc.?
            • For how long?
          • How quickly will customers pay?
            • Accounts receivable amount and terms vs. online cc payments
    • The Team
      • Mission, Aspirations, and Risks
          • You must talk with your team members now
          • Imagine how difficult in 1, 2, 5 years
      • Can you execute?
          • Can your team execute on each and every CSF?
          • If not, have you identified how you will complete the team to address the missing CSFs?
      • Connectedness: Who do you and your team know within the value chain?
            • Likely suppliers and technologists ?
            • Key customers ?
            • Most pressing competitors ?
    • The Critical Success Factors
      • Which assumptions are critical to the success of your business?
      • What are the “big levers”?
        • Sensitivity analysis
        • Typically time (to develop and through the transition)
        • Market size (total sales)
    • Summary Information
      • Summary: only 4 reasonable conclusions
          • Feasible as proposed and moving forward
          • Feasible w/ changes and moving forward
          • Feasible (w/ or w/o changes) but not moving forward
          • Not feasible (w/ or w/o changes) and not moving forward
          • Not feasible and moving forward
    • References to Industry Norms
      • Use Industry-specific Data to guide your projections of expenses and margins
        • Robert Morris Associates Annual Statement Studies HG4050.R64 (in Kresge Library)
    • Mullins’ Assessment Framework Applied Market Domain Industry Domain Macro-level Micro-level REF: The New Business Road Test , John Mullins © 2003. Market Attractiveness Industry Attractiveness Target segments benefits and attractiveness Sustainable advantage x x Necessary but not sufficient Sufficient by itself. VC: x SB: _ VC: x SB: x VC: x SB: x (__ if niche) VC: x SB: _
      • VC Deal-breaker
      • if absent
    • Assembling The Full Business Plan Paul Kirsch Samuel Zell & Robert H. Lurie Institute For Entrepreneurial Studies January 25, 2008
    • Agenda
      • Business plan in the context of business development
      • Purpose
      • Audience
      • Contents
      • Format
      • Challenges
      • Pitfalls
    • Coordinated Message of Your Business
      • You need the right message
      • … for the right audience
      • … at the right time
      • … clearly articulated
      • … and delivered with PASSION!
      Business Plan Executive Summary Elevator Pitch Core Concept Investor Presentation
    • Purpose
      • To force the entrepreneur to do a thorough and effective analyses
      • To provide a roadmap for development
      • To propose a new venture
      • To raise capital for the company
      • To benchmark progress
      • Should evaluate, not promote
      • Good plans take the emotion out of decisions and focus attention on reality
      • (continued)
    • Purpose
      • Always a work in progress
        • About the process NOT the document
      • Ties all aspects of your business and plan together
      • Offers clear linkage between
      Vision and ideas Company to make it happen Business Plan
    • Audience
      • Investors
        • FFF | Banks | Private investors | VCs | Grantors
      • Business partners
        • Beta customers | Suppliers | Distributors
      • Management team
        • Current – talking from the same script
        • Potential – need to understand business
    • Business Plan Contents
      • Executive Summary
      • What is the concept?
      • Market Need or Pain
      • Market Size
      • Value Proposition
      • Business Model
      • Competitive Advantage
      • Competition and Industry
      • Products and Services
      • Marketing and Sales
      • Management
      • Risk Mitigation
      • Action Plan, Milestones
      • Key Financials
      • Exit Strategies
    • What Is the Concept?
      • Core Concept statement that defines product and business
      • Can include
        • The “story” behind the business?
        • Relationship to current solutions
          • Linear development or disruptive?
          • Improvement or new?
          • Evolutionary or revolutionary?
        • (continued)
    • What Is the Concept?
      • Be clear and complete
      • Be brief and to the point
      • State the idea for the company and what it does
        • Not simply a cool website or product
      • Use plain English and
        • No MBA buzzwords or engineering geek speak
        • Get your head out of your assets
      • Use plain English but
        • Use technical language, schematics where necessary
    • Market Need or Pain
      • What is the pain in the market?
      • Market need drives business
        • The product or service fills the need
        • Products, companies do not create a market
      • What are potential customers doing now?
        • A current solution does exist
      • Connect the listener to the problem
      • Why now? Connect timeliness of idea to market pain
      • Staying power and permanence
        • Fads can be very profitable
      Know the difference between customers and users!!
    • In Discussion of Market
      • You must size the market
      • You must size the segments
      • From credible sources
        • Which databases?
        • Summary of primary research
      • Using three credible measures
        • Total dollars spent
        • Number of customers
        • Number of units sold
    • Market Size
      • Quantify “pain” in terms of true market opportunity - just how “big” is this?
      • Which market segments are in the initial planning horizon of 3 to 5 years?
      • Describe your customers
      • Quantify the segments:
        • Geographically, demographically, psychographically
        • Business, economics, SIC codes
          • http://www.osha.gov/pls/imis/sicsearch.html
    • Definition of Market Segment
      • Set of potential, actual customers
      • for
      • Your set of products & services
      • who
      • Have a common set of needs, wants
      • and
      • Refer to one another when making buying decisions
    • Relationship of Market Terms
      • Total Addressable Market
        • All microprocessors – or –
      • Target Market
        • Electronic device manufacturers – or –
      • Market Segment
        • Cell phone manufacturer – or –
      • Ideal or First Customer
        • Nokia or Motorola
    • About the Target Customer
      • Is there an identifiable buyer?
        • Accessible to your channel?
        • Able to pay?
      • Referring back to the market pain
        • Does full product address full market pain?
        • Are auxiliary features, products, services needed?
      • Reason to buy now ?
        • Can customer wait a year?
    • Value Proposition
      • Why do your customers care?
      • How valuable is your idea to your customers?
        • What’s your customer’s ROI?
        • Cost avoidance?
        • New revenue?
        • Cheaper, faster, prettier, better?
      • Who else do you need to make this happen?
        • Value chain relationships
      • How are you going to extract this value from the marketplace?
    • Value Chain Players
      • Examples of value chain partners include:
      • Suppliers
      • Technology or logistics partners
      • Sales partners: dealers, resellers, retail chain
      • Ultimate customers
      • Users
    • Business Model
      • What is the business model?
      • This is really two questions
      • What do you do?
      • How do you make money?
    • Bus. Model: What do you do? Distribution Sales Marketing Mfg Product Design Technology Raw Materials
    • Bus. Model: How do you make money?
      • Product retail sales: using value chain
      • Product internet sales: direct to customer
      • B2B: commercial purchase on terms
      • Advertising: provide ad space
      • Licensing: per unit revenue, payable
      • Consulting: fee for service or impact
      • Services: per unit charges
      • Transaction fees: per activity
      • Subscription: content over time
      • Affiliate: referrals and partnerships
      HP Dell Xerox, BASF Yahoo, ABC IBM, universities McKinsey H&R Block eBay Consumer Reports Amazon          
    • Competitive Advantage
      • What is your primary competitive advantage?
        • Intellectual property
          • Legal protections ≠ advantage
        • Management team
        • Exclusive customer relationships
      • How are you going to act on it?
        • Being the “first mover” is not a sustainable competitive advantage
        • What you do with the competitive advantage is important!
        • Effective execution is more important than being first
    • Competition and Industry
      • Who is your competition?
        • Porter’s 5 Forces analysis
          • Threat of entry
          • Supplier power
          • Buyer power
          • Threat of substitutes
          • Competitive rivalry
        • Write about the attractiveness of the industry that analysis uncovers
          • Do not write about the analysis
          • (continued)
    • Competition and Industry
      • Value chain issues
        • How are you affected by competitors’ relationships with value chain partners?
      • How will competition respond?
        • Always assume you will be successful
          • The sincerest form of flattery
          • Established players are likely to be better resourced
          • Then there’s the GoogleSoft approach
    • Products and Services
      • Detailed description
      • Intellectual property protection
      • Where in the product development process?
        • R&D concerns?
        • Key development hurdles?
      • Where in the product life cycle?
    • Marketing and Sales
      • Product | Price | Place | Promotion
      • State the price of the product
      • How are your going to price your product?
        • Market-based
        • Value-based
        • Cost-based
      • How are you going to sell your product?
      • Be realistic, don’t overpromise or oversimplify
      • (continued)
    • Marketing and Sales
      • What “beta” relationships exist? Why?
      • Who are your first prospective paying customers?
      • In discussion of promotion, remember to tie in the relationships between target market and total market
    • Management
      • Highlight team’s ability to deliver
        • Past success is a good indicator of future performance
        • Has team worked together before?
      • Be honest about team’s missing skills
      • Can use Advisory Board to “bolster” management skills
    • Risk Mitigation Type of Risk What happens Example of how to address Technology Science does not work repeatedly or in product Utilize prototypes extensively Market Customers aren’t paying OR adoption rates are lower Beta products provide early customer feed back opportunities Competition More competitors exist or they are stronger than anticipated Alter pricing strategy Management People in charge have skills that are misaligned to business Hire people with right skills for right phase; let others go Execution Missing milestones Emphasize right priorities Regulatory Product won’t pass current or pending regulations Move on regulations as early as possible; get “preliminaries” Financing Insufficient funds to continue or next round is in question Always stay in fundraising mode
    • Action Plan, Milestones
      • Overview of timeline
      • Demonstrates YOUR understanding of KEY issues for YOUR business
      • Shows that the team knows what is whose responsibility
        • Only items that are your responsibility can be a milestone
      • Include product launch/first sales in ANY discussion of milestones
    • Key Financials
      • Sales/revenue forecast is the starting point
      • Provide credible financial measures
        • Sales | Units | Margins | Customers | Market share
      • Cash flow is king
      • KNOW your assumptions
      • “ The Good, The Bad and the Likely”
      • Be realistic: don’t overpromise or oversimplify
      • (continued)
    • Financials: The Ask
      • How much are you seeking?
      • What is the money to be used for?
      • Most important: where are you now and what will the money get you to?
        • Good: concept, prototype, beta product, commercial product, first sales, profitability
      • Develop Technology Prototype Beta Unit First Sale Expand Sales
        • Bad: “through next year”, “while we wait for our patent”
      • Where will the next round of funding come from?
    • Key Financials
      • What do you need NOW?
      • What are your start-up costs?
      • Provide a Sources and Uses discussion and appendix
        • Working capital is a legitimate use of funds
        • Allowing a percentage of “cushion” is okay
      • Estimate costs and revenues to the best of your ability
    • Exit Strategy
      • Investors don’t invest to get IN
      • Offer feasible exit strategies
      • What is “typical” in your industry?
        • Acquisition
        • IPO
        • Management buyout
        • Dividend payments
        • (continued)
    • Exit Strategy
      • Acquisition
        • Who?
        • How many “who’s”
      • IPO
        • Recent market track record IPO Monitor
        • What performance measures are important?
      • Management buyout is not necessarily a desirable exit
      • Dividends are a tough sell also
    • The Document
    • Format of Document
      • Single or 1½ spaced within paragraphs, double-spaced between paragraphs
      • Integrated graphics
      • 11 or 12-point font with 1-1-1-1 inch margins
      • Numbered pages
      • Hard copies of business plans should be professionally bound
      • Soft copies of business plans should be in a single .pdf document
        • (continued)
    • Format of Content
      • Cover page (not included in page total)
        • Company name, logo, tagline
        • All team member names
        • Full contact information for at least team leader
      • Body of plan – 20 pages - includes the executive summary and summary financial data
      • Appendices – not to exceed 10 pages
        • No new information
        • Include only when data support statements in the plan
        • Audience may not be able to read all the material in the appendices, so the body portion must contain all pertinent information in a clear and concise manner
    • Format of Content
      • Presentations of information
        • Stay away from text only approach
        • Use a variety of graphical representations
          • Charts
          • Pictures
          • Diagrams
        • Use, set aside and highlight quotes for experts and customers
      • Use header and footers wisely
        • Company name, small logo
        • Page numbers
    • Challenge
      • Many plans are product/technology-centric or driven by perceived market
      • Focus on the intersection of market need and technology/product benefits
      Ideas and Inventions Needs and Desires Technology Starter Concepts Solutions Effects Community Personas
    • Challenge
      • Many plans are written in an academic style, i.e., dry, boring
      • Solution
      • Put your passion for the business in the plan
      • Think about what story you want to tell
      • There is no right way to organize a business plan
    • Challenge
      • Many entrepreneurs address preparing the plan and giving the pitch as a necessary evil
      • Solution
      • It’s about the process , not the document
      • Treat “marketing” your company as essential as “running” your company
      • View opportunities for feedback as invaluable instances that will be difficult to duplicate in the “real world”
    • Challenge
      • “ There’s no way to do this in 20 pages!”
      • Solution
      • Succinct and concise understanding AND presentation of key issues is paramount
      • View assembly of plan and presentation as much a communication challenge as it is a business issue
      • Teams have NO option in competitions
    • Typical Pitfalls
      • Product idea not linked to market need
      • Over-simplification of the issues
      • Unrealistic goals and/or timelines
      • No credible go-to-market strategy
      • The “1% market share” objective
      • Under-capitalized and/or over-leveraged
      • Sources and uses of funds
      • Unclear role for the audience, investor
      • (continued)
    • Typical Pitfalls
      • One-person show
      • Team composition and experience
      • Executive summary does not have a “hook”
      • Important information is hidden
      • No contingencies
      • Document not reviewed
      • Document not reviewed by “uninterested” parties
    • This is YOUR story
      • Develop an engaging narrative
      • Make document readable
        • Layout
        • Graphics
        • Font and spacing
        • Table of contents
        • Headings and emphasis
        • (continued)
    • This is YOUR story
      • Infuse delivery with personality and passion
      • Not a “right” way to tell the story
      • Different aspects of a plan will be emphasized differently for different types of businesses
      • Don’t give evaluators a reason to mistrust or disbelieve you or the plan
      • (continued)
    • This is YOUR story
      • Have you demonstrated…
        • Large potential market?
        • Logical go-to-market strategy?
        • Captivating idea with growth potential?
        • Sustainable competitive advantage?
        • Sound financial plan?
        • Strong, core team?
    • Coordinated Message of Your Business
      • You need the right message
      • … for the right audience
      • … at the right time
      • … clearly articulated
      • … and delivered with PASSION!
      Business Plan Executive Summary Elevator Pitch Core Concept Investor Presentation
    • Questions ?
    • Estimating Startup Costs Sales Time Development Transition Modest Growth
      • Working it backwards from the Steady-state numbers:
      • Obtain steady state costs (GS&A, etc, as % of sales from industry data)
      • Make costs constant over transition
      • Add development costs
      • Ramp down develop costs while ramping up operating costs
      Costs