9. Source: Lange, Mollov, Pearlmutter, Singh and Bygrave (2007)
“new ventures launched with formal written
business plans do not outperform ones
launched without them.”
44. scientific business strategy
Source: Fairlie and Robb (2007) in Shane (2009)
High School University grads
(25% greater sales)
Post-grad degree
(75% greater sales)
49. How novel the idea is
Extent the idea is based on new technology
Superiority of product/service
Potential to change the industry
Intuition or gut feel
Source: Baron & Ensley (2006)
106 Novice entrepreneurs evaluated opportunities
50. Source: Baron & Ensley (2006)
106 Novice entrepreneurs evaluated opportunities
Solving a customers problem
Ability to generate positive cash flow
Speed of revenue generation
Manageable risk
Others in network to develop venture with
51. What are the key elements of a
good business opportunity?
Research on 5 of Canada's top angel investors
showed they looked for the following 8 elements
A summary of Business Angel Decision Making By Andrew
Maxwell, a PhD Thesis.
52. Is there a large market for this product?
Key Question:
No evidence of market potential presented
Fatal flaw if…
Examples
I cannot see any demand for this product….
The market is already well served….
1 Market potential
53. Will customers in target market easily adopt [buy] this product?
Key Question:
No clear benefits, or major adoption issues
Fatal flaw if…
Examples
You have not convinced me that anyone will buy this product….
There are only a few major customers for your product, and it will
take you too long to sell any of them….
2 Product Adoption
54. How easy will it be for other people to copy the product or service?
Key Question:
Anyone could copy the product or service easily
Fatal flaw if…
Examples
No barrier to entry, as soon as you are successful, others will
enter the market and you will find it hard to compete…
Without a clear advantage you will just have to compete on price,
which will reduce your profits to zero….
3 Protectability (Barrier to entry)
55. Does management have the direct and relevant experience?
Key Question:
No evidence of required experience
Fatal flaw if…
Examples
I am concerned that without any direct experience of the retail
market you will be able to achieve success….
While the product is great, this is a business, and you haven’t
shown me you have what it takes…
4 Entrepreneur experience
56. Product ready for market, or major work required before it ships?
Key Question:
Needs more research and development
Fatal flaw if…
Examples
The product is still in the research and development phase…
Currently each product is hand made, not clear that have put any
thought into how you could scale up manufacturing….
5 Product Status (Stage of product development)
57. Is there a realistic marketing plan and route to market?
Key Question:
Limited thought given to distribution issues
Fatal flaw if…
Examples
Why would an existing distributor switch to you as a supplier…
You have not allowed enough margin for a retailer…
6 Route to market
58. Is the first customer identified? Does the product meet need?
Key Question:
No identified first customers?
Fatal flaw if…
Examples
You have not identified a first customer who would be likely interested
in your product….
You have not considered the switching cost for potential customers to
adopt your product….
7 Customer Engagement
59. Profitable and sustainable cash flow?
Key Question:
No evidence of profit or cash management
Fatal flaw if…
Examples
You will run out of money before you are able to raise more money
from investors….
There is simply not a path to profitability….
8 Financial model
60. 11 2 3 4
8765
Market
Potential
Product
Adoption
Protectablity Business
Experience
Product
Status
Route to
Market
Customer
Engagement
Financial
Projections
65. “150,000 pounds for 15% of the company”
“5 pound per property to month”
“Rentals only pay when empty”
“14,000 on the site with 3,000 paying”
“200,000 hits per month”
“Number 1 rental site in the UK”
Have you done anything to increase revenue?
“Done reverse bill SMS (1.50 sms) and hosting sites for landlords”
AccomdationforStudents.com – Additional Information
66. Financial projections “3000 are not rented out and paying”
Protectability “I don’t see anything I couldn’t do very simply, very
quickly myself”
Financial projections “I can’t see how it is going to generate
income”
Insufficient return “If we not talking the same ballpark”
Insufficient return “you have put me in a position where I have to
ask for a great deal of equity”
AccomdationforStudents.com
Investment offers: 2
Performance: Survived (14 countries, not in top 100,000 sites)
69. “25% for 75 000 pounds”
“Left school worked for Natwest bank for 5 years. Changed career a
couple of times. Sold steel for 7 years what I am good. Worked
for husband.”
“Done 10 parties and made 2600 pounds”
“8 ladies average spend 20 to 30 pounds”
“Projection:
Consultants doing 1 party per week @ 250 pounds per party”
“4 working consultants”
“Projections year 1 – 750k with 64k profit; Year 2 6 million pounds”
“Aims to recruit 500 consultants in 2nd year”
Truly Madly Baby– Additional Information
70. Unrealistic projections “I do not believe the 6 million” “I think you
projections are truly madly”
Not scalable “Lifestyle business it is not scalable” “It is not that
scalable”
Wrong distribution channel “have you thought about direct mail”
Wrong business model “I can see potential I have got some ideas
to a completely different strategy. I think there is a big opportunity
on the web”
Truly Madly Baby
Investment offers: 2 (Peter Jones invested 75,000 pounds)
Performance: Survived (500 consultants; Website; Startup 100 list)
74. “Asking for 70,000 pounds”
“MBA from Stanford Business School”
“Sales projections Y1 – 180,000; 270,000”
“Profit projections Y1 – 110,000; 240,000”
“Trivial pursuit for Bollywood”
“Funded from personal funds and family”
“Full time day job runs business part-time”
Must be games – Additional Information
75. Product quality “looks cheap” “badly mad”
Product adaption “I don’t see an interest in your game”
Poor pitch “Your pitch was far to long and totally uninspiring”
“Made a bloody hash of your presentation”
Not unique “many games like this on the market”
Competition “The market for board games is heaving”
Protectability “anybody can create a board game”
Lack of commitment “I never invest in someone who isn’t in the
business”
Entrepreneur “I won’t be investing in you”
Must be games
Investment offers: 0
Performance: Failure (No evidence of company existence)
78. “Asking for 200 000 pounds
“We employ 5 people”
“Does commercial opening shows”
“Customer include Audi, Hotel for Butlins”
“Breakeven in 600,000 pounds”
“This year will do 800,000 pounds turnover”
The Generating Company – Additional Information
79. Not scalability “not going to be able to leverage” “it is not
scalable”
High risk “this is a high risk” “this is similar to theatre production
which can have a number of failure”
The Generating Company
Investment offers: 2 (160,000 for 40% from Peter & Theo)
Performance: Success (2006 & 2007 played to over 1 million
people internationally)
83. “39 years old”
“Came up with the idea at university”
“the over 50s control 100 billion pounds”
“I am looking for help to show me how to market the product”
“Suspects it will cost 1.50 to make and sell at 8 pounds”
“Competitors products (no spring) are 1 to 2 pounds“
“I am wanting to produce a pre-production prototype”
“Asking 70,000 pounds”
Light Fitting – Additional Information
84. Small market size “I don’t know whether there is a big enough
market” “If there is a market I suspect it is very narrow” “I don’t
think it will sell in big quantities”
Product status “you have not built a pre-production model” “I
don’t know if the product works”
Entrepreneur experience “you might be a good product design
but you are not an entrepreneur”
Light Fitting Company
Investment offers: 0
Performance: Failure (Still employed - Linkedin)
87. “Competition is Go-karts and bicycles”
“Sold 2,000 in Ireland”
“It has all the relevant safety standards. It is safer than a bicycle”
“I am an importer and distributor”
“I don’t manufacture”
“Next product is the extreme pongo
stick that jumps 5 feet in the air”
“I have the sole right to import in the UK and Ireland”
“debtors 70,000 euros”
“creditors 160,000 euros”
“don’t know how much they owe the VAT man”
“is not paying the VAT man all the time”
Atomic Toys – Additional Information
88. Product life span “won’t get another product and won’t be a long term
success” “you have one product” “I think it is a fad”
Poor pitch “I think it was a poor pitch”
Entrepreneur “I don’t think you are professional”
No legal compliance “You haven’t paid the VAT man so for that reason
I am out” “When someone thinks it is okay I have a serious problem”
Atomic Toys
Investment offers: 0 (2 interested, didn’t invest due to non VAT pmt)
Performance: Success (Small business award, multi-million euro
Business, distributes in UK and Europe)
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.
Take for an example a 6 year study they did on Silicon chip manufactures start ups in the US. They compared teams which started with more then tree members, at least 50% of the team had joint experience and had three years industry experience in the team. The difference was massive a full 73% in six years become successful companies were only 19% with weak times become successful.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.