intro to entrep test 1

core strategy

-The first component of the business model -describes how the firm plans to compete relative to its competitors. -The primary elements of core strategy are: -Business Mission -Basis of Differentiation -Target Market -Product/Market Scope

techniques for generating ideas

-brainstorming -focus groups -library and internet research

characteristics that make some people better at recognizing opportunities than others

-prior experience -cognitive factors -social networks -creativity

2 primary audiences for a firm's business plan & what they look for

1. firm's employees- helps employees operate in sync/move forward in consistent & purposeful manner 2. investors and other external stakeholders- must make the case that the firm is a good use of an investor's funds or the attention of others

three key questions before pursing the idea of starting a firm

1. is the industry accessible- is it a realistic place for a new venture to enter? 2. does the industry contain markets that are ripe for innovation or are underserved? 3. are there positions in the industry that avoid some of the negative attributes of the industry as a whole?

components of organizational feasibility analysis

1. management prowess 2. resource sufficiency

creativity

-Creativity is the process of generating a novel or useful idea. -Opportunity recognition may be, at least in part, a creative process. -For an individual, the creative process can be broken down into five stages

timing of feasibility analysis

-The proper time to conduct is early in thinking through the prospects for a new business. -The thought is to screen ideas before a lot of resources are spent on them.

competitive forces: bargaining power of buyers

-buyers can suppress profitability of the industries from which they purchase by demanding price concessions or increases in quality -ex. auto companies buy products from thousands of suppliers in diff industries, allowing automakers to suppress profitability of industries from which they buy by demanding price reductions

1st application of 5 forces model

-model used to assess attractiveness of industry by determining level of threat to industry profit for each of the forces -if a firm fills out the form & several threats to industry profit are high, the firm may want to reconsider entering the industry or think ab the position it'd occupy

four primary characteristics of successful entrepreneurs

-passion for business -product/customer focus -tenacity despite failure -execution intelligence

business plan

-written narrative, typically 25 to 35 pages long, that describes what a new business plans to accomplish. -dual-purpose document used both inside and outside the firm.

components of financial feasibility analysis

1. total start-up cash needed 2. financial performance of similar businesses 3. overall financial attractiveness of the proposed venture

finding gaps in the marketplace approach

A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn't represent a large enough market to be of interest to mainstream retailers or manufacturers. -ex. guitars for females

encouraging creativity at the firm level

Creativity is the raw material that goes into innovation and should be encouraged at the organizational and individual supervisory level.

technological advances

advances in tech frequently create business opportunities -ex. computer industry -internet -biotech -digital photography once tech is created, products often emerge to advance it

full view of the opportunity recognition process

depicts the connection between an awareness of emerging trends and the personal characteristics of the entrepreneur

presenting business plan: questions and feedback to expect from investors

smart entrepreneur has a good idea of the questions that will be asked, and will be prepared for those queries

entrepreneurial intensity

the position of a firm on the conceptual continuum (corporate) -ranges from highly conservative to highly entrepreneurial

innovation

-Is the process of creating something new, which is central to the entrepreneurial process. -Small innovative firms are 16 times more productive than larger innovative firms in terms of patents per employee.

opportunity defined

a favorable set of circumstances that creates a need for a new product, service, or business

2nd application of 5 forces model

answers key questions: -is the industry a realistic place for a new venture? -are there areas in which we can avoid or diminish the factors that suppress industry profitability -is there a unique position in the industry that avoids or diminishes the factors that suppress industry profit? -is there a superior business model that industry incumbents would find hard to duplicate?

what are indications of increased interest in entrepreneurship

books (36,900 to 89,900 on Amazon) & college courses (250 to 2,000)

3 primary reasons people become entrepreneurs

-desire to be own boss -desire to pursue own ideas -financial rewards

competitor analysis

-detailed analysis of a firm's competition. -helps a firm understand the positions of its major competitors and the opportunities that are available. -A competitive analysis grid is a tool for organizing the information a firm collects about its competitors

types of competitors new ventures face

-direct competitors: businesses offering identical or similar products -indirect competitors: businesses offering close sub products -future competitors: businesses not yet in/direct comp. but could be at any time

disruptive business models examples

-direct to consumer computer sales: dell -online text ads on search engines: yahoo, google -software as a service: salesforce -cloud-based to connect riders and people: uber, lyft

environmental trends

-economic trends, social trends, technological advances, political & regulatory changes -business trends: are profit margins in the industry increasing or falling? innovation? input costs?

operations- key partners

-final element of a firm's business model -startups, in particular, typically don't have sufficient resources to perform all tasks necessary to make business models work, so they rely on key partners to perform important roles -most common types of business partnerships: -joint ventures: sep. entity -network: hub&wheel -consortia: group of orgs with similar needs that band tg to create a new entity to address -strategic alliance: 2+ firms that establish an exchange relationship but has no joint ownership involved -trade associations: typically nonprofit orgs formed by firms in the same industry to collect and disseminate trade info, offer legal & technical advice, furnish industry related training, and provide a platform for collective lobbying

how industry and firm-level factors affect performance

-firm level factors: include a firm's assets, products, culture, teamwork among its employees, reputation, etc -industry level factors: include threat of new entrants, rivalry among existing forms, bargaining power of buyers -conclusion:8-30% of variation in firm profitability is directly attributable to the industry in which a firm competes

business model

-firm's plan or recipe for how it creates, delivers, and captures value for its stakeholders. -The proper time to develop a business model is following the feasibility analysis stage and prior to fleshing out the operational details of the company. -A firm's business model is integral to its ability to succeed both in the short and long term

categories of business models: standard business models

-first category of business models -depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value

total start-up cash needed

-first component of financial feasibility analysis -refers to the total cash needed to prepare the business to make its first sale. -budget should be prepared that lists all the anticipated capital purchases and operating expenses needed to generate the first $1 in revenues. -The point of this exercise is to determine if the proposed venture is realistic given the total start-up cash needed.

presenting plan to investors: the oral presentation

-first rule in making an oral presentation is to follow directions. -If you're told you have 15 minutes, don't talk for more than the allotted time. -The presentation should be smooth and well-rehearsed. -The slides should be sharp and not cluttered

the five competitive forces model

-framework for understanding the structure of an industry -composed of forces that determine industry profitability -helps to determine average rate of return for the firms in an industry by applying pressure on industry profitability -well managed firms try to position their firms in a way that avoids the forces in an attempt to beat the avg rate of return of the industry -forces: -threat of substitutes -bargaining power of suppliers -threat of new entrants -bargaining power of buyers -rivalry among existing firms

operations- product (or service) production

-if firm sells physical product: product can be manu. or prod. in house, by a contract manu, or via outsource provider (this decision has a major impact on all aspects of a firm's business model) -if firm produces service: brief description of how service will be produced should be provided

competitive forces: threat of new entrants

-if the firms in an industry are highly profitable, the industry becomes a magnet to new entrants -unless something is done to stop this, the competition in the industry will increase, and avg industry profitability will decline -firms in an industry try to keep the # of new entrants low by erecting barriers to entry -barrier to entry: condition that creates a disincentive for a new firm to enter an industry

industry analysis

-industry: a group of firms producing a similar product or service, such as music & solar panel manufacturing -industry analysis: business research that focuses on the potential of an industry

business plan: the economics of the business

-section 5 -basic logic of how profits are earned/how many units of profit must be sold to break even & profit -items to include: -revenue drivers/profit margins -fixed and variable costs -operating leverage & implications -start up costs -break even chart and calculations -Two companies in the same industry may make profits in different ways. One may be a high-margin, low-volume business, while the other may be a low-margin, high-volume business. It's important to check to make sure the approach you select is sound. -Computing a break-even analysis is an extremely useful exercise for any proposed or existing business.

step 4: managing the growing an entrepreneurial firm

-unique marketing issues -the importance of intellectual property -preparing for and evaluating the challenges of growth -strategies for firm growth -franchising

young entrepreneurs

-A desire to pursue an entrepreneurial career is high among young people. -According to a recent Gallop survey, about 4 in 10 kids in grades 5-12 say they plan to start their own business. -About 59% of students in grades 5-12 say their school offers classes in how to start a business. -About one-third of young people say their parents or guardians have started a business, which provides them a firsthand look at the entrepreneurial lifestyle.

focus group

-A focus group is a gathering of five to ten people, who have been selected based on their common characteristics relative to the issues being discussed. -These groups are led by a trained moderator, who uses the internal dynamics of the group environment to gain insight into why people feel the way they do about a particular issue. -Although focus groups are used for a variety of purposes, they can be used to help generate new business ideas.

characteristics of successful entrepreneurs- product/customer focus

-A second defining characteristic -An entrepreneur's keen focus on products and customers typically stems from the fact that most entrepreneurs are, at heart, craftspeople.

ethical ways to obtain info about competitors

-Attend conferences and trade shows. -Purchase competitors' products. -Study competitors' Web sites and social media sites. -Set up Google e-mail alerts. -Read industry-related books, magazines, and Web sites. -Talk to customers about what motivated them to buy your product as opposed to your competitor's product.

characteristics of successful entrepreneurs- tenacity despite failure

-Because entrepreneurs are typically trying something new, the failure rate is naturally high. -A defining characteristic for successful entrepreneurs is their ability to persevere through setbacks and failures.

economic forces

-Economic trends help determine areas that are ripe for new start-ups and areas that start-ups should avoid. -weak economy favors start-ups that help consumers save $

myth 4: entrepreneurs should be young and energetic

-Entrepreneurial activity is fairly easily spread out over age ranges. -While it is important to be energetic, investors often cite the strength of the entrepreneur as their most important criteria in making investment decisions. -What makes an entrepreneur "strong" in the eyes of an investor is experience, maturity, a solid reputation, and a track record of success. -These criteria favor older rather than younger entrepreneurs.

internet research

-If you are starting from scratch, simply typing "new business ideas" into a search engine will produce links to newspapers and magazine articles about the "hottest" new business ideas. -If you have a specific topic in mind, setting up Google mail alerts will provide you with links to a constant stream of newspaper articles, blog posts, and news releases about the topic. -Targeted searches are also useful

brainstorming

-Is a technique used to generate a large number of ideas and solutions to problems quickly. -A brainstorming "session" typically involves a group of people, and should be targeted to a specific topic. -Rules for a brainstorming session: -No criticism. -Freewheeling is encouraged. -The session should move quickly. -Leap-frogging is encouraged.

industry/target market feasibility analysis

-Is an assessment of the overall appeal of the industry and the target market for the proposed business. -An industry is a group of firms producing a similar product or service. -A firm's target market is the limited portion of the industry it plans to go after.

product/service feasibility

-Is an assessment of the overall appeal of the product or service being proposed. -Before a prospective firm rushes a new product or service into development, it should be sure that the product or service is what prospective customers want. -product/service desirability & demand -first, ask appeal questions -2nd, administer concept test

organizational feasibility analysis

-Is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch a business. -Focuses on non-financial resources.

what is corporate entrepreneurship

-Is the conceptualization of entrepreneurship at the firm level. -All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial. -The position of a firm on this continuum is referred to as its entrepreneurial intensity.

library research

-Libraries are an often underutilized source of information for generating new business ideas. -The best approach is to talk to a reference librarian, who can point out useful resources, such as industry-specific magazines, trade journals, and industry reports. -Simply browsing through several issues of a trade journal or an industry report on a topic can spark new ideas. -large public and university libraries typically have access to search engines and industry reports that would cost thousands to access on your own

impact on larger firms

-Many entrepreneurial firms have built their entire business models around producing products and services that help larger firms become more efficient and effective.

myth 2: entrepreneurs are gamblers

-Most entrepreneurs are moderate risk takers. -The idea that entrepreneurs are gamblers originates from two sources: 1. Entrepreneurs typically have jobs that are less structured, and so they face a more uncertain set of possibilities than people in traditional jobs. 2. Many entrepreneurs have a strong need to achieve and set challenging goals, a behavior that is often equated with risk taking.

importance of industry analysis

-Once it is determined that a new venture is feasible in regard to the industry and market in which it will compete, a more in-depth analysis is needed to learn the ins and outs of the industry. -The analysis helps a firm determine if the target market it identified during feasibility analysis is favorable for a new firm.

prior industry experience

-Several studies have shown that prior experience in an industry helps an entrepreneur recognize business opportunities. -By working in an industry, an individual may spot a market niche that is underserved. -It is also possible that by working in an industry, an individual builds a network of social contacts who provide insights that lead to recognizing new opportunities

job creation

-Small businesses create a substantial number of net new jobs in the United States. -Firms with 500 or fewer employees create 65% of new jobs on an annual basis.

establishing a focal point for ideas

-Some firms meet the challenge of encouraging, collecting, and evaluating ideas by designating a specific person to screen and track them—for if it's everybody's job, it may be no one's responsibility. -Another approach is to establish an idea bank (or vault), which is a physical or digital repository for storing ideas.

solving a problem approach

-Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it. -These problems can be pinpointed through observing trends and through more simple means, such as intuition, serendipity, or change. -Many companies have been started by people who have experienced a problem in their own lives, and then realized that the solution to the problem represented a business opportunity. -ex. wind farms

the 4 steps of the entrepreneurial process

-Step 1: Deciding to become an entrepreneur. -Step 2: Developing successful business ideas. -Step 3: Moving from an idea to an entrepreneurial firm. -Step 4: Managing and growing the entrepreneurial firm

strong tie vs weak tie relationship

-Strong-tie relationships are characterized by frequent interaction and form between coworkers, friends, and spouses. -Weak-tie relationships are characterized by infrequent interaction and form between casual acquaintances. -It is more likely that an entrepreneur will get new business ideas through weak-tie rather than strong-tie relationships

cognitive factors

-Studies have shown that opportunity recognition may be an innate skill or cognitive process. -Some people believe that entrepreneurs have a "sixth sense" that allows them to see opportunities that others miss. -This "sixth sense" is called entrepreneurial alertness, which is formally defined as the ability to notice things without engaging in deliberate search.

social networks

-The extent and depth of an individual's social network affects opportunity recognition. -People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks. -Research results suggest that between 40% and 50% of people who start a business got their idea via a social contact.

impact on society

-The innovations of entrepreneurial firms have a dramatic impact on society. -Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us in new ways.

characteristics of successful entrepreneurs- passion for the business

-The number one characteristic shared by successful entrep. -This passion typically stems from the entrepreneur's belief that the business will positively influence people's lives

senior entrepreneurs

-The numbers of seniors (those 50 years old and older) starting businesses is substantial and growing. -In 2012, 20% of new businesses were started by people between 50 and 59 years old, while another 12.5 percent were founded by individuals 60 years old and older. -This increase is attributed to corporate downsizing, an increasing desire among older people for more personal fulfillment in their lives, growing worries about the cost of health care, and similar factors.

minority entrepreneurs

-There has been a substantial increase in minority entrepreneurs in the United States. -Between 2002 and 2007 (the most recent statistics available), minority-owned firms outpaced the growth of non-minority firms in gross receipts, employment, and number of firms. -In 2007, there were about 1.9 million African American-owned firms in the United States, 1.5 million Asian American-owned firms, and 2.3 million Hispanic-owned firms.

barringer/ireland business model template

-These attributes can be laid out in a visual framework or template so it is easy to see the individual parts and their interrelationships components: 1. core strategy 2. resources 3. financials 4. operations

competitive analysis grid

-tool for organizing the information a firm collects about its competitors. -can help a firm see how it stacks up against its competitors, provide ideas for markets to pursue, and identify its primary sources of competitive advantage

myth 1: entrepreneurs are born, not made

-This myth is based on the mistaken belief that some people are genetically predisposed to be entrepreneurs. -The consensus of many studies is that no one is "born" to be an entrepreneur; everyone has the potential to become one. -Whether someone does or doesn't become an entrepreneur is a function of their environment, life experiences, and personal choices.

how to collect competitive intelligence

-To complete a competitive analysis grid, a firm must first understand the strategies and behaviors of its competitors. -The information that is gathered by a firm to learn about its competitors -A new venture should take care that it collects competitive intelligence in a professional and ethical manner

observing trends approach

-Trends create opportunities for entrepreneurs to pursue. -The most important trends are: 1. Economic forces: state of the economy, level of disposable income, consumer spending 2. Social forces: social/cultural trends, demographic changes, what people think is "in" 3. Technological advances: new technologies, emerging technologies, new uses of old technologies 4. Political and regulatory change: new changes in political arena, new laws and regulations -It's important to be aware of changes in these areas.

myth 3: entrepreneurs are motivated primarily by money

-While it is naïve to think that entrepreneurs don't seek financial rewards, money is rarely the reason entrepreneurs start new firms. -In fact, some entrepreneurs warn that the pursuit of money can be distracting.

women entrepreneurs

-While men are more likely to start businesses than women, the number of women-owned businesses is increasing. -There were 8.6 women-owned businesses in the United States in 2013, generating over $1.3 trillion in revenue and employing nearly 7.8 million people. -In some industries, women control a significant share of the business. Women-owned businesses account for 52% of all businesses in health care.

myth 5: entrepreneurs love the spotlight

-While some entrepreneurs are flamboyant, the vast majority of them do not attract public attention. -As evidence of this, consider the following question: "How many entrepreneurs could you name?" -Most of us could come up with Jeff Bezos of Amazon.com, Mark Zuckerberg of Facebook, Steve Jobs of Apple, and maybe Larry Page and Sergey Brin of Google. But few could name the founders of Twitter, YouTube, Netflix, or DIRECTV, even though we frequently use those firms' services.

standard business models examples

-advertising: google, fb -auction: eBay, ubid -bricks&clicks: apple, barnes&n -franchise: panera, 24 hr fitness -freemium: dropbox, pandora -lowcost: SW airlines, walmart -manu/ret: fitbit, tesla -peer-to-peer: airbnb, uber -razor & blades: game consoles & games, printers & ink cartridges -subscription: birch box, netflix -traditional retailer: amazon, WF

resources- key assets

-assets that a firm owns that enable its business model to work. The assets can be physical, financial, intellectual, or human. -Physical assets include physical space, equipment, vehicles, and distribution networks. -Intellectual assets include resources such as patents, trademarks, copyrights, and trade secrets, along with a company's brand and its reputation. -Financial assets include cash, lines of credit, and commitments from investors. -Human assets include a company's founder or founders, its key employees, and its advisors.

financials- financing/funding

-at the bus. model stage projections don't need to be completed to determine the exact amount of money that is needed. An approximation is sufficient. -There are three categories of costs to consider: -Capital costs. -One-time expenses, such as building a Web site and training initial employees. -Provisions for ramp-up expenses (most businesses incur costs before they earn revenues) -some entrep. are able to draw from personal resources to fund their business. In other cases, the business may be simple enough that it's funded from its own profits from day one -in my cases, funding is needed -business model template should indicate appropriate amount of funding needed & source of $

4 essential qualities of an opportunity

-attractive -timely -durable -anchored in a product, service, or business that creates or adds value for its buyer or end user

resource sufficiency

-component of organizational feasibility analysis -assessment of sufficient resources -to test, firm lists 6-12 most critical non financial resources (ex. office space, lab space, key mgt employees, ability to obtain intellectual property protection/form partnerships) needed to move the idea forward -if critical resources aren't available, it may be impractical to proceed

management prowess

-component of organizational feasibility analysis -candidly evaluating the ability of management team to satisfy itself that management has the requisite passion & expertise to launch -two of the most important factors: 1. passion that the sole entrep. or founding team has for idea 2. extent to which sole entrep. understands related markets

guidelines for writing business plan: structure

-conventional structure -investors want a plan where they can easily find critical info -software packages -packages employ interactive, menu-driven approach to assist in writing of business plan -entrep. should avoid boilerplate plan that looks like a "canned" source -sense of excitement -needs to project anticipation about possibilities surrounding a new venture

core strategy- product/market scope

-defines the products and markets on which it will concentrate -most start with narrow (limited), and pursue adjacent product and market opportunities as the company grows and becomes more financially secure -in completing business model template, company must be clear about this and project 3-5 years in the future in terms of anticipated expansion

operations- channels

-describes how it delivers its product or service to its customers -businesses either sell direct, through intermediaries (dist. and wholesalers) or via a combo -some firms employ sales force that calls on potential customers to try to close sales. expensive but necessary sometimes

financials- revenue streams

-describes the way in which a firm makes money -some businesses have a single revenue stream while others have several -ex. restaurant vs. Lulus bait shack

core strategy- business mission

-describes why it exists and what its business model is supposed to accomplish -can articulate a businesses's overarching priorities and act as its financial and moral compass -something a business can continually refer back to as it makes important decisions in other elements of its business model

nontraditional barriers to entry

-it's difficult for start-ups to execute barriers to entry that're expensive, such as economies of scale, bc money is usually tight -start-ups have to rely on nontrad. barriers to entry to discourage new entrants, such as assembling a world-class mgt team that'd be difficult for another company to replicate 1. strength of mgt team- if a startup puts tg world class mgt team, it may give potential rivals pause in taking on the startup in its chosen industry 2. first-mover advantage- if a startup pioneers industry or concept within an industry, the name recognition the startup establishes may create a barrier to entry 3. passion of the mgt team and employees- if employees are motivated by the unique culture, and anticipate a large financial reward, this is a combo that can't be replicated by larger firms 4. unique business model- able to construct unique bus. model & est. a network of relationships that makes the business model work, this set of advantages creates a barrier to entry 5. internet domain name- so "spot on" that they give startup meaningful leg up in terms of e commerce 6. inventing a new approach to an industry- if startup invents new approach to an industry, it creates a barrier for potential imitators

guidelines for writing business plan: content of the business plan

-long enough for sufficient info, short enough to maintain interest -25-35 pgs

common traits about successful entrepreneurs

-moderate risk taker -persuasive -promoter -resource assembler/leverager -creative -self-starter -tenacious -tolerant of ambiguity -visionary -optimistic disposition -a networker -achievement motivated -alert to opportunities -self-confident -decisive -energetic -strong work ethic -lengthy attention span

guidelines for writing a business plan: recognizing the elements of the plan may change

-new insights invariably emerge when an entrep. or team immerse themselves in writing the plan and start getting feedback from others

3 ways to identify an opportunity

-observing trends -solving a problem -finding gaps in the marketplace

political action and regulatory changes

-political action and regulatory changes also provide the basis for opportunities -company created to help other companies comply w the law -ex. laws to protect the environment -ex. OSHA

step 3: moving from an idea to an entrepreneurial firm

-preparing the proper ethical and legal foundation -assessing a new venture's financial strength and viability -building a new venture team -getting financing or funding

competitive forces: threat of substitutes

-price consumers are willing to pay for a product depends on the availability of substitute products -when close substitutes for a product exist, industry profitability is suppressed, because consumers will opt out if the price gets too high -the extent to which subs suppress the profitability of an industry depends on the propensity for buyers to sub b/t alternatives -why firms in an industry often offer their customers amenities to reduce the likelihood that they'll switch to a sub product, even in light of price increase

aspects of entrepreneurial firms

-proactive -innovative -risk taking

components of a properly conducted feasibility analysis

-product/service feasibility -industry/target market feasibility -organizational feasibility -financial feasibility

step 2: developing successful business ideas

-recognizing opportunities and generating ideas -feasibility analysis -developing an effective business model -industry and competitor analysis -writing a business plan

financial performance of similar businesses

-second component of financial feasibility analysis -estimate by comparing to similar, established businesses -all ways to doing this involve ethical detective work 1. there are many reports available, some for free and some that require a fee, offering detailed industry trend analysis and reports on thousands of individual firms. 2. simple observational research may be needed. For example, the owners of New Venture Fitness Drinks could estimate their sales by tracking the number of people who patronize similar restaurants and estimating the average amount each customer spends.

business plan: executive summary

-section 1 business plan -short overview of entire plan -provides busy reader w everything needed to know about distinctive nature of new venture -shouldn't exceed 2 single space -should be written last -investor may only ask for entire plan if this is convincing -most important section bus plan

business plan: overall schedule

-section 10 -should be prepared that shows major events required to launch -should be in format of milestones critical to business's success -examples: -incorporating venture -completion of prototypes -rental of facilities -obtaining critical financing -starting production -obtaining first sale -helpful in convincing potential investors that the mgt team is aware of what needs to take place to launch the venture and has a plan in place to get there

business plan: financial projections

-section 11 -firm's pro forma (projected) financial projection -items to include: -sources/uses of funds statement -assumptions sheet -pro forma income statement -pro forma balance sheets -pro forma cash flows -ratio analysis -takes plans you've developed and expresses them in financial terms

business plan: industry analysis

-section 2 bus plan -should begin by describing industry (size, growth rate, sales projections) -items to include: -industry size, growth, sales -industry structure -nature of participants -key success factors -industry trends -long-term prospects -before select of target market, should have grasp of industry (promising areas & points of vulnerability) -industry largely defines playing field firm participates in

business plan: company description

-section 3 bus plan -begins with general description of company -items to include: -co description -co history -mission statement -products and services -current status -legal status and ownership -key partnerships -demonstrates to read you know how to translate idea into business

business plan: market analysis

-section 4 -breaks industry into segments & zeros in on specific segment (or target market) -items to include: -mkt segmentation and tgt mkt selection -buyer behavior -competitor analysis -deals with behavior of the consumers in the market. The more a start-up knows about the consumers in its target market, the more it can tailor its products or services appropriately

business plan: marketing plan

-section 6 -focuses on how business will market and sell product or service -items to include: -overall mkt strategy -product, price, promotion, dist -sales process (cycle) -sales tactics -articulating its marketing strategy, positioning, and points of diff, and then talk about how these overall aspects of the plan will be supported by price, promotional mix, and distribution strategy. -It's also important to discuss the company sales process.

business plan: design & development plan

-section 7 -focuses on status of development efforts -items to include: -dev. status & tasks -challenges & risk -projected dev. costs -proprietary issues (patents, trademarks, copyrights, licenses, brand names) -Many seemingly promising start-ups never get off the ground because their product development efforts stall or the actual development of the product or service turns out to be more difficult than thought.

business plan: operations plan

-section 8 -outlines how business will run -describe business in terms of "back stage" (unseen to customer) and "front stage" (seen by customer) -items to include: -general approach to operations -business location -facilities and equipment -short & crisp

business plan: management team & company structure

-section 9 -consists of founder or founders and a handful of key mgt personnel -items to include: -mgt team -board of directors -board of advisers -company structure -investors and others who read the business plan look first at the executive summary and then go directly to the management team section to assess the strength of the people starting the firm.

concept test

-should be developed for product/service desirability -1 pg description of a business that is distributed to people who are asked to provide feedback on the potential of the business idea. -The feedback will hopefully provide the entrepreneur: 1. A sense of the viability of the product or service idea. 2. Suggestions for how the idea can be strengthened or "tweaked" before proceeding further.

resources- core competencies

-specific factor or capability that supports a firm's business model and sets it apart from rivals. -A core competency can take on various forms, such as technical know-how, an efficient process, a trusting relationship with customers, expertise in product design, and so forth. -Most start-ups will list two to three core competencies in their business model template.

competitive forces: bargaining power of suppliers

-suppliers can suppress the profitability of the industries to which they sell by raising prices or reducing quality of components they provide -if a supplier reduces quality, the quality of finished product will suffer, manu will eventually have to lower its price -if suppliers are powerful relative to firms in industry to which they sell, industry profitability can suffer

aspects of conservative firms

-take "wait and see" posture -less innovative -risk averse

first screen

-template for completing feasibility analysis -tool that can be used in the initial pass at determining feasibility of business idea -if it passes, next step is to complete business plan

characteristics of successful entrepreneurs - execution intelligence

-the ability to fashion a solid business idea into a viable business is a key characteristic of successful entrepreneurs

financial feasibility analysis

-the final component of comprehensive feasibility analysis -preliminary financial assessment is sufficient

operations

-the final quadrant in a firm's business model -both integral to a firm's overall business model and represents day to day heartbeat of firm

competitive forces: rivalry among existing firms

-the major determinant of industry profitability is the level of competition among existing firms -some industries are fiercely competitive, where prices are pushed below costs, & industry wide losses occur -in other industries, competition is much less intense and price competition is subdued

core strategy- target market

-the place within a larger market segment that represents a narrow group of customers with similar interests -should be made explicit in the business model template

feasibility analysis

-the process of determining whether a business idea is viable. -the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing.

categories of business models: disruptive business models

-the second category -rare, do not fit profile of standard business model -impactful enough to disrupt/change the way business is conducted in an industry or niche within an industry

resources

-the second component of a business model -these are the inputs a firm uses to produce, sell, distribute, service a product or service -firm's most important resources must be difficult to imitate & hard to find a substitute for

financials

-the third component of a firm's business model -the only section of a firm's business model that describes how it earns money -the manner in which a business makes money is one of the most fundamental aspects of its business model

overall financial attractiveness of the proposed venture

-third component of financial feasibility analysis -A number of other financial factors are associated with promising business start-ups. -In the feasibility analysis stage, the extent to which a business opportunity is positive relative to each factor is based on an estimate rather than actual performance. factors: -steady & rapid growth in sales during first 5-7 yrs in clearly defined niche -high % recurring revenue -ability to forecast income & expenses w reasonable certainty -internally generated funds -availability of exit opportunity for investors to convert equity to cash

financials- cost structure

-this describes the most important costs incurred to support a business model -it costs money to establish a basis of differentiation, develop core competencies, acquire & develop key assets, etc. -the goal for this box in a firm's business model template is threefold: 1. identify whether the business is cost-drive or value-driven 2. identify nature of a bus. costs 3. identify bus. major cost categories

core strategy- basis of differentiation

-what causes consumers to pick one company's products over another's. -It is what solves a problem or satisfies a customer need. -It is best to limit a company's basis of differentiation to two to three key points. -Make sure that these refer to benefits rather than features

competitive forces: bargaining power of buyers: factors that have an impact on the ability of buyers to exert pressure on suppliers

1. buyer group concentration- if there are only a few large buyers who buy from a large # of suppliers, they pressure suppliers to lower costs & affect profit of industries from which they buy 2. buyer's costs- greater importance of an item is to a buyer, the more sensitive the buyer will be to price 3. degree of standardization of supplier's products- degree to which supplier product differs from competitor's affects buyer's barg. power 4. threat of backward integration- power of buyers is enhanced if there's a credible threat that the buyer might enter the supplier's industry

barriers to entry

1. economies of scale- industries characterized by large economies of scale are difficult for new firms to enter, unless they're willing to accept a cost disadvantage 2. product differentiation- industries such as soft drinks with firms w strong brands that're difficult to break into without spending heavily on advertising 3. capital requirements- the need to invest large amounts of money to gain entrance to an industry 4. cost advantages independent of size- existing firm in an industry may have purchased land when it was less expensive than it is today 5. access to dist. channels- often hard to crack, true in crowded markets, such as the convenience store market 6. gov't/legal barriers- granting of license by public authority

industry types and the opportunities they offer

1. emerging industries: -industries in which standard operating procedures have yet to be developed (opp: first-mover adv) 2. fragmented industries -industries characterized by a large # of firms of approx equal size (opp: consolidation) 3. mature industries -experiencing slow/no increase in demand (opp. process innovation & after-sale service innovation) 4. declining industries -experiencing reduction in demand (opp. leadership, est. niche mkt, cost reduction strategy) 5. global industries -industries exp. int'l sales (opp. multidomestic & global strategies)

components of industry/target market feasibility analysis

1. industry attractiveness -Particularly important—the degree to which environmental and business trends are moving in favor rather than against the industry. -ex. young rather than old, growing rather than shrinking, "must have" vs "want to have", not crowded, not dependent on historically low price of key raw materials 2. target market attractiveness -find a market that's large enough for the proposed business but is yet small enough to avoid attracting larger competitors. -Assessing the attractiveness of a target market is tougher than assessing the attractiveness an entire industry. -Often, considerable ingenuity must be employed to find information to assess the attractiveness of a specific target market.

competitive forces: rivalry among existing firms: factors that determine the intensity of the rivalry among existing firms in an industry

1. number and balance of competitors- the more competitors there are, the more likely it is that 1+ will try to gain customers by cutting its price 2. degree of difference between products- the degree to which products differ from one product to another affects industry rivalry 3. growth rate of an industry- the comp. among firms in slow-growth industry is stronger than among those in fast growth industries 4. level of fixed costs- firms w high fixed costs must sell higher volume of their product to reach break-even than firms w low fixed costs

5 steps to generating creative ideas

1. preparation 2. incubation 3. insight (eureka!; business idea conceived; problem solved) 4. evaluation 5. elaboration

types of start-up firms

1. salary substitute firms- firms that basically provide their owner or owners a similar level of income to what they would be able to earn in a conventional job 2. lifestyle firms- firms that provide their owner or owners the opportunity to pursue a particular lifestyle, a make a living at it 3. entrepreneurial firms- firms that bring new products and services to the market by creating and seizing opportunities regardless of the resources they currently control

techniques to assess industry attractiveness

1. study environmental and business trends 2. the 5 competitive forces model

types of business plans

1. summary business plan: 10-15 pgs, works best for new ventures in early stages of dev. that want to "test the waters" to see if investors are interested in their data 2. full business plan: 25-35 pgs. works best for new venture at point of needing funding/financing & serves as blueprint for company's operations 3. operational business plan: 40-100 pgs primarily for an internal audience. works best as a tool for creating blueprint for a new venture's operations and providing guidance to operational managers

competitive forces: bargaining power of suppliers: factors that have an impact on the ability of suppliers to exert pressure on buyers

1. supplier concentration- when there are only a few suppliers that supply a critical product to a large number of buyers, the supplier has an adv. 2. switching costs- fixed costs that buyers encounter when switching or changing from one supplier to another. if switching costs are high, a buy will be less likely to switch suppliers 3. attractiveness of subs- supplier power enhanced if there are no good subs for product or service 4. threat of forward integration- power of supplier is enhanced if there is a credible possibility that the supplier might enter buyer's industry

steps to assessing product/service demand

1. talk face-to-face with potential customers (The idea is to gauge customer reaction to the general concept of what you want to sell, and tweak, revise, and improve on the idea based on the feedback. In some cases, talking with potential customers will cause an entrepreneur to abandon an idea.) 2. use online tools, such as Google AdWords & Landing Pages, to assess demand (Some entrepreneurs purchase text ads on search engines that show up when a user is searching for a product that is close to their idea. If the searcher clicks on the text ad, they are directed to a landing page that describes the idea. There may be a link on the landing page that says "For future updates please enter your e-mail address." Demand for the idea can be assessed by how many people click on the text ad and enter their e-mail address. Ex. business idea feedback sites, market research, online surveys, Q&A sites)

12 ppt slides to include in investor presentation

1. title slide 2. problem 3. solution 4. opportunity/tgt market 5. technology 6. competition 7. marketing and sales 8. mgt team 9. financial projections 10. current status 11. financing sought 12. summary

day-in-the-life research

A type of anthropological research, where the employees of a company spend a day with a customer.

explanation of what entrepreneurs do

Entrepreneurs assemble and then integrate all the resources needed - the money, the people, the business model, the strategy - to transform an invention or an idea into a viable business.

venture capitalist Fred Wilson

Entrepreneurship is the art of turning an idea into a business.

academic definition entrepreneurship

Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control.

social forces

Social trends alter how people and businesses behave and set their priorities. These trends provide opportunities for new businesses to accommodate the changes. -ex. aging population -increasing diversity in workplace -increased social media -growth in mobile device use -focus on health & wellness

customer advisory boards

Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas.

weak-tie relationships

These relationships, which form between casual acquaintances, are not as apt to be between like-minded individuals, so one person may say something to another that sparks a completely new idea.

strong tie relationships

These relationships, which typically form between like-minded individuals, tend to reinforce insights and ideas that people already have.

outline of business plan

section 1. executive summary section 2. industry analysis section 3. company description section 4. market analysis section 5. the economics of the business section 6. marketing plan section 7. design & dev. plan section 8. operations plan section 9. mgt team & co structure section 10. overall schedule section 11. financial projections