Entrepreneurship & Innovation
Fatal Flaws of New Concepts (9):
- It wont work - No real need - Hidden traps - Bad economics - No protection - Limited life - Customer education - Inconvenience - Extensive service requirements
Defining Concept: Conceptual Model (7)
- Where is the value? - To whom? - For what? - Where? - Made by whom? - Marketed by whom? - Financed by whom?
What is a business model? Questions that are typically asked (4):
- Who are the customers? - What do customers value? - How does our business make money? - What is the underlying economic logic of the venture?
Competitive Analysis: Knowing your competition (6):
- Who are they - Where are they - What their strengths and weaknesses are - Who are their customers - How do they advertise and promote - What ist he basis of competiton
Market Research: Answer these questions (3):
- Who is the customer? - Who are the players? (competitors and potential competitors) -How can the customer be reached?
First Mover Advantage (5):
- You have to be first (or very early) in the market - Need to capture large percentage of market quickly - Create switching costs so customers will stay - Very expensive, hard to win - First movers rarely win
What are the contributing factors to framework (9):
- cultural norms - education and training - government - r&d transfer - commercial & legal - internal market openness - financial - people resources - physical resources
Personal Attributes that influence becoming an entrepreneur (6)
- higher internal focus of control - desire for financial success - desire to achieve self realization - desire for recognition - joy of innovation - risk of tolerance
Questions to spur creativity (8):
- is there a new way to do it? - can you give it a different twist? - what if we do the opposite? - can parts be rearranged? - can we put it to other uses? - can ideas be combined? - what else can we make from this? - can you borrow/adapt this?
Environmental factors that influence becoming an entrepreneur (4)
- local, regional, national attitudes towards entrepreneurship - social and cultural pressures for or against risk taking and entrepreneurship - access to entrepreneurial ole models - responsibilities to family and the community
Barriers of creativity (8):
- one "correct" answer - being logical - following the rules - being practical - coming specialized - avoiding ambiguity - fearing mistakes and failures - believing your NOT creative
Creativity consists of (3):
- thinking outside of the box - looking at things in different ways - doing the unexpected
Entrepreneurs must do three things before moving forward:
1) Asses their own financial reality 2) Identify key contacts in their networks 3) Reach out to sources of free advice/feedback
Define a business model (2):
1. Describes how venture obtains resources, people, money, materials, and other inputs. 2. Tells who the venture produces the product for, the conditions of sale & delivery, marketing & cash flow.
What are the four "whos" of marketing?
1. The User 2. The Decision Maker 3. The Buyer 4. The Influencer
In 2011 how many small businesses were small business employer firms?
28.2 million small businesses, of that total just under 5.7 million were small business employer firms. Total employment was at 55 million
What percent of small businesses were woman owned?
29%
An entrepreneurial leader is someone who... - Innovates... - Develops & Executes... - Creates...
An entrepreneurial leader is an innovator who recognizes and seizes upon opportunities, develops and executes strategies to capitalize on marketable ideas, and creates employment and wealth for themselves and for their communities.
MacroTrends: Last 50 Years Trends: Baby-Boomers, Personal-Computing, Obesity, Urbanization: What was their impacts?
Baby-boomers: Pampers, TV, rock & roll, minivans Personal-computing: Internet, media-on-demand, electronic publishing/communication, spread sheets. Obesity: Drain on health care system, growth of diet industry, health clubs, and home gyms. Urbanization: Densification and growth of urban areas.
How many new net jobs did small businesses create?
Created 1.1 million new net jobs - biggest gain was firms in 1-4 employee category.
10 "D's": Distribute
Distribute ownership of business with key employees who are critical to the success.
What does franchising work best with?
Franchising works best with service businesses that are easy to replicate * be sure to monitor franchisees to maintain brand purity*
10 "D's": Dollars
Getting rich is NOT the prime motivator - money is just a measure of success.
What kind of marketing do entrepreneurs often use?
Guerilla marketing
What are the top small business industries (by employment) in the US (4)
Health care & social assistance - accommodation & food services - retail trade - manufacturing
10 "D's": Doers
Once a course of action is decided they implement it as quickly as possible.
Definition of Marketing
Organizational function and set processes for creating, communicating, and delivering value to customers, and for managing customer relationships in ways that benefit the organization and its stake holders.
List the highest number of small firms in/by the industry (5)
Other services - professional, scientific, and technical services - construction - real estate & rental/leasing - health care & social assistance.
What is strategy?
Patterns of decisions that shape the venture's internal resource configuration and deployment, and guide alignment with the environment.
What is the Profit equation?
Profit = Revenues - Expenses
What is the revenue equation?
Revenues = Price x Quantity
How many people did small business employ?
Small businesses employed half, or 55 million of the nation's private work force.
SWOT Analysis: Strengths (7)
Strengths: Positive Internal Factors - Core competencies - Innovative capacity - Management quality - Proprietary technology - Competitive protection - Financial strengths - Effective Strategies
What is Market Segmentation? List segment groups (6):
The identification of distinct heterogeneous buying groups, and the development and implementation of a marketing strategy to fit each group segment according to: - Type of buyer - Geography - Demographics - Time of use - Benefits sought - Buyer attitudes
SWOT Analysis: Weaknesses (7)
Weaknesses: Negative Internal Factors - Inadequate financial resources - Inexperience management - Inadequate facilities - Marketing/distribution problems - Negative reputation - Ineffective strategies - Operational inefficiencies
Guerilla Marketing (2):
- It is a non-traditional, grassroots, captivating, & viral - It creates word-of mouth & buzz
10 "D's": Dedication
Totally dedicated to business - long hours - personal relationships may come second.
Types of Innovation (4)
- Invention - Extension - Duplication - Synthesis
Promotional Activities (4)
- Advertising - Personal selling (prospecting, communicating, servicing, information collection and allocating) - Publicity (public relations) - Sales promotions (promotional mix)
PEST Model - Social Trends in society affecting opportunities (5):
- Aging - Income - Purchase Habits - Consumer Attitudes - National/International movements
Opportunity Analysis: Industry & Market Considerations: Criteria for evaluating venture opportunities industry and market (10)
- Customers - User benefits - Value added - Product life - Structure - Size - Growth rate - Capacity - Attainable share - Cost structure
Consider these three topics before expanding geographically:
- Customers: go where they are, mimic proven success strategies - Vendors: can you use the same vendors? new costs?? - leverage volume for better pricing - Distribution: Same channels? leverage volume?
Growth planning process (5):
- Define success measures - Make time to plan - Seek input from team and mentors - Analyze your business (SWOT analysis, core competencies, organizational structure, market and competition) - Set goals and measure performance
Opportunity Assessment: Strategic | Differentiation Considerations: Criteria for evaluating venture opportunities strategic differentiation (10)
- Degree of fit - Team - Service Management - Timing - Technology - Flexibility - Opportunity Orientation - Pricing - Dist. channels - Room for error
Understanding the Customer: What is the customer profile (3)?
- Demographics (age, gender, income) - Psychographics (innovative, risk-averse, etc.) - User-term Characteristics (heavy/passive users, level of usage)
Basic strategy categories are (3):
- Differentiation - Low Cost - Niche
What are the 10 "D's" of entrepreneurship?
- Dream - Decisiveness - Doers - Determination - Dedication - Devotion - Details - Destiny - Dollars - Distribute
PEST Model - Economics How it affects opportunities (6):
- Employment - Interest Rates - Business Cycles - Inflation - Wages - Expectations
Opportunity Analysis: Management team considerations: Criteria for evaluating venture opportunity management team (4):
- Entrepreneurial team - Industry and technical experience - Integrity - Intellectual honesty
Opportunity Analysis: Competitive Advantage Considerations Criteria for evaluating venture opportunities competitive advantages (6)
- Fixed/variable costs - Control over costs - Proprietary protection - Response/lead time - Legal advantage - Contracts/networks
Designing Your Firm's Value Solution (5):
- For Customer Convenience - For Price - For Productivity - For Simplicity - For image
The 9 "F's" of Successful Companies
- Founders - Focused - Fast - Flexible - Forever innovating - Flat - Frugal - Friendly - Fun
Opportunity Assessment: Personal criteria considerations: Criteria for Evaluating venture opportunities personal criteria (6):
- Goals and fit - Upside/Downside issues - Opportunity costs - Desirability - Risk and reward tolerance - Stress tolerance
Sources of Innovation (3/6)
- Industry/Market changes: health care, outpatient, clinics - Demographic changes: club Med: increase in wealth and interest in exotic travel - Knowledge based concepts: computer
What does an entrepreneurial mindset consist of? (11)
- Innovation & creativity - Opportunity recognition & assessment - Strategic business planning - Management & leadership - Negotiation & conflict resolution - Financial analysis & budgeting - Sales & market analysis - Verbal & written communications - Team building - Risk management - Willingness to try/acceptance of failure
Four Pillars on New Venture
- Large growing market - Strong team - Excellent financial returns - Competitive advantage (IP)
Entrepreneurs face unique marketing challenges (3):
- Limited by: financial & managerial resources, time, market information - Muddling decision-making with personal biases and beliefs - Establishes poor relations with multiple audiences.
Key Areas for Assessing the Feasibility of a New Venture (4):
- Market Issues: expected demands - target markets and competition - Organizational Issues: structure, qualifications, and roles & responsibilities. - Technological Issues: specific needs, availability, proprietary or not, and ability to obtain. - Financial Issues: start up costs, revenue projections, sources of financing and profit potential
SWOT Analysis: Threats (7)
- New strong competitors - Increased demand for customers - Subtle product demand - Business cycle shifts - Slow market growth - Changing customer preferences - Adverse demographic shifts
PEST Model - Technological Trends in society that affect opportunities (3):
- New technologies - Rate of change in technology - Relative importance of technology to customers/firms
Why Marketing is so Important (4):
- No venture can become established and grow with out a customer market. - Its difficult and expensive to bring new products and services into the market. - Differentiate products or services to customers makes the company distinctive and valuable. - Companies must be bale to switch marketing gears quickly to attract new customer segments.
Why is entrepreneurship important? (6)
- Primary source of new jobs in an economy - Driving force in an economy - Outstanding source of innovation - Is the essence of the american dream - Creates wealth, advances society ~ Powers individuals to pursue their professional career dreams
Entrepreneurs must acquire market data & information: Four main categories
- Product attributes important to customers - Customer behavior indicating a willingness to pay - Trends - Customer preference locations
You can drive growth in three ways:
- Product mix expansion - Franchising - Geographic expansion
Franchising has three main benefits:
- Replicability: established and proven methods - New sources revenue: Royalties and fees from franchising - New capital growth funds
Entrepreneurs must acquire market data & information: Two main types
- Secondary: economical, already published - Primary: collected directly for specific purposes (groups, survey's and experiments)
Strong Attributes of a Concept (8)
- Significant saving - Solves serious problems - Offers convenience - Integrates well - Clear market ID - Market barriers - Large & growing markets - Big upside; low downside
Drive growth with product mix (3):
- Tangents and agencies: what makes sense with current offerings. - Spread current costs: new products up revenues more than costs. - Maintain same distribution channels
PEST Model - Political/Legal: Ways government affects this model (6):
- Taxes - Environmental regulations - Employment laws - Political climate - Trade laws - General government regulation
Opportunity Analysis: Economic and Harvest Considerations Criteria for evaluating venture opportunities economics and harvest issues (7)
- Time to BE - ROI Potential - Capital requests - Cash flow char. - Value added potential - Exit strategy - Capital Market
Sources of Innovation (3/6)
- Unexpected occurrences: Novocaine was invented for surgery but is used in dentistry today - Incongruities: shipping - cost of time - Process Needs: Portable generators - emergency power supply
SWOT Analysis: Opportunities (7)
- Untapped market potential - New product or geographic market - Significant potential market growth - Emerging technologies - Deregulation - Global market opportunities - Increasing market fragmentation
Tenets of Timmons Model
1) The opportunity 2) The lead entrepreneur and management team 3) The resources
Classic Definition of Entrepreneurship (Schumpeter's definition)
An entrepreneur is someone who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw material.
Attributes of winning strategies (3):
Cheaper --> Better --> Faster --> Cheaper --> Better --> Faster (so on and so forth)
How do others see it? - Market (5) - Advantages (5) - Return (5)
Market: need, market structure, pricing, marketing size, timing. Advantages: cost structure, barriers to entry, intellectual property, the team distribution, channels Return: profitability, time to break even, investment needed, exit strategy, return on investment
Entrepreneurial Framework:
New venture creation and existing expansion has many integrated and moving parts that need to be in alignment to maximize opportunities.
What is innovation?
The specific function of entrepreneurship, whether it is an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen. Means by which the entrepreneur either creates new wealth - producing resources or endows existing resources when enhanced with potential.
What is Market Research?
The systematic and objective process of gathering, coding, and analyzing data for aid on making marketing decisions
10 "D's": Decisiveness
They don't procrastinate - they make decisions swiftly <-- that is the key factor for success.
10 "D's": Dream
They have a vision of what the future could be like for them - they implement their dreams.
10 "D's": Determination
They implement ventures with total commitment.
10 "D's": Devotion
They love what they do - it's the love that sustains them when it gets tough - love for products/services is what make them sell.
10 "D's": Details
They must be on top of all critical details.
10 "D's": Destiny
They want to be in charge of their own destiny rather than be dependent on an employer.