Mind Your Business

REAL Entrepreneurs base their direction on purposeful innovation in response to consumer demand and not on the desire to make a quick buck.

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Do you want to be master of your own financial destiny?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up? Are you always looking for better ways of doing things?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up? Are you always looking for better ways of doing things? Can you recognize, admit to, and learn from your mistakes?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up? Are you always looking for better ways of doing things? Can you recognize, admit to, and learn from your mistakes? Are you good at making decisions?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up? Are you always looking for better ways of doing things? Can you recognize, admit to, and learn from your mistakes? Are you good at making decisions? Do you have a purpose, focus & direction in your life?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up? Are you always looking for better ways of doing things? Can you recognize, admit to, and learn from your mistakes? Are you good at making decisions? Do you have a purpose, focus & direction in your life? Do you have the courage to try new things or go against the grain and be

different from other people without working too much about what they think?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up? Are you always looking for better ways of doing things? Can you recognize, admit to, and learn from your mistakes? Are you good at making decisions? Do you have a purpose, focus & direction in your life? Do you have the courage to try new things or go against the grain and be

different from other people without working too much about what they think? Do you like make things happen instead of waiting for things o happen?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up? Are you always looking for better ways of doing things? Can you recognize, admit to, and learn from your mistakes? Are you good at making decisions? Do you have a purpose, focus & direction in your life? Do you have the courage to try new things or go against the grain and be

different from other people without working too much about what they think? Do you like make things happen instead of waiting for things o happen? Does pressure feed you rather than get to you?

Do you want to be master of your own financial destiny? Are you willing to invest and possibly lose a large portion of your savings? Are you prepared, if needed, to lower your standard of living until your business

becomes profitable? Have your ever been involved in a business before? Do you have the ability to conceptualize the whole of a business – and

connect the dots? Are you imaginative, inventive and resourceful? Do you constantly re evaluate and adjust your goals? Can you sell your ideas to others? Are you a person who never gives up? Are you always looking for better ways of doing things? Can you recognize, admit to, and learn from your mistakes? Are you good at making decisions? Do you have a purpose, focus & direction in your life? Do you have the courage to try new things or go against the grain and be

different from other people without working too much about what they think? Do you like make things happen instead of waiting for things o happen? Does pressure feed you rather than get to you? Do you look forward to a good Challenge?

Being at the right place at the right time

Adaptive to change

Good people will follow a visionary and a leader

Customers will show loyalty when treated properly and shown the value proposition

Capital will follow the management team that can demonstrate the ability to focus on their model and produce operational excellence

Reasons for Success

They fail the narrative test (the story doesn’t make sense) or the number test (the spreadsheet doesn’t add up)

They underestimated the competition and how their model would stand up under pressure

Retaliation of existing competitors or entry of new competitors

Substitute products or services

They fail to adjust to economic, social political, regulatory, industry, technology, environmental or competitive changes.

Reasons for Failure

Most businesses fail in less than two years

Fewer than one percent of the business plans submitted to VCs get funded

Failures are planned by lack of planning

Facts you should know!

What important customer problem can you solve with your Idea?

How are you going to do it?

How many customers are there that are willing to buy from you?

Why can only you provide the solution?

How can you defend against others?

Answer First Five!

Are both market and industry attractive?

Does the opportunity offer compelling customer benefits as well as sustainable advantage over other solutions to the customer needs?

Can the idea deliver the results they seek and promise to others?

Top level issues!

John Mullins

1. Market domain – macro level

2. Market domain – micro level

3. Industry domain – macro level

4. Industry domain – micro level

5. Team domain – aspirations

6. Team domain – execution capability

7. Team domain – connections or networks

What’s That?

Seven domains are not equally important

A simple scoring sheet will not work

Wrong combination of domains can kill a venture

Sufficient strength in some domains can mitigate weaknesses in others – good opportunities can be found in not-so-attractive markets and industries

Remember!

Overall market – size (number of customers, aggregate money spent, number of usage occasions) (Secondary data from trade publications, business press)

Where is the market on the “S curve” – is it nascent, growing or saturating (infer from historical data)

Trends in broad categories – demographic, socio-cultural, economic, technological, regulatory

Market AnalysisMacro Level

Target segment benefits and attractiveness –customers buy benefits, not products or features.

How large is the segment and how fast it is growing – combination of primary and secondary data

Who you would like to be your FIRST customer –can you name him

Clearly differentiated solution with value delivery unambiguously stated

Does an entry in a segment facilitate lateral entry in other segments?

Market AnalysisMicro Level

Standard Industry Classification

Positioning is not obvious

Michael Porter – “Competitive Strategy” -- Five Force Framework

Suppliers, Buyers, Incumbents, New Entrants, Substitutes

Competitive rivalry, threat of entry and substitutes, bargaining power of buyers and suppliers

Which of these forces are favourable and unfavourable (SWOT analysis)

Industry AnalysisMacro Level

Sustainable competitive advantage – How long will your edge last ?

IP Protection – patents, copyright, trade secrets

Superior organizational processes that are difficult to replicate

Economically viable business model –availability of finance for long term and working capital, contract enforcement and revenue collection cycles

Industry AnalysisMicro Level

Financers give as much importance to team as ideas.

Accepted wisdom – Ideas come dime a dozen, who will execute?

Aspirations, motivation and propensity for risk taking

Ability to execute on critical success factors (CSFs) – unique to each industry market segment – better, cheaper, faster

Connectedness up, down and across the value chain – ability to move from Plan A to Plan B

Team Analysis

VentureCharacteristics *Typology of

Ventures

Entrepreneurial Fit

*Personal goals*Entrepreneurial

Capacity

Strategy to Exploit

*Research&Analysis*Process

*Resources*Growth

Iterative

Heuristics

Heuristics Heuristics

Venture Typology Revolutionary ventures

Niche ventures

Ventures that are propagators of new technology or innovations

Hustle ventures

Speculative (deal) ventures

SWOT Analysis Strengths – identifying existing organisational

strengths

Weaknesses – identifying existing organisational weaknesses

Opportunities – Identify existing and emerging market opportunities

Threats – Identify threats to the future success of the business

PEST Analysis Political: local, national and international

political developments – how will they affect the business ?

Economic: what are the main economic issues – both nationally and internationally – that would have a bearing on the business.

Social: Identify existing and emerging social trends that would have impact on the business and their implications for future planning

Technological: Technological changes and their implications to competitive advantage.

PEST Analysis Political: local, national and international

political developments – how will they affect the business ?

Economic: what are the main economic issues – both nationally and internationally – that would have a bearing on the business.

Social: Identify existing and emerging social trends that would have impact on the business and their implications for future planning

Technological: Technological changes and their implications to competitive advantage.

Potter’s Five Force Model

The Company

Current Competitors

Potential Competitors

Suppliers

Substitute Products

Customers

Determinates of Profitability

Bob Fabio’s “WHAT” What messages . . . to reach

What market(s) . . . with

What product(s) . . . distributed through

What channel(s) . . . against

What competition . . . with

What pricing and packaging . . . to deliver

What value . . . in

What time frame?

Bob Fabio’s “WHAT” What messages . . . to reach

What market(s) . . . with

What product(s) . . . distributed through

What channel(s) . . . against

What competition . . . with

What pricing and packaging . . . to deliver

What value . . . in

What time frame?

Market Opportunities / Validations How will the product or service be priced?

How will you reach the target customer?

How much does it cost to acquire a customer in time and Money?

How much does it cost to produce and deliver the product or service?

How much does it cost to support a customer?

How easy (expensive) is it to retain a customer?

Competition Who are the current competitors?

What resources do they control and what are their strengths and weaknesses?

How will they respond to our decision to enter the business and what can we do?

Who else might notice and enter our market?

Can we build barriers to competitors by forming alliances?

Effective Strategy Implementation Requires

In just about 12 slides

6

Technologies

8

Marketing and leverage

points

7

Competition

1

Intro

What $ youare after

2

Company overview and

elevator pitch;

Moresolution details

5

10

Management Team

3

Problem buy-in; Market and

opportunitysize

4

Your solution and products;with benefits

9

How youmake money;

How much?

11

Status; Timeline;

Use of funds

12

Recap;Call-to-action

Venture Capital Early Stage Financing

The SEED Stage – In this stage relatively small amounts of capital is used to prove concepts & finance feasibility studies.

The START-UP Stage – In this stage funding is done for product development and initial marketing, but with no commercial sales yet (basically to get operations started).

Venture Capital Development Financing

The SECOND Stage – In this stage working capital is used for initial growth phase, but no clear profitability or cash flow yet.

The THIRD Stage – In this stage financing is done for major expansion for company with rapid sales growth, at break even or positive profit levels but still private company.

The BRIDGE/PRE-PUBLIC Stage – In this stage Bridge financing is done so as to prepare the company for public offering.

Mind Your Business

shiftHAPPENED