Entrepreneurship and Strategic Innovation

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Entrepreneurship and Strategic Innovation

• Business Planning for New Ventures

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Lecture Contents

• Starting up a new business
• The role of the business plan
• So what is a business plan for?
• Contents of the business plan
• The history of the business
• The market opportunity
• The product or service
• The managerial team

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Contents cont.

• The financials
• The future of the business
• Presenting your plan
• Conclusion

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Starting up a new business

• You are a budding entrepreneur
• youve got a good idea for a new venture
• youve formed a team
• youve got the energy and the enthusiasm
• you may even have completed your degree from the
  University of Greenwich...
• but you need more capital to get started

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The role of the business plan

• A business plan isnt just something you need in
  order to raise funds. It will also help you
  clarify your strategic thinking at an early stage
  and provides a road map for the future of your
  business
• 3i Venture Capital website
• - even if the No. 1 goal is to raise funds

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So what is a business plan for?

• Writing a business plan helps to
• clarify goals mission
• provide a strategic road-map
• help investors understand the business
• And last but not least, to persuade investors
  they should invest in the venture

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Contents of the business plan

• After the executive summary
• A. Introduction on the businesss history
• B. The market opportunity, and why now?
• C. The product or service on offer
• D. The managerial team
• E. The business risks
• F. The financials
• G. The future of the business

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A. The history of the business

• Tell the story of your idea
• What was the source of your inspiration?
• Can you inspire others with it?
• Describe the trail to the present
• How far have you got?
• Have you developed a prototype?
• Have you done any market research?

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B. The market opportunity

• No customers, no funding, no new venture
• Who constitutes your market, and why?
• What is the nature of your segmentation?
• Why do you think your customers will buy?
• What will be your marketing strategy?
• and, crucially, why now?

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C. The product or service

• This must be tailored for your audience
• give a jargon-free description of the innovative
  aspects of your product or service
• link it clearly to demand, noting the degree of
  price sensitivity in this particular market
• dont sell it to your audience convince them of
  its present future viability

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D. The managerial team

• One of two fundamental issues
• disputes often cause new venture collapse so
  clarify roles and responsibilities
• establish which competences your team lacks, as
  well as those it has got
• balance leadership consensus
• Can your entrepreneurial start-up team also
  consolidate make the venture grow?

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E. The business risks

• Identify strategies for the key risk factors
• how to overcome barriers to entry (if any)
• how to deter imitation keep the competition
  (present future) at bay
• how to adjust to environmental change
• how to respond to growth success
• how to cope with disputes in the team
• for other specific industry/market risks

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F. The financials

• The second of the two fundamental issues,
  particularly for Venture Capitalists
• how much founders capital is there?
• what external funds are needed why?
• what is the equity split envisaged?
• is the debt/equity ratio manageable?
• what is the projected valuation profit?
• have you thought through an exit strategy?

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G. The future of the business

• Financial projections naturally lead to a
  consideration of the ventures future, but growth
  has to be managed planned
• the managerial team will change
• financial demands may expand
• where is the second product or service coming
  from (or is it a 1-product firm)?
• when will the value be harvested?

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Presenting the plan

• The plan must work in spoken form too
• understand the nature of the audience then
  adjust the presentations emphasis
• determine the best vehicle for presentation
  (PowerPoint is not obligatory, just useful)
• demonstrate teamwork, coherence commitment to
  the venture
• rehearse stick to the timeslot allotted!

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Conclusion

• Business plans clarify the fundamentals
• strategy mission before start-up
• managerial team composition or gaps
• nature of the market opportunity
• business risks strategic solutions
• business rewards financial needs
• capturing reaping the value upon exit

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Sources Used

• Wickham, Strategic Entrepreneurship 2nd edition,
  general approach
• S. Birley D. Muzyka, eds., Mastering
  Entrepreneurship (Prentice Hall, 2000) chaps. 4
  5
• W. A. Sahlman, How to write a great business
  plan, HBR July-August (1997)
• 3i VC Fund website