Establishing an eBusiness CITM360

1
Establishing an eBusinessCITM360 Week 3

• Steven A. Gedeon, PhD, MBA, PEng
• s2gedeon_at_ryerson.ca

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This Weeks Agenda

• Elevator Pitches
• Business Plan Overview
• Market Analysis
• Market Lifecycle
• Crossing the Chasm
• Segmentation
• Porters 5 Forces
• Assignment 1 (for next week)

3
Elevator Pitch Evaluations

• Business Overview Did it contain the major
  elements (product, customer, revenue, goals)?
• Clarity Was it easily understood?
• Success Is it a good idea? Do you think it will
  succeed?
• Excitement Are you interested in hearing more?
  Would you like to be involved?
• Presentation Delivery
• Overall Score ( out of 100)

4
Business Plans

• What is the Purpose of the Plan?
• Raise Financing?
• Clarity of Thought?
• Operating Plan for Employees ?
• Report to the Board?
• Who is the Audience?
• Angel, VC, Banker, IPO
• Acquirer or Acquiree

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Business Plan Overview

• Executive Summary
• Mission, Goals Objectives
• The Business Opportunity (Big Picture)
• Market Analysis
• Key Success Factors (Strategy)
• Marketing Plan
• Processes and Technology Plan
• Organizational Matters
• Financial Plan
• Concluding Comments
• Appendices

6
The Business Planning Process

• Identify the Opportunity (Start with an Idea)
• Marshal Scarce Resources (Skunkworks, Prototype)
• Market Analysis (Gather Info, Meet with
  Customers)
• Determine Key Success Factors
• Articulate the Business Opportunity
• Create Plans (Market, Technology, Org, Financial)
• Articulate the Goals and Objectives
• Create and Disseminate the Business Plan
• Implement the Plan
• Monitor and Revise the Plan

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Executive Summary

• Must be a Stand Alone Document
• Normally the First Thing you Send Out
• Many People will Only Read This even if Attached
  to the Full Business Plan
• Must Contain All the Essential Elements to
  Understand the Business and Stimulate Action
  (Accept a Followup Meeting or Ask for the Full
  Plan)
• Normally Written Last

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Mission, Goals Objectives

• This Should Motivate the Reader or Dont Bother
• No Motherhood/Apple Pie Statements
• Give an Overview of the Size of the Opportunity
• Is this Business Capable of Hitting 100M/yr in
  Rev?
• Are there Non-Financial Goals of the Business?
• Financial Goals
• E.g. break even in 6 mo? 2M within 2 years?
• Exit Strategy
• E.g. position ourselves to be acquired by
  Microsoft

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The Business Opportunity (Big Picture)

• This is Also a Motivational Opportunity
• Need to Provide Crystal Clear Understanding of
  the Business before Delving into Potentially
  Confusing Market Information and Plans
• All Info in the Plan must be Integrated with This
  Section
• You may Need to Rewrite this Section Most Often
  as You Discover Info and Refine your
  Understanding of the Business

• The Better we can Define the Opportunity and
  Value
• Proposition, the More Likely we are to Capitalize
  on it

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Market Analysis

• Focus on the Facts
• Provide References and Recent Info
• Focus on Detailed Understanding, not Just Broad
  Overviews
• Nobody Ever Hits 1 of the Gazillion Dollar
  Market!
• Businesses are Built One Segment at a Time Pick
  Good Ones and Understand them in Detail

More Details on Market Analysis Later in Class
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Key Success Factors (Strategy)

• Synthesis of the Data and Strategy
• What are the Few Key Things we Must Do to
  Succeed?
• What are the Few Key Things that Drive the Rest
  of the Plan?
• What are the Biggest Hurdles that we must Address?

This May be the Most Important Section
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Marketing Plan

• Product
• Core, Actual and Augmented
• Detailed Description of how it addresses the
  Customer Need
• Price
• Revenue Model, Pricing Strategy (Penetration,
  Skimming)
• Place (Distribution Channels)
• Promotion

13
Processes and Technology Plan

• This is Often in the Appendix (or a Separate
  Document)
• May be more Important if the Company Depends on
  Patents and/or Intellectual Property
• May want to provide Overview in Plan with Details
  in Appendix

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Organizational Matters

• Whether or not you need this Section may Depend
  on the Purpose of the Plan
• This is Often in the Appendix (or a Separate
  Document)
• May want to provide Overview in Plan with Details
  in Appendix
• Many Plans Only Provide a Good Overview of
  Management Team and Board of Directors

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Financial Plan

• Most Investors (and All Bankers, VCs) WILL READ
  this in detail and feel that this is the true
  Heart of a Plan
• Most plans Fail on this section
• Provide Proforma Financials in the Appendix
• Clearly State Key Drivers and Assumptions
• This section should demonstrate that you
  understand the Key Issues and Costs of doing
  business
• CPM Understanding if Revenues based on Traffic
• Understanding of the True Cost of Sales and Sales
  Cycle
• Demonstration of how to Manage Cash (Cash is King)

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Concluding Comments

• Last Chance to Motivate the Reader
• This is not a Summary Its a Conclusion
• Highlight the Key Things you want them to Remember

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Appendices

• Make sure you maintain a logical flow to the
  Business Plan. Anything that breaks the flow, but
  needs to be included, should be put in the
  appendix
• Resumes, Technical Details, Reports, Financial
  Statements all belong in the appendix
• Nice way to show youve really done your homework
  by including lots of backup information

18
Final Business Plan Comments

• Edit, Edit, Edit! Mistakes and obvious spelling
  and grammar errors are deadly!
• Put Contact Information on Front Page and at end.
  You never know where your plan will end up and
  who may want to call.
• Format should be appropriate to your stage (dont
  make it too slick for a startup).
• Add some color, figures, logos

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Marketing Analysis

• You dont conduct business in a vacuum-you do it
  in a world already inhabited by buyers and
  sellers
• Describe the customers, competitors and trends
  affecting the marketplace

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Market Analysis

• Focus on the Facts
• Provide References and Recent Info
• Focus on Detailed Understanding, not Just Broad
  Overviews
• Nobody Ever Hits 1 of the Gazillion Dollar
  Market!
• Businesses are Built One Segment at a Time Pick
  Good Ones and Understand them in Detail

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Market Analysis Section Outline

• Macroeconomic Trends
• Overall Market Analysis (Growing, Flat, Trends,
  other info)
• Customer Analysis (Segment and Define the
  Customer Influencers in Detail!)
• Company Strengths Weaknesses
• Competition (Current and Future)

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Market Analysis References

• http//homebiztools.com/analysis.htm
• http//www.va-interactive.com/inbusiness/editorial
  /sales/ibt/market_analysis.html
• http//www.inc.com/articles/1999/12/15964.html

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Macroeconomic Trends

• This section of the plan is highly overrated
• This must be directly relevant or dont bother
  writing about it
• You are selling to a specific market and segment
  now. Trends that might affect your segment in 5
  years may not be important in your plan

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Overall Market Analysis

• Product Lifecycle Curve
• Market Lifecycle Curve
• Industry Consolidation
• Shortening of the Product Lifecycle
• Enabling Technologies

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Customer Analysis Segmentation

• Detailed Understanding of their Pain
• Detailed Understanding of the Niche Segment
• Detailed Understanding of WHO within the
  company/family will decide/influence (titles)
• What are their other Choices?
• Share of Mouth/Mind/Ear?
• Other websites?
• What do you know? What do you need to know? Where
  will you get this information?

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Moores Crossing the Chasm
Bowling Alley
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Crossing the Chasm Refs

• http//www.testing.com/writings/reviews/moore-chas
  m.html
• http//www.moneyhaven.com/entrepreneurs/hightechma
  rketing.html

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Summary of Moore

• You Start by Selling to Enthusiasts and
  Visionaries (Very Different than mainstream)
• If the Market is More Mature, you Need to Sell to
  Bowling Pin Segments within the Bowling Alley
  (then leverage one pin to hit the next logical
  pin or two)
• Need to know When in the Market you are, which
  Pin/Segment, and Characteristics of that Segment

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Company Strengths Weaknesses

• Strategy and Plans should Focus on taking
  Advantage of your Strengths, not trying to fix
  your Weaknesses
• Ideally your Strengths will align with your
  Competitors Weaknesses
• Be Honest and Specific
• The Importance of this Section will Depend on the
  Purpose of your Plan

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Competitive Opportunities and Threats

• Description of main competitors is essential in
  business plan
• Need honest assessment of competition, which are
  your most serious competitors?
• What are their weaknesses?
• Substitutes? New Entrants? Suppliers?
• What are the Opportunities for Partners?
• All Companies Need Friends, Partners, Channels

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Porter 5 Forces
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Porter 5 Forces References

• http//home.att.net/nickols/five_forces.htm
• http//www.quickmba.com/strategy/porter.shtml

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Assignment 1 (due Jan 31)

• Get the Assignment Details off Blackboard
• Purpose Identify Business Opportunities and Hone
  Research Skills
• Research Various Trends
• Some sample websites shown but go beyond this!
• Outline a Business Idea
• Can be your Group Idea or a different idea you
  are interested in
• Do Your Own Work even if all Team Members have
  same Business Idea!
• This will prevent GroupThink by thinking through
  the business independently and doing your own
  independent research
• Think outside the box Be Resourceful

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Assignment Questions

• What useful information for e-business planning
  did you get from your research? Summarize 3-4 key
  insights that will help you identify an
  e-business opportunity. (6 marks)
•  
• 2. Building on your answer to the previous
  question, outline an idea for an e-business that
  you think is likely to be successful. Your answer
  should explain what the value proposition for
  this business is, and why you believe the
  business has the potential for success. (6 marks)
•  
• 3. Explain the revenue model for this business.
  The business does not need to be profitable in
  its first year of operation, but you must
  demonstrate how this business will generate
  revenues. (3 marks)

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Format

• Length limit 1000-1200 words
• Submit Word file to turnitin.com
• Class ID 1244069
• Enrollment password ebiz

Note The Original ID and password in the Outline
Handed Out in Class is WRONG!
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Group Work -

• Further refine the business idea based on the
  feedback received during the Elevator Pitch
• Draft an outline of the Market Analysis and
  assign sections to various team members to focus
  on
• Define your market segment and specific customers
  as clearly as possible
• Identify what market research is still needed