INFORMATION TECHNOLOGY ENTREPRENEURSHP

1
INFORMATION TECHNOLOGY ENTREPRENEURSHP
CLASS FOUR THE BUSINESS PLAN THE ELEVATOR PITCH

• Elikem Nutifafa Kuenyhia
• Management Consultant Corporate Lawyer

2
Agenda For Class Four

• Hand in Homework Assignment
• Recap of Class Three Discussion
• Discussion of Sedina Attionu Case
• The Business Plan Elevator Pitch
• Guest Speakers Michael Antwi, Business
  Development Manager, Africa Development Fund
  Confirmed and Eli Kumekpor, Consultant,
  Deloitte Touche USA
• Give you opportunity to ask questions

3
Homework Exercises

1. Spend five to ten minutes to analyse yourself,
   your strengths, weaknesses and ask yourself
   whether you consider yourself a born entrepreneur
   based on the traits of successful entrepreneurs
   discussed.
2. Based on the presentations of Michael Amankwah
   Mrs Villars and on the case studies
   (TravelKing/Pak Wo Shum and Sedina Attonu) would
   you say there is a particular entrepreneurial
   mindset?

4
Recap of Class Three
5
Developing A Business Plan

• BPlan should highlight uniqueness of particular
  venture
• Should demonstrate entrepreneur has
• Thought through proposed venture its key
  success factors
• Carried out relevant research
• Considered Pros Cons of proposed venture

6
Developing a business plan

• A business plan should tell a complete picture
  about
• Management team
• Product/Service
• Financing Needs
• Strategies
• Financial Non-Financial Goals of enterprise

7
Developing a business plan

• A business plan should
• Balanced
• Present both positives and negatives about
  business
• Forward looking frame of about 3 years
• Clear, concise and well organized
• Simple to understand
• Provide realistic data
• If seeking investment, be clear on returns exit
• Provide projected financial statements

8
Each Plan though is unique

• The detail you focus on will depend on the type
  of business
• For start ups, may focus more on substantiating
  the existence of market demand
• Start ups may also focus disproportionately on
  the quality of the management team
• If inventing new technology based on research,
  may focus on Research Development section

9
Role of Business Plan

• Internal document
• 'bible' for running the company, charting its
  course, recording successes etc
• Should become a 'living' document
• Pro-active Problem solving document
• Reveals potential problems gives entrepreneurs
  chance to think through them
• Forces industry understanding
• For a good business plan, entrepreneur would have
  to completely understand the industry he seeks to
  operate in

10
Role of Business Plan (cont'd)

• Provides analytical discipline
• Forces entrepreneur to think through whether
  venture will make money from which sources etc
• Attracts lenders investors
• Provides medium for entrepreneur to 'sell' his
  business to lenders investors
• Enhances chances of success
• Greatest value is in actually drawing up plan
• The process framework makes entrepreneur better
  equipped

11
Executive Summary

• Brief summary of the key highlights of plan.
• Objective Grab attention/Encourage reader to
  read to the end.
• Should provide a good overview of venture to
  enable investor determine make decision
• Clearly communicate existing consumer pain and
  how business would deal with this pain
• Communicates the business concept and what
  differentiates it from competition

12
Mission Statement

• Is the broadest statement of a company's purpose
  and defines the direction in which it will move
• Basically will capture
• What the enterprise is
• What it will become
• What it stands for

13
The Entity

• Provides info about the company or other entity
  behind the business plan
• If company has been in existence for a while,
  will include some historical background
• Describe how the entity is organised operating
  structure
• Describe key processes involved in providing
  service or product any relations with
  sub-contractors etc

14
Entity

• This section will answer the following key
  questions
• What form of entity?
• When established? By whom?
• Shareholding structure
• Level of commitment to running business
• Is it a start up or growing concern?
• Location
• Number of employees
• Any outsourcing?

15
Product/Service

• Addresses a current customer pain
• Should clear state what the product or service
  does and what the customer value is
• Refer to competition and state how this
  product/service is superior to the competition
• Think indirect substitutes where there are no
  direct substitutes
• Stage of product development (or details of
  prototype)

16
Product/Service

• Should answer the following
• What are the identified customer needs that the
  product/service will address
• What value does the product/service bring the
  customer?
• Strengths/Weaknesses of product/service to
  competitive set
• Type of service/maintenance program planned
• What is the nature of the innovation?
• What is the current status of technical
  development?

17
Management Team

• Most important section!!!
• Success of a venture depends on ability of
  management team.
• Even if it is a sole-proprietor, he will be
  relying on people to execute
• Team should have
• Common vision
• Complimentary skills, attributes, strengths
• Ability to get along with one another
• Team should be lean resilient

18
Management Team

• Detail responsibility split
• Info on qualifications/experiences
• Answers questions such as
• Who are the team members what are their roles?
• What distinguishes them (experience, education
  etc)?
• What experiences do they have that will help
  implement venture?
• What experiences/skills are lacking? How gap will
  be fill

19
Market Competition

• Should demonstrate understanding of market
  competitive landscape
• Understand/Discuss wider industry and dynamics
  driving the industry
• Include reliable expectations of market growth
• Supported by data Graphic/Business Financial
  Times, Statistics, Budget statement, State of
  Ghanaian Economy

20
Market Competition

• How is the industry developing?
• What are the key success factors in the industry?
• How would you segment the market?
• What volume value would each segment bring?
• What volumes do you estimate over next few years?
• How profitable are the competitors

21
Market Competition

• What are your competitors' key strengths/weaknesse
  s
• What new developments do you expect from the
  competition?
• Any barriers to entry? How to overcome these
  barriers

22
Marketing Sales

• Sets out marketing sales strategy
• Target customers - clearly describe core target/
  Give indication of size
• Include gatekeepers where relevant
• Customer Profile indicate that target will
  respond favourably to marketing mix
• Focus on 3 of the 4 Ps - Pricing, Promotion,
  Place (Distribution)
• Sales tactics projections (based on reasonable
  assumptions)

23
Marketing Sales

• Should answer
• Who are the target customers? What do they 'look'
  like?
• What is the potential size of target market? What
  can you reach?
• What sales volume?
• What price?
• What advertising strategy?
• What distribution channels? Sales per channel?
• What payment policies

24
How to write a Great Business Plan Sahlman

• Bplan is a snapshot of an event in the future.
  Best ones are like movies of the future offer
  plausible coherent story of what lies ahead
• Business Plans rank 2 on a scale of 1 to 10 as a
  predictor of a new venture's success
• Most waste too much time on detailed financial
  projections
• For new company, they are an 'act of imagination'
• Entrepreneurial ventures face too many unknowns
  to predict revenues, let alone profits.
• Too optimistic padding of figures discounting
  of s by investors

25
Article (Cont'd)

• Not enough time spent on the information that
  matter (The Four interdependencies critical to
  every new venture)
• The People
• The Opportunity
• The Context
• The Possibilities for both risk reward
• He is not saying Bplan should not include s
• There should be some showing you have thought
  through key drivers of a venture's success or
  failure

26
Article (Cont'd)

• Examples of key drivers
• Manufacturing yield on a production process
• Magazine publishing anticipated renewal rate
• Software impact of various distribution channel
  
• Should also address the break even question
• At what level of sales does the business begin to
  make a profit?
• When does cashflow turn positive?
• Thinks finanacial questions deserve a few pages
  near the back

27
The People

• Define as 'the men women starting and running
  the venture as well as the outside parties
  providing key services or important resources for
  it (lawyers, accountants, suppliers)'
• What do they know?
• Experience Insights
• Knowledge of product, production process, market,
  customers, comopetitors
• Whom do they know?
• How familiar are there with industry players
  dynamics
• Have team worked together before?
• How well are they known?

28
The Opportunity

• Profile of business itself
• What it will sell and to whom
• Whether the business can grow and how fast
• What its economics are
• Who and What stand in the way of success
• Ask Two Questions
• Is the market for the venture's product or
  service large or rapidly growing? Total Size
  Growth
• Is the industry structurally attractive?
• Do companies in the industry make money (cost
  structures, acquisition costs, conversion time,
  capital etc)

29
The Context

• The big Picture factors that change but cannot
  be controlled by the entrepreneur
• Regulatory Environment
• Interest Rates
• Demographic Trends
• Inflation
• Competitor behaviour
• Should also understand how you will react when
  that context changes

30
Risks Reward

• Look unflinchingly at the risks....giving... a
  realistic idea of what magnitude of reward they
  can expect and when they can expect it
• Risk
• Assessment of everything that could go wrong and
  right
• How would you respond to?
• Reward the end of the process
• How do I get my money out
• Is it IPOable?
• Investors like different options sales,
  alliances

31
The Deal Beyond

• From whom you raise capital is more important
  than the terms

32
Elevator Pitch

• Is a simple concise description of your business
  and the opportunity that anyone can understand.
• Goal is to get someone sufficiently interested so
  they can follow up. Not to sell.
• It is NOT a conversation. But the start of one.
• Assume you are in the elevator and have one or
  two minutes maximum

33
Elevator Pitch (contd)

• Should answer the question Why should I be
  interested in your business?
• Focus on the opportunity The Pain and how you
  plan on solving the pain
• Focus on why yours is a superior solution to the
  competitive set
• Talk about the team of people who are going to
  make it happen
• Throw in some numbers