Turning an Idea into a Business. WELCOME Participants!. TOP DAWG Business Plan Competition Sponsored by : ABESE Outline of Presentation : Intro---CEnIT What is a Business Plan? Sources of information Brainstorming for Value. What does CEnIT do?. we want what you want—more business!
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Business Plan Competition
Sponsored by :
Outline of Presentation:
What is a Business Plan?
Sources of information
Brainstorming for Value
A business plan precisely defines your business, identifies your goals and serves as your firm's resume. Its basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make the right decisions.
Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package. Additionally, it can tell your sales personnel, suppliers and others about your operations and goals.
source: Machine Politics, By Kevin Baker, Issue Date: Nov 20 2000
Coke’s formula fiasco
“Examples of costly failures are legion. In today's dollars, Federal Express lost $294 million on Zap Mail. NeXt lost $250 million on its computer workstation. GM lost $420 million on the Wankel Rotary Engine. DuPont lost over $1 billion on Corfam. Ford lost over $2 billion on the Edsel. Polaroid wrote off $197 million in inventory alone for Polarvision instant movies. Xerox invented the personal computer ahead of Apple but failed to commercialize it. Motorola invested over a decade and more than $360 million in its cellular telephone project before taking a single major order.”
G.S. Lynn and R.R. Reilly in “Growing the Top Line Through Innovation”, Chief Executive; New York; Fall 2002
Learn from “Uncle” Thomas (Edison):
Don’t Assume people will want it-prove it -as you develop it !!!!!!!
Skip LeFauve, who was the president/CEO of the Saturn Corporation, bought a case of the books entitled ‘The Edsel Affair , gave a copy to all his executives and had them underline everything that Ford did wrong with the Edsel."
“These days, start ups must have more to offer than just a good idea to build a successful company. There’s plenty of risk for start ups which need the experience of angels who have already taken businesses to maturity or public. From her perspective, entrepreneurs need:”
Shirley Eis, co-partner of Rigo Telecommunications
Remember: BP’s are for someone else besides you-OPWM
An idea is good if there is a NEED for it.
At least a “perceived need”
Another word for NEED:
Product, Price, Place, Promotion
More on this next time ……..maybe
But combine with…
Disregard for the limitations of market realities can be trouble !!!!!!!!!
You do them simultaneously-feedback
“Strategy leads to the continuous creation of real value. Real value requires sustained competitive advantage. Leaping at opportunities without strategy consistently produces failure” –The Boston Consulting Group
”Creating innovative products can be a challenge like going down a road with rocks and ruts the whole way. Out of approximately 3,000 raw ideas come 125 small projects, 9 that will go to early development, 4 that continue to major development, and fewer than 2 that actually make it to market. One recent study found that newly launched industrial products failed 33 percent of the time; new consumer packaged goods fail to live up to management s expectations 80 percent of the time.”---G.S. Lynn and R.R. Reilly in “Growing the Top Line Through Innovation”, Chief Executive; New York; Fall 2002 24:1
What limits COMPETITION?
What makes you better?
Legal---Patents, copyrights / Trade secrets
Natural Monopoly---single firm can supply the product at lower cost than two or more firms. Examples: Networks (cable systems, pipeline, wire) and Large data bases - Human Genome---see J. Nesheim’s example B.P
Huge cost of Re-inventing the wheel--Microsoft
Experience-----VC’s contribute here more
than with their money.
Abilities - complementary
millionaire cotton speculator
Capital for “capturing “ the market quickly
name/brand recognition - “fortification” your brand is the “generic” ----Advil - Ibuprofen
“In war you win by outwitting, outflanking, and overpowering the enemy—your competition”
See Marketing Warfare, by Al Ries and Jack Trout
1)satisfies market need(s)
2)With an “unfair” and “sustainable” competitive advantage …..and
3)which appeals to you ….and…
4)…to those who provide funding
is our product?
need(s) are satisfied
makes it unique?
can go wrong?
Are the risks?
selling price?Things to Brainstorm for a Description/Boundaries of your idea
is our customer(s)?
Botox---people with wrinkles
people with migraines
is our competition?
can we minimize risks?
big is the market?
will we produce?
Much will it cost?
Will it be sold/delivered?
Is the market?
will you locate?
Will it pay off?Things to Brainstorm for a Description of your idea, continued
How big is your market when for the foreseeable future it contains only “innovators”?
When will the habituated try your product or service”?----Surveys-would you buy?…at what price?…how much do you use?
Brainstorm a product or service that meets or exceeds requirements --answers to:
Who, What, How, Where, When
(Or see the 4 P’s)
If product evolves to violate constraints, then:
Change Product or …
Dr. Jon D. Pratt
Center for Entrepreneurship and I.T.
208A Bogard HallLouisiana Tech UniversityRuston, LA 71272318 257 3191