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INFORMATION TECHNOLOGY ENTREPRENEURSHP. CLASS FOUR: THE BUSINESS PLAN & THE ELEVATOR PITCH. Elikem Nutifafa Kuenyhia Management Consultant & Corporate Lawyer. Agenda For Class Four. Hand in Homework Assignment Recap of Class Three Discussion Discussion of Sedina Attionu Case

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information technology entrepreneurshp

INFORMATION TECHNOLOGY ENTREPRENEURSHP

CLASS FOUR: THE BUSINESS PLAN & THE ELEVATOR PITCH

Elikem Nutifafa Kuenyhia

Management Consultant & Corporate Lawyer

agenda for class four
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
homework exercises
Homework Exercises
  • 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.
  • 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?
developing a business plan
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
developing a business plan6
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
developing a business plan7
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
each plan though is unique
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
role of business plan
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
role of business plan cont d
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
executive summary
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
mission statement
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
the entity
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
entity
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?
product service
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)
product service16
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?
management team
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
management team18
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
market competition
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
market competition20
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
market competition21
Market & Competition
  • What are your competitors' key strengths/weaknesses
  • What new developments do you expect from the competition?
  • Any barriers to entry? How to overcome these barriers
marketing sales
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)
marketing sales23
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
how to write a great business plan sahlman
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
article cont d
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
article cont d26
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”
the people
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?
the opportunity
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)
the context
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
risks reward
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
the deal beyond
The Deal & Beyond
  • From whom you raise capital is more important than the terms
elevator pitch
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
elevator pitch cont d
Elevator Pitch (cont’d)
  • 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 $$$
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