The Entrepreneurial The Entrepreneurial ProcessProcess

•You get an idea!You get an idea!

•Develop your idea.Develop your idea.

•Develop an Operating Plan.Develop an Operating Plan.

•Gather the necessary resources.Gather the necessary resources.

•Launch your venture!Launch your venture!

Idea DevelopmentIdea Development

Develop the Venture ConceptDevelop the Venture Concept

Determine Feasibility:Determine Feasibility:

•Patent searchPatent search

•Your abilities Your abilities

•Projected SalesProjected Sales

•Projected CostsProjected Costs

•Break even pointBreak even point

Operating PlanOperating Plan

•Functional strategies:Functional strategies:– LogisticsLogistics– OperationsOperations– MarketingMarketing– Human ResourcesHuman Resources– TechnologyTechnology

Gather ResourcesGather Resources

Resources necessary to support Resources necessary to support your Operating Planyour Operating Plan

•People (Build your team)People (Build your team)•AssetsAssets•FinancingFinancing

– Private investorsPrivate investors– BanksBanks– Venture CapitalistsVenture Capitalists

LAUNCH!LAUNCH!

•Open the door (service).Open the door (service).

•Start the machines (product).Start the machines (product).

•Put out fires.Put out fires.

•Learn from mistakes and Learn from mistakes and oversights.oversights.

• Improve.Improve.

CreativityCreativity

•Creative People are:Creative People are:– Curious; they ask questions.Curious; they ask questions.– Strongly aware of their surroundings.Strongly aware of their surroundings.– Open to multiple ideas.Open to multiple ideas.– Unafraid to do things differently, if Unafraid to do things differently, if

needed.needed.– Able to handle ambiguity/uncertainty.Able to handle ambiguity/uncertainty.

•Everyone can be creative, however, Everyone can be creative, however, some people resist creativity (culture, some people resist creativity (culture, training).training).

Fostering CreativityFostering Creativity

•Heighten awareness of creative Heighten awareness of creative stimuli.stimuli.– Spend more time where you feel most Spend more time where you feel most

creative.creative.– Be alert for creativity in all Be alert for creativity in all

environments.environments.

•Make time for creativity.Make time for creativity.– ReadRead– PlayPlay

Fostering CreativityFostering Creativity

•Return to your childhood.Return to your childhood.– Unlock your imagination.Unlock your imagination.– Be open to possibilities.Be open to possibilities.

•Think in opposites.Think in opposites.– What What isn’tisn’t normal? normal?

Idea SourcesIdea Sources

•Hobbies/InterestsHobbies/Interests

•Skills/AbilitiesSkills/Abilities

•Marketplace need recognitionMarketplace need recognition– Existing product doesn’t meet the Existing product doesn’t meet the

needneed– No product exists to meet the needNo product exists to meet the need– Additional product/service to Additional product/service to

enhance existing products/servicesenhance existing products/services

Idea SourcesIdea Sources

•Benchmark existing firmsBenchmark existing firms– Gaps in product lineGaps in product line– Products/services to enhance their Products/services to enhance their

performanceperformance

•TechnologyTechnology– Existing process improved through Existing process improved through

new technologynew technology– Peripheral needs created from new Peripheral needs created from new

inventionsinventions

Venture/Business Venture/Business ConceptConcept

•What is the product/service? What is the product/service?

•Who is the customer?Who is the customer?

•What benefit(s) does your What benefit(s) does your venture offer to the customer?venture offer to the customer?

•How will you reach the customer How will you reach the customer (channels)?(channels)?

Concept StatementConcept Statement

Worldwide Imports provides smaller Worldwide Imports provides smaller U.S. furniture retailers with the U.S. furniture retailers with the ease and convenience of worldwide ease and convenience of worldwide access to unique pieces of furniture. access to unique pieces of furniture. Worldwide will reach its customers Worldwide will reach its customers through a catalog service, web site, through a catalog service, web site, and showroom, and will deliver and showroom, and will deliver direct to the customer from its direct to the customer from its warehouse.warehouse.

Concept StatementConcept Statement

The concept statement should be The concept statement should be memorized as a short statement memorized as a short statement to interest potential investors and to interest potential investors and customers. This is commonly customers. This is commonly referred to as the “elevator referred to as the “elevator pitch”, assuming that you have pitch”, assuming that you have the duration of an elevator ride to the duration of an elevator ride to create interest in your venture.create interest in your venture.

Elevator PitchElevator Pitch

I’m working on a concept for a health I’m working on a concept for a health education company called Smart Choice education company called Smart Choice Software that helps college students Software that helps college students learn about the dangers of substance learn about the dangers of substance abuse. I plan to develop and distribute abuse. I plan to develop and distribute interactive software on CD that delivers interactive software on CD that delivers objective, non-threatening, objective, non-threatening, entertaining, and flexible programs to entertaining, and flexible programs to my customers - college and university my customers - college and university health centers – to help them reduce health centers – to help them reduce the overall cost of dealing with drug the overall cost of dealing with drug and alcohol related issues.and alcohol related issues.

Problem/Want/NeedProblem/Want/Need

Identifying the customer/need:Identifying the customer/need:•No product/service existsNo product/service exists•Segment(s) not served by existing Segment(s) not served by existing

products/servicesproducts/services•Existing product/service lacks Existing product/service lacks

features, functions, and/or appealfeatures, functions, and/or appeal•Existing market demand too large Existing market demand too large

for existing firmsfor existing firms

Address the Address the Need/BenefitNeed/Benefit

•How your product/service is new.How your product/service is new.

•How your product/service serves How your product/service serves the specific needs of a segment.the specific needs of a segment.

•How your product/service is How your product/service is different from existing offerings.different from existing offerings.

•How your firm fits with existing How your firm fits with existing competitors.competitors.

Building Blocks ofBuilding Blocks ofCompetitive AdvantageCompetitive Advantage

Quality

Efficiency

Innovation

Strategic ArenaCompetitive Advantage: Differentiation

Reaching the CustomerReaching the Customer

• Internal DevelopmentInternal Development– e.g. MouseDrivere.g. MouseDriver

•Acquire an existing companyAcquire an existing company– Identify potential targetsIdentify potential targets

•Purchase a franchisePurchase a franchise

Reaching the CustomerReaching the Customer

•Physical locationPhysical location– What state, city, etc.?What state, city, etc.?– Lease vs. OwnLease vs. Own– Freestanding, Mall, Shopping Freestanding, Mall, Shopping

Center, etc.Center, etc.

•Phone/catalog salesPhone/catalog sales

•On-line salesOn-line sales

Benefits of Market Benefits of Market ResearchResearch

Avoid errors:Avoid errors:– Under/overestimating demandUnder/overestimating demand– Miss a potential customer groupMiss a potential customer group

Speed up venture development Speed up venture development processprocess– ““Hit the ground running” mentalityHit the ground running” mentality– Move past many “trial and error” Move past many “trial and error”

situationssituations

Target MarketTarget Market

Primary Market:Primary Market:Segment of the marketplace that will Segment of the marketplace that will

most likelymost likely purchase the purchase the product/service.product/service.

Secondary Market:Secondary Market:Potential customers outside the Potential customers outside the

primary market who are likely to be primary market who are likely to be targeted after the primary has been targeted after the primary has been exhausted.exhausted.

Key AnswersKey Answers

•Who is most likely to buy my Who is most likely to buy my product?product?

•What do these customers typically What do these customers typically buy, how do they buy it, and how buy, how do they buy it, and how do they hear about it?do they hear about it?

•How often do they buy (buying How often do they buy (buying pattern)?pattern)?

•Will my venture meet their needs?Will my venture meet their needs?

Market Research StepsMarket Research Steps

•Assess your information needsAssess your information needs

•Secondary source researchSecondary source research

•Primary source researchPrimary source research

•Forecast demand; determine Forecast demand; determine feasibilityfeasibility

Assess Information Assess Information NeedsNeeds

•How will the data be used?How will the data be used?– Collect data that answers your key Collect data that answers your key

questions.questions.– Collect data that fits with your Collect data that fits with your

planned statistical analysis planned statistical analysis approach.approach.

Secondary Source Secondary Source ResearchResearch

•Demographics (www.census.gov, Demographics (www.census.gov, Chamber of Commerce, SBDC)Chamber of Commerce, SBDC)– Age, gender, geography, income Age, gender, geography, income

level, etc.level, etc.– Segments and subgroupsSegments and subgroups

•Business demographics Business demographics (Chamber, www.economy.com)(Chamber, www.economy.com)– Size, revenue, # of employees, etc.Size, revenue, # of employees, etc.

Primary Source ResearchPrimary Source Research

To obtain information directly from To obtain information directly from your potential target customers.your potential target customers.

•Gather unbiased information (not Gather unbiased information (not just friends and relatives).just friends and relatives).

•Ensure randomness.Ensure randomness.

•Be aware that they are also forming Be aware that they are also forming opinions of you and your business.opinions of you and your business.

Primary TechniquesPrimary Techniques•ObservationObservation•SurveysSurveys

– MailMail– PhonePhone– InternetInternet

• InterviewsInterviews•Focus GroupsFocus GroupsYour primary and secondary source Your primary and secondary source

research will yield a customer research will yield a customer profile.profile.

Forecast DemandForecast Demand

•Use history or substitute Use history or substitute productsproducts

•Observe similar businessesObserve similar businesses

•Talk to people in the industryTalk to people in the industry

•Use a limited production run testUse a limited production run test

•Do a formal test marketDo a formal test market

Operating PlanOperating Plan

•Functional strategies:Functional strategies:– LogisticsLogistics– OperationsOperations– MarketingMarketing– Human ResourcesHuman Resources– TechnologyTechnology

The Value ChainThe Value Chain

Company Infrastructure

Human Resources

Research & Development

SUPPORT ACTIVITIES

MaterialsManagement

Operations Marketing& Sales

Service

Information Systems/technology

PRIMARY ACTIVITIES

LogisticsLogistics

•Supply Chain strategy for:Supply Chain strategy for:– ProductsProducts– Raw materialsRaw materials– SuppliesSupplies

•Where will you get these?Where will you get these?•How will you move/store them?How will you move/store them?•How much will they cost?How much will they cost?•Exclusives?Exclusives?

OperationsOperations

•MachineryMachinery

•FurnishingsFurnishings

•Work/Customer flowWork/Customer flow

•ControlsControls

MarketingMarketing

•PromotionsPromotions

•Public RelationsPublic Relations

•DistributionDistribution

•PricePrice

Human ResourcesHuman Resources

•Staffing needsStaffing needs

•Compliance issues (EEOC, etc.)Compliance issues (EEOC, etc.)

•TaxesTaxes

•PayrollPayroll

•TrainingTraining

TechnologyTechnology

•Computers/ServersComputers/Servers

•DatabasesDatabases

•NetworksNetworks

•Cash RegistersCash Registers

•Alarms/Safety systemsAlarms/Safety systems

Gather ResourcesGather Resources

Resources necessary to support Resources necessary to support your Operating Planyour Operating Plan

•People (Build your team)People (Build your team)•AssetsAssets•FinancingFinancing

– Private investorsPrivate investors– BanksBanks– Venture CapitalistsVenture Capitalists

PeoplePeople

•Fill gaps in abilitiesFill gaps in abilities

•Bring in knowledge/expertiseBring in knowledge/expertise

In-house or outsourceIn-house or outsource

AssetsAssets

•BuildingBuilding

•MachineryMachinery

•FurnishingsFurnishings

•TechnologyTechnology

Lease vs. Own vs. OutsourceLease vs. Own vs. Outsource

•Don’t outsource Don’t outsource criticalcritical assets assets

FinancingFinancing

•Private investors are the most likely Private investors are the most likely source for most entrepreneurs.source for most entrepreneurs.

•Venture capitalists typically are only Venture capitalists typically are only interested in grand slam ventures.interested in grand slam ventures.

•Banks are out of the question for Banks are out of the question for start-ups unless backed by the Small start-ups unless backed by the Small Business Administration or Business Administration or considerable collateral (house).considerable collateral (house).

Private InvestorsPrivate Investors

•Know your story (venture Know your story (venture concept).concept).

•Have some numbers.Have some numbers.

•What’s your offer?What’s your offer?– Don’t offer too much (family, etc.)Don’t offer too much (family, etc.)– Prepare to negotiatePrepare to negotiate

•Taking money changes Taking money changes relationships.relationships.

LAUNCH!LAUNCH!

Put your Operating Plan into action.Put your Operating Plan into action.

•Open the door (service).Open the door (service).

•Start the machines (product).Start the machines (product).

•Put out fires.Put out fires.

•Learn from mistakes and Learn from mistakes and oversights.oversights.

• Improve.Improve.