do i have a good idea? - session 6

www.solvayentrepreneurs.be

DO I HAVE A GOOD IDEA? SESSION 6 (out of 10)

OPPORTUNITY ASSESSMENT

This session is part of a 10-weeks course given to master students of the SOLVAY BRUSSELS SCHOOL OF ECONOMICS AND MANAGEMENT by professor Olivier WITMEUR.

Entrepreneurship Course – Session 1 - 2014 © Olivier WITMEUR

•  What makes a good idea?

•  How to assess it?

•  The role of the business plan

•  Opportunity validation framework

•  Introduction to the business plan

•  Solvay Entrepreneurs Checklist (in French)

2

Desired Outcomes of the Session


The main steps towards your final project.

3

VALUE PROPOSITION

BUSINESS MODEL ROADMAP

Key activities, resources & partners Revenues model & costs structure

Problem-Solution fit Product-Market fit Market sizing Competition

Stages & milestones Get-Keep-Grow Risks & scenario

FINANCE

P&L, cash and balance sheet Financing

CREATE

TEST =

BUILD MEASURE

LEARN

YOU


How many squares do you see?

4


OPPORTUNITY ASSESSMENT FRAMEWORK

#1

Beyond technical feasibility, financial return and additional developments…


Opportunity Validation Framework

6

Market attractiveness

Industry attractiveness

Customer readiness to buy

Understanding of the industry KSF

MARKET (Buyers)

INDUSTRY (Sellers)

MACRO LEVEL

MICRO LEVEL

* Adapted from John Mullins, The New Business Road Test (2006)



7





MARKET (Buyers)

INDUSTRY (Sellers)

MACRO LEVEL

MICRO LEVEL



Total Available Market (TAM)

–  How large is the market if

all customers buy your product?

–  Example: total LED market

Served/Serviceable Available Market (SAM)

–  Focus on your own technology/services

–  Example: Living colors LED market < segment of total LED market

Serviceable Obtainable Market (SOM)

–  Which realistic market share can be obtained by myself, considering competition, countries, my sales/distribution channels and other market influences?

What are the supporting trends (PESTEL)

How fast will the market grow?

8

Marking sizing TAM

SAM

SOM


Influencing trends

9

Political

Economical

Sociological / Demographical

Technological

Environmental

Legal / Regulation

P

E

S

T

E

L


Time to market

10

Sales

Time

Early adaptors

Early majority

Late majority LaggardsInnovators

Opportunity Window


•  Market (niche) size

•  Market growth (Compound Annual Growth Rate)

•  Market share

Market > 20M€ CAGR > 20% Potential market share > 20%

11

Easy to keep in mind

3 x 20



12





MARKET (Buyers)

INDUSTRY (Sellers)

MACRO LEVEL

MICRO LEVEL



•  Back to Design Challenge and Empathy Map

•  Segment definition using:

–  Who the customers are (e.g. sociological, behavioral description)

–  Where the customers are

•  Customer’s benefits à Easiness to sell

–  Where is the need / the pain

–  Ideal = Customer ROI calculation

•  Customer gain / Price = Pay-back (in months)

13

Market Micro Level: Will the customer buy it?



14





MARKET (Buyers)

INDUSTRY (Sellers)

MACRO LEVEL

MICRO LEVEL



Porter’s five forces

15


Identify the key players of your business ecosystem

–  Your customers … and their customers (often the end-user)

–  Your suppliers … and their suppliers

–  Direct and indirect competitors (substitutes)

–  Possible new entrants

–  Opinion or policy makers

–  Other key players/factors if any

Analyse the logic of their evolution

Define your relationship with these players:

–  Competition

–  Co-evolution

–  Alliance

16

Business Ecosystems



17





MARKET (Buyers)

INDUSTRY (Sellers)

MACRO LEVEL

MICRO LEVEL



Back to Key Activities, Key resources and Key partners in the Business Model Canvas

•  What does it take to be successful in this industry

•  Resource-based view of the firm: Resources, Capabilities & Processes

Valuable

Rare

Inimatable = Proprietary Elements

Non substituable

18

Understanding Key Success Factors (KSF)


About virtual companies (Sometimes a good starting point and/or food for thoughts)

19

Virtual company

Centres de recherche Research

centers

R&D Subcontracting License agreement

Centres de recherche

Industrial partners Production/Sourcing

subcontracting Confidentiality agreement

Investors

Investment agreement

Accountant Consultants

Management agreement Centres de

recherche Distributors

Distribution agreement


Why you are unique including core/unique resources as a source oc Sustainable Competitive Advantage (SCA)

20

Sustainable Competitive Advantage

Team, know-how…

Technology, secrets, patents…

Partnerships, exclusivity…

Business model

First Mover Advantage Brand, location…


Competition

21

X Y YOU

General information •  Turnover/sales •  Headcount •  … (nationality, age…)

Offering •  Product range description •  Main features (Feat.1, Feat.2; Feat.3, …) •  Brands

Sales & Marketing •  Pricing •  Distribution channels / sales force •  Localization

Strengths

Weaknesses

Positioning •  Differentiation factor #1 •  Differentiation factor #2 •  …

WHY YOU ARE

UNIQUE


Blue Ocean – Value curves

22


Useful techniques

23

Statistics and press Industry Analysts

+ Specialized press

Interviews with customers / Focus

Groups / Pools +

Observation

Interviews with experts

+ Observation

MARKET INDUSTRY

MACRO LEVEL

MICRO LEVEL


INTRODUCTION TO BUSINESS PLANNING

#2

24


•  Prove the quality of the opportunity

•  Explain the business strategy

•  Define realistic and measurable targets

•  Convince potential partners

•  Create a benchmark for the management team in charge of implementing the

plan

25

Main targets of a business plan


•  Who is in the management team?

•  What do you sell? Why is it unique? To what needs do you answer?

•  Who are the customers?

•  What are your goals (the strategy)?

•  What are the main risks?

•  What are the development stages of the venture? What need to be done (the

action plan)?

•  How do you sell?

•  How and when go you make profits (the financial plan)?

•  What is missing before you start?

26

The big questions


The Great Equalizer

27

Orientation Content Time Horizon

Short

Long Map

Itinerary Strategy Operations


The Great Equalizer

28

Use Output Format

PPT Text

Milestones

Budget External Internal


The Business Plan Process

29

Forecasts

Financings

Production

Marketing & Sales

Research & Development

Administration

Vision

Business model

Team

Product or service

Market & industry

CONTEXT

1 STRATEGY

2 ACTION PLAN

3 FINANCES

4


Typical business plan construction

30

Management Team

Vision Business Model

Production & Supply Chain

Sales & Marketing

Research & Development

Organization & Administration

Financial Plan

Opportunity Market & Industry

Stages Milestones

Risk analysis Plan B

Financing

Sensitivity analysis


A more realistic process view

31


A real passion for entrepreneurship education and entrepreneurs.

•  Student entrepreneurs: 2x

•  Full time entrepreneur: once, in a team of 5

•  Coach: 500+ projects over the last 20 years

•  (Advisory) Board member in multiple new ventures

•  Policy making: 2x

•  Director of Solvay Entrepreneurs

•  PhD in entrepreneurship in 2008

•  … never as an investor

My wife (as Colombo), no kids, one dog (Vicky).

33

Olivier Witmeur (Belgian, 46)


Solvay entrepreneurs is the entrepreneurship center of the Université Libre de Bruxelles. We support entrepreneurs through the development of their venture, from an idea to a successful and sustainable business.

34

Solvay Entrepreneurs


Let’s keep in touch!

35 2014%©%Olivier%Witmeur

FOLLOW US ON

LinkedIn.com/company/Solvay-Entrepreneurs

inFacebook.com/

SolvayEntrepreneurs

fTwitter.com/ SolvayStart

t

SolvayEntrepreneurs.be

wwwYouTube.com/user/

SolvayEntrepreneursFoursquare.com/

SolvayStart

do i have a good idea? - session 6

Business

business road

industry ksf

2014 olivier

good idea

buy understanding

john mullins

management

amp