success formulas workbook_session2

Success FormulasSuccess Formulas®

Session Two Session Two

FocusFocus

Session Two Session Two AgendaAgenda

• Feedback Session On...

– 30-Second Description– Exit Strategy– Executive Summary

• Tests of a Winner• Product/Market Matrix• The Focus

Feedback SessionFeedback Session

• Entrepreneurs Present Information• Others Act as “Investors”• Comments & Feedback (“Yeah, buts…”)

On:• 30-Second Description• Exit Strategy• Executive Summary

30-Second Description30-Second DescriptionFeedbackFeedback

• Introduction• Interest Generating Idea• Two Key Points• Probe for Need or Opportunity

Exit StrategyExit StrategyAsk Yourself...

• Why Are You Getting Into Business?• Do You See Yourself Running the

Company Twenty Years From Now?• Is Your Goal to Make A Lot of Money?• Or Running a Solid and Steadily Growing

Family Business?

Exit StrategyExit StrategyFeedbackFeedback

Types…

• Lifestyle• Inheritance-Bequest• Sell to Larger Corporation• IPO: Sell to the Public• Shut Down: Dissolve the Company

Executive SummaryExecutive SummaryIn 2-or-3 Pages, Briefly Describe the

highlights of…• Elevator Speech• Industry• Vision• Mission• Corporate Legal Description• Product/Service - What it does, how much it sells for,

proprietary position• Market - Who’s going to buy, what is the sales channel.• Operations• Management Team• Investment Required• Financial Proforma• Note: Develop each topic for five years

FundingFunding

• What are Your Funding Needs?• What are Your Sources of

Funding?

Professional InvestorsProfessional Investors

• Venture Capitalist• Banks• Angels/Local Private Investors

Venture CapitalistsVenture CapitalistsWho are they? Which should you approach? • Role of “Lead Venture Capitalist” (should be

close to you)• How many investors do you need• Specialty by Industry• Specialty by Stage of Investment• Specialty by Size of Investment• Other Criteria:

– Co-investors– Value-added services– Active versus passive involvement– Et. al.

Venture Capitalist’s Goal...Venture Capitalist’s Goal...

• High Return on

Investment• Managed Risk

BanksBanks

Will Give You a Loan If…

• You have Assets--Get Money Back.• Earnings Within Company.• You Personally Guarantee Pay Back

(Personal Assets) Debt.

Angels/Private InvestorsAngels/Private Investors

• Known as Informal Venture Capitalists• Typically Willing to Invest Earlier• One or More Angels May Be Used to

Raise Money• Often Like to Get “Involved” in the

Company’s Operations• Can Be Idiosyncratic

What ResourcesResources Do You Have to Draw On?

BreakBreak

Tests of a WinnerTests of a Winner

• Team?• Market?• Operations?• Technology?

TechnicalTechnical• Do We Have a Proprietary Technology,

and is it Proven?• Can We Make it in Volume?• Can We Protect It?

(More Discussion on Technology in Session Four.)

The 2-Minute Opportunity Checklist for Entrepreneurs

• Does your business idea soothe someone's pain, discomfort, frustration, or dissatisfaction?

• Are there lots of those people out there?

• Do these people (or companies, or governments) have money to pay for it?

• Will they be able to decide quickly to buy your product or service?


Cont’d• Does your idea exploit

something about you that is outstanding or unique?

• Can you think of at least two people who might join you?

• Are there important assets you have that no one else has? (money, access to customers, technology, leadership skills, execution, location, salesmanship, etc.)


Cont’d• Do their skills

complement yours?• Do they have the same

values as you do?

• Do the majority of people whose opinion you highly respect think your idea is a good one?


Cont’d• Does at least one

person (and not more than three people), whose opinion you highly respect, think your idea is a bad one?

• Is there something about the idea or its implementation, that compels you to really devote yourself to it?


Cont’d• Can you sneak by the

big competitors without them noticing you for awhile?

• Can you start up without huge gobs of money?

• Can you find a potential customer who will take your calls, give you feedback, try a pilot out?

• Can you keep your fixed costs low during launch?


Cont’d• Does your idea lend

itself to small incremental steps that can inexpensively generate valuable information as well as at least a little cash?

• Can you think of something else that Isenberg has forgotten? (and it is....)

MarketMarket

• Who wants it?• What will they Pay?• How Do We Know Who Will Buy?• What Features/Functions will make them

choose your product/service?• What is the best Channel to Market?• What is the Competition Doing?

OperationsOperationsAsk Yourself: Do we have the... • Correct People Resources?

– Now– Future

• Financial Resources?– Cash-flow from sales– Equity Financing– Debt financing

• Infrastructure?– Equipment & facilities– Out-sourcing versus in-house

Case Study: Case Study: Jacobs’ Hot Dog StandJacobs’ Hot Dog Stand

• Donald• Hot Dogs• Secret Ingredient• Technology is...

The ProductThe Product• The Product is…..

The MarketThe Market• Front Yard• Nearby Park• The market is…..

OperationsOperations• A Hot Plate, Pots• Shopping at the grocery store• Loose change jar

ResourcesResources• Donald• Ruth, his wife• A Card Table• A Yard Sign• $5.00

Sales ChannelSales Channel• The Sales Channel is…..

SuccessSuccess• Success happens• The story is…..

ExpansionExpansion• The next Product is…..• And the Product after that is…..• The next Market is…..• The Market after that is…..• The next Technology is…..• The next Sales Channel is…..

RamificationsRamifications• The Customer Base Grew…..• The Company brought in more Vendors….• The Company brought in more People…..• The Story involves Money…..• Then the Government discovered

Donald…..

The Competition Shows Up...The Competition Shows Up...

Sales Take A Dive!

What Should Donald Do?

Sales Take a Dive!Sales Take a Dive!• What to Do?

– Create a new secret recipe– Upgrade the stand’s appearance– Advertise– Cut prices– Open a new stand– Move the stand– License the recipe– Sell the business

Product/Market MatrixProduct/Market Matrix

1 2 3 4 5 6 7 8 9 10 ABCDE

FG

The FocusThe Focus• Team• Market• Sales Channel• Technology• Product• Service• Resources

TechnologyTechnology

• The Resource: Research, Patents, Trade Secrets

• The Investment: New Technology• The Return: Licenses and

Consulting Fees

ProductProduct• The Resource: Family of Related

Products• The Investment: New Products• The Return: Sales of Products to

Multiple Markets

MarketMarket

• The Resource: Access to a Set of Customers with Common Needs

• The Investment: The Right Range of Products

• The Return: Sales of Multiple Products to a Single Market

ServiceService

• The Resource: A Skill Set• The Investment: People With a

Skill• The Return: Selling Related

Services to Multiple Markets

Sales ChannelSales Channel

• The Resource: A Method of Sales• The Investment: Sales Tools,

Access to Products and Markets• The Return: Sales of Many

Products to Many Markets Through a Single Method of Sales

ResourceResource

• The Resource: Airplane Seats, Architects, Engineers

• The Investment: People or Equipment

• The Return: Selling the Resource to Multiple Markets

Pick Your ResourcePick Your Resource• Team• Market• Sales Channel• Technology• Product• Service• Resources

Ramifications of Your ChoiceRamifications of Your Choice

• The Resource• The Investment• The Return

Will the Business Take-Off?Will the Business Take-Off?

Re-Cap QuestionsRe-Cap Questions

• What is Your Exit Strategy?• What is Your Focus?• What are Your Resources?• What are Your Sources of Funding?• Do You Have a Winning Business?

HomeworkHomework

• Based on Feedback• Include Focus

Update Executive Summary

PreviewPreview Session Three: Session Three: Marketing StrategyMarketing Strategy

• Present Revised Executive Summaries• Product Life Cycle• Defining Your Product--Market & Niche• Low Price/Technology/Relationship Leaders• Distribution Channels

Success FormulasSuccess Formulas®

Session Two Session Two

FocusFocus

success formulas workbook_session2

Small Business & Entrepreneurship