Evaluate Your Idea Frank Moyes

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Invention to VentureEvaluate Your Idea
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• Frank Moyes
• Leeds School of BusinessUniversity of
  ColoradoBoulder, Colorado

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How to Evaluate Your Idea

• Is your idea a good opportunity?
• 3 critical issues you must address
• What is the process for evaluating your idea?

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Good Opportunity Compelling Need
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• What is the compelling need?
• What problem are you solving?
• Does the customer care?
• Does the customer understand that there is a
  problem?
• Is there dissatisfaction with current
  products/services e.g. performance, poor quality
  or service?
• Very difficult questions to answer

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Good Opportunity Market Demand Is Strong

• Favorable trends
• Market is growing
• Size is big enough for your venture to be worth
  the effort
• Market share is attainable
• Favorable window of opportunity

• 30 per year
• 100 million to 1 billion potential
• Minimum 20

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Good Opportunity Favorable Industry Structure

• No dominant player
• Barriers to entry are low
• SOTs (slow, old or traditional)
• Response of competitors to new entrants is not
  predatory
• No proprietary barriers to entry
• Access to channels
• Forgiving of mistakes

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3 Critical Issues You Must Address
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• Value proposition
• Sustainable competitive advantage
• Management team

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Value Proposition
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• Product/service description
• Target market
• Unique benefits

XYZ is a_______describe company. By its
_______feature(s), it provides ______ unique
benefit(s) to ______target market
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Simple Value PropositionSST Corporation
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SST is a stainless steel toothbrush company. By
its one bristle brush made of high tensile
stainless steel, it provides an exhilarating
tooth cleaning experience to thrill-seeking
X-gen consumers
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Product/Service Description

• 10 words
• Understood by non-expert in your field

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Target Market

• B to C - demographics psychographics
• B to B type of company, size, industry
• How do customers make buying decisions?
• Point of entry. Can it provide entry to other
  segments?

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Unique Benefits

• Emotional independence, security, love
• Social popularity, status, style
• Health quality of life, longevity, cure or
  treat illness
• Financial increase revenue, productivity, ROI

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Simple Value PropositionDell Computer
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Dell Computer sells personal computers to
consumers. Our build-to-order manufacturing and
customer-direct sales enable us to offer custom
built computers at very competitive prices. Our
customers get the computer that they have always
imagined and save money.
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Competitive Advantage

• Innovation
• Differentiation
• Resources capabilities
• Technology

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Typical Competitive Advantages
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• Intellectual property
• Agreements with customers or suppliers
• Long term contracts
• Control of costs
• Control of prices
• Control of channel
• Location

• First to market
• World class management
• Expertise
• Development lead time
• Brand
• Quality
• Service
• Execution
• Relationships

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Sustainable Competitive Advantages
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• Really understand the market
• Really understand competition
• Establish resources and capabilities

Why is this so hard?
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Competitive Advantages Difficult to Achieve
Sustain
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• Most are easily copied
• Entrepreneur ignorant of or ignores competition
• Entrepreneur is not realistic about own resources
  capabilities
• Entrepreneur ignores future
• Entrepreneur must be intellectually honest

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Management

• Demonstrated success in building a company
• Experience in the industry
• Team of 2-6 people with complementary
  capabilities who are committed
• Passion, commitment vision

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Process for Evaluating Ideas

• Feasibility Plan
• Proof of concept
• Business Plan

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Feasibility Plan About the Idea

• Will any one buy it?
• Market research
• In your face - talk to people
• Customers
• Competitors
• Industry experts
• Advisors mentors
• Can you make money? Margin analysis
• Can you develop make it?
• Prototypes, expert opinions
• Enabling technologies infrastructure
• Funds required to
• Develop working prototype
• Scale-up

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Business Plan About the Business

• Executive Summary
• Product or Service Description
• Industry and Marketplace Analysis
• Marketing Plan
• Operations Plan
• Development Plan
• Management
• Financial Projections
• Competitive Advantage
• Funding Requirements

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Business Plan Tools
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• Business Plan
• Most software products are very good
• http//leeds-faculty.colorado.edu/moyes/bplan/
• Feasibility Plan
• http//leeds-faculty.colorado.edu/moyes/bplan/
• How to Get Your Point Across in 30 Seconds, Milo
  Frank