Technical Entrepreneurship

1
TECHNISCHE UNIVERSITÄT BERLIN INSTITUT FÜR
INFORMATIK
HUMBOLDT-UNIVERSITÄT ZU BERLIN INSTITUT FÜR
INFORMATIK
TECHNICAL ENTREPRENEURSHIP Vorlesung 2 BUSINESS
PLAN Wintersemester 1999 Leitung Prof. Dr.
Miroslaw Malek Betreuer Peter K.
Ibach www.informatik.hu-berlin.de/rok/entreprene
urship
2
OPPORTUNITY

• Types of startup firms
• 1) mom-and-pop business (marginal firm,
  life-style firm)
• 2) high potential firm
• 3) foundation firm
• Types 2) and 3) have at least 500,000 in sales
  and grow at a rate of minimum 10 per year.
• 2) and 3) have much bigger success potential than
  mom-and-pop businesses.
• 7 of 7 million US companies grew over 20 per
  year
• Over 1 of 7 million (80,000) grew over 50 per
  year
• Venture capital founded firms have a 60 plus
  success rate

3
THE WINDOW OF OPPORTUNITY
4
THE DIFFERENCE BETWEEN IDEAS AND OPPORTUNITIES

• 1 - 3 of ideas are considered opportunities by
  VC's.
• A good opportunity must be
• attractive
• durable
• timely
• Lemons (loosers) ripen in about 2 1/2 years.
• Pearls (winners) take seven to eight years.

5
SALES VOLUME OF U.S. COMPANIES

• 20 of businesses have sales over 1M
• 10 of businesses have sales over 2M
• 1.25 of businesses have sales over 10M
• 0.67 of businesses have sales over 25 M
• (U. S. government data for 1980) In 1990 these
  figures have doubled

6
ONE-YEAR SURVIVAL RATES BY FIRM SIZE
7
FOUR-YEAR SURVIVAL RATES BY FIRM SIZE
8
SIX MOST IMPORTANT FACTORS (FROM VC'S
PERSPECTIVE) FOR SUCCESSFUL COMPANY

• 1. the best entrepreneur and the quality of the
  team (people)
• 2. the best entrepreneur and the quality of the
  team (people)
• 3. the best entrepreneur and the quality of the
  team (people)
• 4. the best entrepreneur and the quality of the
  team (people)
• 5. Market potential and marketing
• 6. Idea
• The management team must have quality, depth and
  maturity.

9
MARKET STRUCTURE

• Market structure is characterized by
• The number of sellers
• The size distribution of sellers
• The differentiation of products
• The conditions of entry and exit
• The number of buyers
• The cost conditions
• The sensitivity of demand to changes in price

10
ENTRY STRATEGIES FOR ENTERING BUSINESS

• Developing a new product or service (innovation)
• Developing a similar product or service
  (imitation)
• Buying a franchise
• Exploiting an existing product or service
• Sponsoring a startup enterprise
• Acquiring a going company

11
WAYS TO GENERATE IDEAS WHAT IF ...?

• 1. WHAT IF it were longer? or smaller? inside
  out, different material, color, thinner, lighter,
  shorter, etc.
• 2. TURN PROBLEMS INTO PROFITS (eco industry, new
  civilization headaches)
• 3. VISUALIZE (mental pictures)
• 4. IDENTIIFY NEEDS
• 5. FORCED CONNECTIONS (e. g., clock radio and
  wrist watch)
• 6. KEEP A RECORD OF YOUR IDEAS ("creativity
  file")
• 7. CULTIVATE YOUR IDEAS
• 8. BE RECEPTIVE TO IDEAS
• 9. STOP BEING PRACTICAL

12
WAYS TO GENERATE IDEAS WHAT IF ...?

• 10. TRY SOMETHING NEW
• 11. BE PROGRESSIVE, NOT REGRESSIVE
• 12. BRAINSTORMING
• 13. IMPROVE EXISTING IDEAS
• 14. BRAINWRITING
• 15. SERENDIPITY TECHNIQUE ("BY CHANCE")
• 16. CREATIVE UNHAPPINESS
• 17. MIND MAPPING
• 18. SPEAK UP AND LISTEN
• 19. GAME STRATEGY METHOD (CHESS, JIGSAW, etc.)
• 20. JOIN BUSINESS OR ENTREPRENEURS ORGANIZATIONS

13
MIND MAPPING
14
WRITING A SUCCESSFUL BUSINESS PLANDEFINING A
BUSINESS PLAN

• A good definition A business plan is a document
  that convincingly demonstrates the ability of
  your business to sell enough of its product or
  service to make a satisfactory profit and be
  attractive to potential backers.
• A better definition A business plan is a selling
  document that conveys the excitement and promise
  of your business to any potential backers or
  stakeholders.

15
EIGHT REASONS FOR WRITING A BUSINESS PLAN

• 1. To sell yourself on the business - "sanity
  check".
• 2. To obtain bank financing.
• 3. To obtain investment funds.
• 4. To arrange strategic alliances.
• 5. To obtain large contracts.
• 6. To attract key employees.
• 7. To complete mergers and acquistions.
• 8. To motivate and focus your management team.

16
TYPES OF PLANS

• The Summary Business Plan - up to ten pages
• The Executive Summary - up to two pages
• The Full Business Plan - 10 - 50 pages
• The Operational Business Plan - 40 - 200 pages
• GETTING STARTED TO WRITE
• BRAINSTORMING
• Step 1 Posing the Right Questions or Subjects
• Step 2 Providing Bite-Size Answers

17
WHAT SHOULD THE BUSINESS PLAN COVER

• 1. COVER PAGE
• 2. TABLE OF CONTENTS
• 3. EXECUTIVE SUMMARY
• 4. THE COMPANY
• 5. THE MARKET
• 6. THE PRODUCT/SERVICE
• 7. SALES AND PROMOTION
• 8. FINANCES (CASH FLOW, INCOME/LOSS, BALANCE
  SHEET)
• 9. APPENDICES (e. g., EXECUTIVES PROFILES)

18
ALTERNATIVE CONTENTS

• 1. COVER PAGE
• 2. SUMMARY
• 3. TABLE OF CONTENS
• 4. INTRODUCTION
• 5. DESCRIPTION OF VENTURE
• 6. MARKETING STRATEGY
• 7. FINANCIAL STRATEGY
• 8. FINANCIAL SCENARIOS
• 9. OPERATING STRATEGY
• APPENDICES

19
BUSINESS PLAN TARGETING SUMMARY
20
CRITERIA FOR EVALUATING VENTURE OPPORTUNITIES (1)
21
CRITERIA FOR EVALUATING VENTURE OPPORTUNITIES (2)
22
CRITERIA FOR EVALUATING VENTURE OPPORTUNITIES (3)
23
CRITERIA FOR EVALUATING VENTURE OPPORTUNITIES (4)
24
CRITERIA FOR EVALUATING VENTURE OPPORTUNITIES (5)
25
CRITERIA FOR EVALUATING VENTURE OPPORTUNITIES (6)
26
BUSINESS PLAN A MORE DETAILEDTABLE OF CONTENTS

• Cover Page
• Executive Summary 1
• 1. Introduction-Industry, the company and its
  products 2
• The industry
• The company
• The products or services
• 2. Market research and analysis 3
• A. Customers
• B. Market Size and Trends
• C. Competition
• D. Estimated Market share and sales
• E. Ongoing Market evaluation

27
BUSINESS PLAN A MORE DETAILEDTABLE OF CONTENTS
(continued)

• 3. Marketing plan 6
• A. Overall marketing strategy
• B. Pricing
• C. Sales tactics
• D. Service and warranty policies
• E. Advertising and promotion
• 4. Design and development plans 8
• A. Development status and tasks
• B. Difficulties and Risks
• C. Product improvement and New products
• D. Costs

28
BUSINESS PLAN A MORE DETAILEDTABLE OF CONTENTS
(continued)

• 5. Manufacturing and operations plan 9
• A. Geographic Location
• B. Facilities and improvements
• C. Strategy and plans
• D. Labor Force
• 6. Management team 11
• A. Organization
• B. Key management Personnel
• C. Management compensation and ownership
• d. Board of directors
• E. Management assistance and training needs
• F. Supporting professoinal services

29
BUSINESS PLAN A MORE DETAILEDTABLE OF CONTENTS
(continued)

• 7. Overall schedule 13
• 8. Critical risks and problems 15
• 9. Community benefits 16
• A. Economic benefits
• B. Human development
• C. Community development
• 10. The financial plan 17
• A. Profit and loss forecast
• B. Pro forma cash flows analysis
• C. Pro forma balance sheets
• D. Breakeven chart
• E. Cost control

30
BUSINESS PLAN A MORE DETAILEDTABLE OF CONTENTS
(continued)

• PRO FORMA INCOME STATEMENTS
• PRO FORMA CASH FLOWS STATEMENTS
• PRO FORMA BALANCE SHEETS
• BREAKEVEN CHART
• 11. PROPOSED COMPANY OFFERING 24
• A. Desired financing
• B. Securities offering
• C. Capitalization
• D. Use of funds

31
(No Transcript)
32
(No Transcript)
33
(No Transcript)