MBAX 6100 Entrepreneurship & Small Business Management Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado Nature of Opportunity

Today’s Agenda Opportunity Recognition Feasibility Plan ICEDELIGHT’s Status of Entrepreneurship Interview Feasibility concepts Mid-term alternative Week 10 Nature of Opportunity

Next Week’s Schedule Corporate Entrepreneurship Entrepreneurial market research – bring laptops. Joseph Yue Read Building Breakthrough Businesses Understanding Obstacles M-3 Is This a Good Market? Nature of Opportunity

When Is an Idea an Opportunity? Open window Entry is feasible Management team Competitive advantage Economics Rewarding Forgiving Growth Attractive Durable Timely Adds value What does this mean? Timmons, New Venture Creation Nature of Opportunity

Good Opportunity Market is strong & accessible Compelling need Good Opportunity Market is strong & accessible Compelling need Sustainable competitive advantage Unique/different High margins Management Nature of Opportunity

Market Demand Is Strong Market Demand Is Strong Favorable trends Growing market Size is big enough to be worth the effort Market share attainable Favorable window of opportunity Venture Capital 30%+ per year $100 million with $1 billion potential Minimum 20% Nature of Opportunity

Market Is Accessible Market Structure Fragmented No dominant player SOT’s (slow, old or traditional) Response of competitors to new entrants is indifferent No proprietary barriers to entry Access to channels is possible Forgiving of mistakes Fragmented market strategy Ownership of resources Low cost producer Consolidation If dominant player(s) are: old, traditional, slow Response of competitors: Airlines, but Southwest Personal computers, but Dell Organized crime PC software, no buts Access to channels Air Florida Toothpaste, but Tom’s of Maine Will make lots of mistakes. Why need Hi margins Growth Resources Experience Nature of Opportunity

Compelling Need Solves a problem Unfulfilled niche Compelling Need Solves a problem Unfulfilled niche Dissatisfaction with current products/services Poor quality or service Needs Physical Physiological Emotional Social Financial Intellectual Manage information: Google Physical: food, warmth, shelter, sleep, etc. Physiological: health, cleanliness, comfort, fitness, safety, etc. Emotional: euphoria, love, prestige, stress, etc Social: ethical, honesty, power, competitiveness, integrity, friendship, etc. Intellectual: achievement, better decisions, artistry, etc. Economic: revenues, productivity, cost savings, maintenance, etc. Financial: ROI, DCF, payback, burn rate, etc. Nature of Opportunity

Competitive Advantage Competitive Advantage Understand the market Understand the competition Sustainable Innovation Differentiation Resources & capabilities Really understand the market & competition Major competitor is inertia Nature of Opportunity

Unique/Different You must differentiate your business – it’s already being done by someone More than unique product/service design Marketing – positioning Operations – process or value chain Channels – create a new channel Benefits Nature of Opportunity

High Margins Mind-set of high & low margin thinking Advantages of high gross profit margins Funding Cash flow Development & marketing Can solve the screw-up problem Slippery slope of low margin thinking Example of 40% vs 60% gross profit margin business Nature of Opportunity

Management Meets your personal interests & objectives Takes advantage of your experience Would your potential customers buy from you? You can put a management team together You are passionate and commit Nature of Opportunity

Commitment “Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative and creation there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: That the moment one definitely commits oneself, Providence moves too. All sorts of things occur to help one that would never other wise have occurred. A whole stream of events issue from the decision, raising in one’s favor all manner of unforeseen incidents and meetings and material assistance, which no man could have dreamed would have come his way. Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it.” Goethe’s Faust. Nature of Opportunity

Good Opportunity Market is strong & accessible Compelling need Sustainable competitive advantage Unique/Different High margins Management Nature of Opportunity

New Ventures Are Opportunity Driven New Ventures Are Opportunity Driven Not technology driven Not product driven Not solution driven Not asset driven Not resource driven Product: Famous Amos Cookies. Wally Amos got recipe from back of package of Nestlé's Chocolate Chips. Source: Tom O’Malia of USC Innovation: takes time and/or money Ford: meat packing to autos Dell: supply chain management and on-line sales Nature of Opportunity

When Opportunity Driven When Opportunity Driven Uncertainty is good! Lack of information is good! Being small & flexible can be good! E is a full contact sport Nature of Opportunity

Ideas Are Overrated Build a better mouse trap Ideas Are Overrated Build a better mouse trap Most ideas already thought of Process of refinement is essential 2.7 venture attempts in 5 to 7 years to succeed. Noodles process of refinement Nature of Opportunity

Feasibility Plan Objectives Assessment Framework Assignment Nature of Opportunity

Objectives of a Feasibility Plan Objectives of a Feasibility Plan Will anyone buy it? Can you make money? Is this a good opportunity? Nature of Opportunity

Assessment Framework Part I Market Analysis Part II Industry Analysis Part III Venture Analysis Nature of Opportunity

Approach Start with broad perspective Talk to wide variety of people Qualitative customer survey Secondary research of industry and competition Nature of Opportunity

Assignment Answer questions in Feasibility Plan Framework Conduct interviews with business people (5 per person) Prepare Call Reports Conduct customer survey (5 per person) Prepare answers to surveys Deliverable Parts I & II due week 10 Parts I, II & III due week 14 Parts I & II revised based on feedback and further research Presentations week ? DECK format Nature of Opportunity