Ch. 2: Inside the Entrepreneurial Mind Protecting Your Ideas Utility Patent – a grant from the Patent and Trademark Office to the inventor of product, giving the exclusive right to make, use, or sell the invention for 20 years from the date of filing the patent application. Ch. 2: Inside the Entrepreneurial Mind

Ch. 2: Inside the Entrepreneurial Mind Protecting Your Ideas Design Patent – a grant from the Patent and Trademark Office to the inventor of a new, original, or ornamental change to an existing product that enhances it sales, the right to make, use, or sell the product for 14 years from the date of filing the patent application. Ch. 2: Inside the Entrepreneurial Mind

Protecting Your Ideas Utility Patents are superior to Design Patents

Patent Applications and Patents Issued Ch. 2: Inside the Entrepreneurial Mind

The Six Steps to a Patent 6. File the patent application 5. Complete the patent application 4. Study search results 3. Search existing patents 2. Document the device 1. Establish the invention’s novelty Ch. 2: Inside the Entrepreneurial Mind

Ch. 2: Inside the Entrepreneurial Mind Protecting Your Ideas Trademark – any distinctive word, symbol, design, name, logo, slogan, or trade dress a company uses to identify the origin of a product or to distinguish it from other goods on the market. ™ ® Servicemark – the same as a trademark except that it identifies the source of a service rather than a product. ℠ ® Ch. 2: Inside the Entrepreneurial Mind

Ch. 2: Inside the Entrepreneurial Mind Protecting Your Ideas Copyright – an exclusive right that protects the creators of original works of authorship such as literary, dramatic, musical, and artistic works. Copyrighted material is denoted by the symbol ©. Ch. 2: Inside the Entrepreneurial Mind

Protecting Intellectual Property The primary weapon an entrepreneur has to protect patents, trademarks, and copyrights is the legal system. Before engaging in a legal battle consider: Can the opponent afford to pay if you win? Do you expect to win enough to cover your legal costs? Can you afford the loss of time, money, and privacy involved? Ch. 2: Inside the Entrepreneurial Mind

Characteristics of Patents, Trademarks, and Copyrights Ch. 2: Inside the Entrepreneurial Mind

Conclusion The creative process is a tenant of the entrepreneurial experience. Success, and even survival itself, requires entrepreneurs to tap their creativity. Creativity results in value, and value provides a competitive advantage. Entrepreneurs protect their creative ideas with patents, trademarks, servicemarks, and copyrights to sustain a competitive edge. Ch. 2: Inside the Entrepreneurial Mind 2 - 10

Intellectual Capital Components MANA 3325 – Thurburn Lecture #4 Slides Intellectual Capital Components Human Capital – External The people you know through networking. Who you can call upon to provide resources from outside. Human Capital – Internal The people you have inside your company. Their Creativity, Processes, Etc. Structural Capital Patents, Intellectual Property, Systems, Controls. Customer Capital Goodwill Customers perception of Corporate Citizenship

Vision vs Mission Vision: Mission: Why do we do what we do. MANA 3325 – Thurburn Lecture #4 Slides Vision vs Mission Vision: Why do we do what we do. What will we be when we are a mature company. Mission: What business we are in. Who we serve. Where we are going.

Competitive Advantages MANA 3325 – Thurburn Lecture #4 Slides Competitive Advantages Any aspect of how you operate your business that is difficult for your competitors to copy and which customers appreciate and respond to.

Competitive Advantages MANA 3325 – Thurburn Lecture #4 Slides Competitive Advantages Any unique technology or process that is either protected by a patent, copyright, or trademark or which is difficult or impossible for a competitor to duplicate.

Competitive Advantages MANA 3325 – Thurburn Lecture #4 Slides Competitive Advantages Barriers to entry that restrict new competitors from gaining a similar advantage.

Competitive Advantages MANA 3325 – Thurburn Lecture #4 Slides Competitive Advantages Relationships with suppliers or distributors that competitors are unable to duplicate, including spokespersons and celebrity endorsements

Strategic Management Is crucial to building a successful business. MANA 3325 – Thurburn Lecture #4 Slides Strategic Management Is crucial to building a successful business. Involves developing a game plan to guide a company as it strives to accomplish its mission, goals, and objectives, and to keep it on its desired course.

Strategic Management and Competitive Advantage MANA 3325 – Thurburn Lecture #4 Slides Strategic Management and Competitive Advantage Developing a strategic plan is crucial to creating a sustainable competitive advantage, the aggregation of factors that sets a company apart from its competitors and gives it a unique position in the market that is superior to its competition. Example: Whole Foods

Building a Competitive Advantage MANA 3325 – Thurburn Lecture #4 Slides Building a Competitive Advantage Consider five aspects of a small company: Products they sell Service they provide Pricing they offer Way they sell Values to which they are committed

Key: Core Competencies MANA 3325 – Thurburn Lecture #4 Slides Key: Core Competencies Unique set of capabilities a company develops in key areas, such as superior quality, customer service, innovation, team-building, flexibility, responsiveness, and others that allow it to vault past competitors. They are what a company does best. Best to rely on a natural advantage (often linked to a company’s “smallness”). Example: Pizza Fusion

Sustainable competitive advantage Superior value for customers MANA 3325 – Thurburn Lecture #4 Slides Building a Sustainable Competitive Advantage Capabilities Core competencies Sustainable competitive advantage Lessons learned Superior value for customers Skills

Strategic Management Process MANA 3325 – Thurburn Lecture #4 Slides Strategic Management Process Step 1 Develop a vision and translate it into a mission statement Step 2 Assess strengths and weaknesses Step 3 Scan environment for opportunities and threats Step 4 Identify key success factors

Strategic Management Process MANA 3325 – Thurburn Lecture #4 Slides Strategic Management Process (continued) Step 5 Analyze competition Step 6 Create goals & objectives Step 7 Formulate strategies Step 8 Translate plans into actions Step 9 Establish accurate controls

Step 1: Develop a Vision and Create a Mission Statement MANA 3325 – Thurburn Lecture #4 Slides Step 1: Develop a Vision and Create a Mission Statement Addresses question: “What business are we in?” The mission is a written expression of how the company will reflect an entrepreneur’s values, beliefs, and vision – more than just “making money.” Serves as a “strategic compass.” Examples: Chick-fil-A, Google

Step 1: Develop a Vision and Create a Mission Statement MANA 3325 – Thurburn Lecture #4 Slides Step 1: Develop a Vision and Create a Mission Statement Elements of a mission statement: Purpose of the company: What are we in business to accomplish? Business we are in: How are we going to accomplish that purpose? Values of the company: What principles and beliefs form the foundation of the way we do business?

Step 2: Assess Company Strengths and Weaknesses MANA 3325 – Thurburn Lecture #4 Slides Step 2: Assess Company Strengths and Weaknesses Strengths Positive internal factors a company can draw on to accomplish its mission, goals, and objectives. Weaknesses Negative internal factors that inhibit a company’s ability to accomplish its mission, goals, and objectives.

Strengths Loyal Customers Special Skills Special Knowledge MANA 3325 – Thurburn Lecture #4 Slides Strengths Loyal Customers Special Skills Special Knowledge Superior Products Positive Public Image Employee Experience Unique Suppliers

Weaknesses Poor Location Lack of Capital Lack of Skilled Workers MANA 3325 – Thurburn Lecture #4 Slides Weaknesses Poor Location Lack of Capital Lack of Skilled Workers Lack of Enough Workers Business Model Obsolescence

Step 3: Scan for Opportunities and Threats MANA 3325 – Thurburn Lecture #4 Slides Step 3: Scan for Opportunities and Threats Opportunities Positive external factors the company can exploit to accomplish its mission, goals, and objectives. Threats Negative external factors that inhibit the firm's ability to accomplish its mission, goals, and objectives.

Threats All of those that are listed in the book… … also Law Suits MANA 3325 – Thurburn Lecture #4 Slides Threats All of those that are listed in the book… … also Law Suits Environmental Disasters Loss of Key Individuals Failure to Secure Funding in Future

The Power of External Market Forces MANA 3325 – Thurburn Lecture #4 Slides The Power of External Market Forces Technological Economic Competitive Social and Demographic Political and Regulatory

MANA 3325 – Thurburn Lecture #4 Slides

Step 4: Identify Key Success Factors MANA 3325 – Thurburn Lecture #4 Slides Step 4: Identify Key Success Factors Key success factors (KSFs): factors that determine the relative success of market participants. The keys to unlocking the secrets of competing successfully in a particular market segment. Example: Five Guys Burgers and Fries

Key Success Factors Industry Experience Experienced Management MANA 3325 – Thurburn Lecture #4 Slides Key Success Factors Industry Experience Experienced Management Sufficient Capital Good Location Quality Products Superior Customer Service Liberal Return Policy for Retailers Distribution Systems Internal Processes – tight controls over costs and quality

Identifying Key Success Factors MANA 3325 – Thurburn Lecture #4 Slides Identifying Key Success Factors List the skills, characteristics, and core competencies that your business must possess to be successful in its market segment. Key Success Factor How Your Company Rates 1. Low 1 2 3 4 5 6 7 8 9 10 High 2. 3. 4. 5. Conclusions:

Step 5: Analyze Competitors MANA 3325 – Thurburn Lecture #4 Slides Step 5: Analyze Competitors NFIB study: Small business owners believe they operate in a highly competitive environment and the level of competition is increasing. Yet, 97 percent of all U.S. businesses do not systematically track the progress of their key competitors.

Competitor Analysis Direct competitors Significant competitors MANA 3325 – Thurburn Lecture #4 Slides Competitor Analysis Direct competitors Offer the same products and services Customers often compare prices, features and deals among these competitors when they shop Significant competitors Offer some of the same or similar products or services Product or service lines overlap but not completely Indirect competitors Offer same or similar products in only a small number of areas

Step 5: Analyze Competitors MANA 3325 – Thurburn Lecture #4 Slides Step 5: Analyze Competitors Analyzing key competitors allows an entrepreneur to: Avoid surprises from existing competitors’ new strategies and tactics. Identify potential new competitors and the threats they pose. Improve reaction time to competitors’ actions. Anticipate rivals’ next strategic moves.

Step 5: Analyze Competitors MANA 3325 – Thurburn Lecture #4 Slides Step 5: Analyze Competitors Techniques do not require unethical behavior: Monitor industry and trade publications. Talk to customers and suppliers. Debrief employees, especially sales representatives and purchasing agents. Attend trade shows and conferences and study competitors’ sales literature. Watch for competitor’s employment ads. Conduct patent searches for patents competitors have filed. Get EPA reports for the factories of competing manufacturers. Monitor direct competitors via social media

Step 5: Analyze Competitors MANA 3325 – Thurburn Lecture #4 Slides Step 5: Analyze Competitors (continued) Techniques do not require unethical behavior: Learn about the kinds of equipment and raw materials competitors are importing from the Journal of Commerce Port Import Export Reporting Service. Buy competitors’ products and “benchmark” them. Get competitors’ credit reports. Check out the reports publicly-held competitors must file with the SEC. Investigate UCC reports. Check out the resources in your local library. Use the Internet to learn more about competitors. Visit competing businesses to observe their operations.

Competitive Profile Matrix MANA 3325 – Thurburn Lecture #4 Slides Competitive Profile Matrix

Is Setting Goals & Objectives Really Important? MANA 3325 – Thurburn Lecture #4 Slides Is Setting Goals & Objectives Really Important? “Would you tell me, please, which way I ought to go from here?” said Alice. “That depends a good deal on where you want to get to,” said the Cheshire cat. “I don’t much care where.…” said Alice. ‘Then it doesn’t matter which way you go,” said the cat. - Lewis Carroll’s Alice in Wonderland

Goals: Objectives: Goals vs Objectives Long range … lets go to Miami MANA 3325 – Thurburn Lecture #4 Slides Goals vs Objectives Goals: Long range … lets go to Miami General and/or Abstract… Lofty Objectives: Specific targets… what route and where do we stay at night? Measurable… how many miles per day? Assignable… who drives which legs of the trip? Realistic/Challenging… make progress vs time to sleep. Timely… project the arrival in Miami accurately. Written… get everyone on board. GO… SMART-W

Step 7: Formulate Strategies MANA 3325 – Thurburn Lecture #4 Slides Step 7: Formulate Strategies Strategy - a road map of the actions an entrepreneur draws up to achieve a company’s mission, goals, and objectives. It is the company’s game plan for gaining a competitive advantage.

Strategic Options Road Map… Route to take to Miami Strategic Options: MANA 3325 – Thurburn Lecture #4 Slides Strategic Options Road Map… Route to take to Miami Strategic Options: Cost Leadership… Low Cost Leader… Walmart - Target Differentiation… Unique Selection, Better Service, etc… Whole Foods Focus… Niche Markets… smaller… specific… Natural Foods Grocery Road Map – Walmart vs Whole Foods vs Natural Foods Road Map – WWN

Step 8 – Implement Action Plans MANA 3325 – Thurburn Lecture #4 Slides Step 8 – Implement Action Plans Purpose: Why are we going to Miami? Scope: Who is going? Contribution: What is the benefit of going? Resources: How many bags of potato chips will it take? Timing: When do we leave? PSCRT

Step 9 - Establish Controls MANA 3325 – Thurburn Lecture #4 Slides Step 9 - Establish Controls Financial: Does this make enough money to justify efforts? Internal Business: Are we implementing the right processes? Customers: Is our perception improving? Innovation: Are we innovating? Citizenship: Are we adding to society? F-IB-C-I-C

Business Models MANA 3325 – Thurburn Lecture #4 Slides Mo. 1 2 3 4 5 6 7 8 9 10 11 12 Tot A 50 B

Business Models MANA 3325 – Thurburn Lecture #4 Slides Mo. 1 2 3 4 5 6 7 8 9 10 11 12 Tot A 50 B @ 6 months A = 23 B = 18 A = 28% more than B

MANA 3325 – Thurburn Lecture #4 Slides Business Models

MANA 3325 – Thurburn Lecture #4 Slides Business Models

Non-Recurring Revenue MANA 3325 – Thurburn Lecture #4 Slides Business Models Recurring Revenue Non-Recurring Revenue Rev. Frequency Mo. / Qtr. / Yr. > Yr.

Non-Recurring Revenue MANA 3325 – Thurburn Lecture #4 Slides Business Models Recurring Revenue Non-Recurring Revenue Frequency Magazines Grocery Fuel Attorneys Mortgage Realtors

Non-Recurring Revenue MANA 3325 – Thurburn Lecture #4 Slides Business Models Recurring Revenue Hybrid Recurring & Non-Recurring Non-Recurring Revenue Frequency Magazines Grocery Fuel Recurring for a Short Period of Time or Periodic Fees + Attorneys Mortgage Realtors

Non-Recurring Revenue MANA 3325 – Thurburn Lecture #4 Slides Business Models Recurring Revenue Hybrid Recurring & Non-Recurring Non-Recurring Revenue Frequency Magazines Grocery Fuel Insurance Bus. Attorney - Retainer or Stock Broker Business Coaches Attorneys Mortgage Realtors Furniture

Business Models MANA 3325 – Thurburn Lecture #4 Slides Clothing Restaurants Security Services Home Theater & Electronics Appliances Home Improvements Roofing Plumbing Electrical Repair

Non-Recurring Revenue MANA 3325 – Thurburn Lecture #4 Slides Business Models Recurring Revenue Non-Recurring Revenue Rev. Frequency Mo. / Qtr. / Yr. > Yr. Customer Profile Value Proposition Differentiation Pricing Selling Process Distribution Support

Feasibility Analysis MANA 3325 – Thurburn Lecture #4 Slides Industry & Market Product & Service Financial

Low Industry & Market Feasibility Five Forces Circle High MANA 3325 – Thurburn Lecture #4 Slides Intensity of Rivalry Low Industry & Market Feasibility Five Forces Circle Bargaining Power Of Customers 5 5 High 5 Threat of New Competitors 5 5 Bargaining Power Of Suppliers Threat of Substitute Products

Industry & Market Feasibility Five Forces Circle Low High Intensity of Rivalry Low Bargaining Power Of Customers 5 5 High 5 Threat of New Competitors 5 5 Bargaining Power Of Suppliers FOOD TRUCK EXAMPLE Threat of Substitute Products

Consignment Clothing Retailer Industry & Market Feasibility Five Forces Circle Intensity of Rivalry Low Industry & Market Feasibility Five Forces Circle Bargaining Power Of Customers 5 5 High 5 Threat of New Competitors 5 5 Bargaining Power Of Suppliers Consignment Clothing Retailer Threat of Substitute Products

Five Forces Analysis MANA 3325 – Thurburn Lecture #4 Slides Food Truck Neighborhood Style Mexican Restaurant Pizza Franchise – Dominos Steak House – High End

Five Forces Analysis MANA 3325 – Thurburn Lecture #4 Slides Commercial Lawn Care Business Moving Company Clothing Store Roofing Company

Product or Service Feasibility MANA 3325 – Thurburn Lecture #4 Slides Product or Service Feasibility Primary Research – Most Valuable & Expensive: Customer Surveys Focus Groups Prototypes In-Home Trials Secondary Research – Less Pertinent & Less Expensive: Trade Associations Direct Mail Lists Demographic Data Census Data Market Research by Others Articles Local Data Internet

Financial Feasibility MANA 3325 – Thurburn Lecture #4 Slides Start here Financial Feasibility Capital Requirements Do we have enough cash to do it? If not… can we raise the cash needed? Estimated Earnings Does it generate enough cash to sustain itself? Return on Investment Can we get a better return doing something else for a lower risk?

MANA 3325 – Thurburn Lecture #4 Slides Should We? Can We? How Do We? Did We? Would We?

Did We Achieve our Goals? MANA 3325 – Thurburn Lecture #4 Slides Should We? Does it fit our Vision and Mission? Can We? Do we have adequate resources? Perform a Feasibility Analysis How Do We? Develop a Business Plan Specify Objectives Did We Achieve our Goals? Implement the Business Plan Measure Results Would We Do It Again? Do we pull the plug? If so… When?

The Business Plan Why Make a Business Plan? MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Why Make a Business Plan?

The Business Plan Good Planning Improves Results MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Good Planning Improves Results Increase Probability of Successful Financing Helps Prevent Mistakes… I wish we hadn’t !

The Business Plan Who is the Plan for? MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Who is the Plan for? Yourself… essentials may be enough. Partners… more extensive Investors… most extensive The More $$$ the More EXTENSIVE

The Business Plan Company Strategy Marketing Implementation MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Company Strategy Marketing Implementation Projections Financing

The Business Plan Company Title Page Table of Contents Exec Summary MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Company Title Page Table of Contents Exec Summary Vision & Missions History Industry Profile Products & Services

The Business Plan Strategy Goals Objectives Business Strategy MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Strategy Goals Objectives Business Strategy

The Business Plan Marketing Marketing Strategy Marketing Research MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Marketing Marketing Strategy Marketing Research Customer Research Competitors Analysis

The Business Plan Implementation Management Team Plan of Operations MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Implementation Management Team Plan of Operations

The Business Plan Projections Assumptions Summary & Cash Flow MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Projections Assumptions Summary & Cash Flow Income Sources COG Expenses Payroll Detail

The Business Plan Financing Loan Details if applicable MANA 3325 – Thurburn Lecture #4 Slides The Business Plan Financing Loan Details if applicable Investor Details if applicable

The Business Plan The 5 Cs Capital Capacity Collateral Character MANA 3325 – Thurburn Lecture #4 Slides The Business Plan The 5 Cs Capital Capacity Collateral Character Conditions

The Business Plan The 5 Cs of Capital MANA 3325 – Thurburn Lecture #4 Slides The Business Plan The 5 Cs of Capital Capital – Enough? and Balance of Debt vs Equity Capacity – Cash Flow Collateral – Liquid or Fixed Assets Character – Creditor History Conditions – Terms of Loan