1© John Mullins 2006 What to Run Before Your Business Plan Course John W. Mullins London Business School

2© John Mullins 2006 What’s Terrific About Your Business Plan Course? Pulls things together Applies theory learned in the core Gets students engaged: work on their own ideas Learning by doing

3© John Mullins 2006 What’s Not So Good About Your Business Plan Course? A “sales” mindset: no critical thinking Puts them in a difficult position vs. judges Some students disengage if the idea is not theirs Most plans are pretty bad! Why?

4© John Mullins 2006 One Solution: Opportunity Assessment Course Course project: a feasibility study for an opportunity they choose No confirmation bias: “go” or “no-go” are both OK No embarrassment with judges Brings together strategy, marketing, OB Jump-starts the business planning

5© John Mullins 2006 How Do You Build It? The seven domains of attractive opportunities

6© John Mullins 2006 Motivated by Warren Buffett… “When a business with a reputation for poor fundamentals meets a management team with a reputation for brilliance… it’s the reputation of the former that remains intact.”

7© John Mullins 2006 ProCom Bootstrapped the business with money from 3Fs to prove the model Raised $4 million from GE Capital when e-learning was all the rage Have treaded water since, no exit, but still around: the “living dead”

8© John Mullins 2006 Oxiden Raised £5 million from 3i Took two years to get product to market Then, a very lengthy sales cycle followed There was another solution… Died after 4 years

9© John Mullins 2006 Darian Holdings Raised small amount of angel money An opportunity arose to buy a competitor at a very attractive price Having considerable success

10© John Mullins 2006 Glencoren Turned down by several investors, but did eventually raise a small amount for proof of concept Now trying to raise the next round A very long lead time play – changing surgeons’ behavior takes a long time

11© John Mullins 2006 Research Question How can entrepreneurs (and investors, too?) best assess market opportunities?

12© John Mullins 2006 Point of Confusion #1: The Market / Industry Distinction What’s a market? What’s an industry? These are frequently confused!

13© John Mullins 2006 The Seven Domains of Attractive Opportunities Market DomainsIndustry Domains Market AttractivenessIndustry Attractiveness

14© John Mullins 2006 Point of Confusion #2: The Macro / Micro Distinction Large and growing markets are important, but… Structurally attractive industries (in a five forces sense) are also important, but…

15© John Mullins 2006 The Seven Domains of Attractive Opportunities Macro Level Micro Level Market DomainsIndustry Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

16© John Mullins 2006 Point of Confusion #3: What’s Crucial about Entrepreneurs and Their Teams… It’s not found on their CVs Not simply about “chemistry” or “character” or “entrepreneurial drive”

17© John Mullins 2006 The Seven Domains of Attractive Opportunities Macro Level Micro Level Market DomainsIndustry Domains Mission, Ability to Aspirations, Execute Propensity on CSFs for Risk Connectedness up and down Value Chain Team Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

18© John Mullins 2006 In Summary, for the Seven Domains… Scores are not additive: summing the scores across the seven domains is meaningless Strong scores at the micro level can mitigate poor macro-level scores

19© John Mullins 2006 What to Do Before (Or in?) Your Business Plan Course? The seven domains –Identify key weaknesses Questions to be answered –Suggest avenues for reshaping the opportunity if not mitigated by other domains –Identify key strengths Crucial in telling your story to resource providers

20© John Mullins 2006 Remember Warren Buffett’s Words “When a business with a reputation for poor fundamentals meets a management team with a reputation for brilliance, it’s the reputation of the former that remains intact.”

21© John Mullins 2006 For the Rest of the Story… The New Business Road Test

22© John Mullins 2006 To Download an Examination Copy of Chapter 1… Instructor website at See Amazon for Reader Reviews