1. E mpowering I magination A pplying K nowledge E xploring I nnovations T omorrow S eizing O pportunities A ccelerating B usiness I nspiring I nnovations E mpowering I magination A pplying Knowledge Explore S eizing O pportunities A ccelerating B usiness I nspiring T omorrow E mpowering I magination A pplying K nowledge E xploring Innovation T omorrow S eizing O pportunities A ccelerating Business I nspiring T Unit 3 Opportunity Recognition and Business Plan

2. Opportunity Recognition  Discuss: What is the difference between an opportunity and an idea? Opportunity an amount of time or a situation in which something can be done; a favorable juncture of circumstances Idea  something that you imagine or picture in your mind

3. Opportunity Recognition Opportunity Driven: What makes a good opportunity?  Opportunity driven  Entrepreneur and team  Fit and balance  Integrated and holistic

4. Opportunity Recognition Opportunity Evaluations:  Market size and growth potential  Technology  Personnel and team  Product value/characteristics  Internal challenges  Level of innovation and creativity

5. Opportunity Recognition Maximize Potential with Limited Resources  Clear, concise description of the business  Unique features and proprietary rights  Overview of market potential  Strong team  Financial potential

6. Opportunity Recognition The Product/Service Plan  Bootstrapping (Barter, borrow, beg)  Minimize and control resources versus owning resources, such as equipment, buildings, other… Thinking money first can be a mistake.

7. Opportunity Recognition Opportunity Resources Business Plan Fit and Balance: Balancing Opportunity, and Resources to create a successful venture.

8. Opportunity Recognition Opportunity  Market Demand-what people are willing & able to buy  Market Structure & Size  # of competitors in the market  Margin Analysis-how much profit can be made

9. Opportunity Recognition Resources  Minimize & Control vs. Maximize & Own Depends on:  Financial needs  People you have to work with

10. Evaluating Opportunities in Market & Economically Criteria:  Customers  Growth rate  User benefits  Capacity  Value added  Attainable Share  Product life  Cost structure  Structure & Size Criteria  Time to BE  ROI potential  Exit strategy  Cash flow characteristics  Capital market  Capital requirements  Value-added potential

11. Evaluating Venture Opportunities Competitive Advantages Criteria:  Fixed/variable costs  Control over costs  Proprietary protection  Contracts/networks  Response/lead time  Legal advantage

12. Opportunity Recognition Criteria:  Entrepreneurial Team  Industry and technical experience  Integrity  Intellectual honesty Evaluating Venture Opportunities

13. Opportunity Recognitions Evaluating Venture Opportunities Personal Criteria  Goals and fit  Upside/downside issues  Opportunity costs  Desirability  Risk/reward tolerance  Stress tolerance

14. Successful Venture Opportunities 1. They create or add significant value to a customer or end user. 2. They do so by solving a significant problem, or meeting a significant want or need, for which someone is willing to pay a premium. 3. They have a robust market, margin, and moneymaking characteristics: large with high growth; high margins; early free cash flow; and attractive returns to investors. 4. They are a good fit with the founders and management team.

15. E mpowering I magination A pplying K nowledge E xploring I nnovations T omorrow S eizing O pportunities A ccelerating B usiness I nspiring I nnovations E mpowering I magination A pplying Knowledge Explore S eizing O pportunities A ccelerating B usiness I nspiring T omorrow E mpowering I magination A pplying K nowledge E xploring Innovation T omorrow S eizing O pportunities A ccelerating Business I nspiring T Intellectual Property

16. Patents  It gives you an exclusive right within the US to make, use and sell your invention for a period of years. It must fall into one of these four categories:  Process  Machine  An article of manufacture  Composition of matter

17. Intellectual Property Design Patent— ornamental design of a manufactured item (14 years) Utility Patent— functional features of the invention (20 years) Patents  Cannot be obvious  Must have some utility  Can’t be frivolous or immoral

18. Intellectual Property Copyrights  Literary works  Musical works  Dramatic works  Pantomimes and choreographic works  Pictorial, graphic and sculptural works  Motion pictures  Sound recordings

19. Intellectual Property Trademarks and Trade Names  Trademark is any word (or words), name, symbol or picture or device that a company uses to distinguish its goods from someone else’s.  A related property right is a Service Mark

20. Intellectual Property Trademarks and Trade Names  If you are only going to do business locally, may not be necessary to officially register  If you may go across state or the country, should consider formal registration from the state and the US Patent and Trademark Office

21. Intellectual Property Trade Secrets  Data or information not generally known in the industry that gives a business an advantage over the competition  Formulas  Manufacturing techniques/processes  Customer lists  Computer software (source code)

22. E mpowering I magination A pplying K nowledge E xploring I nnovations T omorrow S eizing O pportunities A ccelerating B usiness I nspiring I nnovations E mpowering I magination A pplying Knowledge Explore S eizing O pportunities A ccelerating B usiness I nspiring T omorrow E mpowering I magination A pplying K nowledge E xploring Innovation T omorrow S eizing O pportunities A ccelerating Business I nspiring T Business Plans

23. Effective Business Planning  The business plan is a written document that provides details of a proposed venture.  It must be comprehensive and cover all aspects of the business.  It becomes the entrepreneur’s roadmap.

24. Effective Business Planning Why should we write business plans?  Identify opportunities and potential pitfalls  Assess the overall market potential  Determine financial requirements  Develop operational strategies  Guide in the management of the venture

25. Effective Business Planning Sections of the Business Plan  Title page  Table of Contents  Executive Summary  Product/Service Section  Management Section  Marketing Section  Financial Section  Monitor and Measuring  Exit Strategy  Appendix

26. Effective Business Planning Things That Should be Obvious  Each section defines and meets its objectives  Conclusions are reasonable and supported by facts  No spelling errors; grammar is clean; financials are correct  Clean printouts; contains page numbers; format consistent throughout

27. Effective Business Planning Executive Summary  Clear, concise description of the business  Unique features and proprietary rights  Overview of market potential  Strong team  Financial potential

28. Effective Business Planning The Product/Service Plan  Purpose and unique features of the product or service  Current state of development  Proprietary rights (if any exist)  Any government approvals/status  Any liabilities product/service may pose  Means of production

29. Effective Business Planning The Product/Service Plan  Warranties  Service activities associated with the product or service  This section should clearly describe the concept and convince the reader that the entrepreneur has a product/service that is innovative and creates value for the customer.

30. Effective Business Planning The Management Section  Team—key personnel and responsibilities  Legal structure and agreements  Board of directors/advisors  Outside consultants Have to demonstrate strong team capable of successfully leading the venture!

31. Effective Business Planning The Marketing Plan  Current market size/growth potential  Industry trends  Competition analysis  Customer profile  Target markets  Market penetration  Pricing

32. Effective Business Planning The Marketing Plan In this section, the entrepreneur needs to show:  Large and growing market  Identifiable and penetrable target market(s)  Knowledge of the competition  Understanding of the customers and their needs  Logical plans for penetrating the market

33. Effective Business Planning The Financial Plan  Start-up costs  Balance sheet projections  Cash flow projections  Income statement projections  Sources and uses of funds

34. Effective Business Planning The Financial Plan The entrepreneur needs to demonstrate:  Significant profit potential exists  Sufficient cash coverage  Ability to repay loans  Ability to earn favorable return for investors  Ability to eat while the business grows

35. Effective Business Planning Monitor, Measuring & Contingency Plan (3, 6, 12 Month)  Profitability  Sales  Communications  Goals  Performance  Other concerns Area to be Measured Monitoring Method Contingency Plan of Action if Below Average 1. 2. 3.

36. Effective Business Planning Exit Strategy  Plan time of business closure  Tax implications  Legal notification of closure  Distribution of assets owned  Will there be a transition of ownership?

37. Effective Business Planning The Appendix  Technical specifications/diagrams  Resumes of key team members  Examples of marketing data  Contracts or other legal documents  Financial projections (statements)

38. Effective Business Planning Guidelines to Remember  Write an executive summary with impact  Describe product/service completely  List key features and unique customer benefits  Identify any proprietary value  Demonstrate knowledge of the industry and target market(s)  Provide evidence of an effective entrepreneurial team  Explain revenue model  Include key financial assumptions and three-year projections