Business Ideas

1Business Ideas –and PlansY2KWednesday, November 7 2Ideal Investor CharacteristicsExciting company•Unique Product /Service •Large potential market•Rapid growth prospects3The Best IdeasCome from your own experiences•Jobs, hobbies, family•A problem you’ve encountered•Something that just bugs you4Sectors to Avoid•Films and theater•Music and dance•Creative art•Sports -teams, events•Education (Teaching)55“Free” Competition•Government •Charities•Rich peopleDoes someone offer your service for really cheap -or for nothing? 6Unattractive Sectors•Restaurants--one location > Too many cooks> 80% bankruptcy rate•Retailing--one location > Too easy to enter > 80% bankruptcy rate7More Unattractive Choices•Consulting> Not scalable> No financing necessary•Some International Businesses> Depends on your access > Also, perspective of the judges8AvoidOne trick poniesProduct, not a business ?9AvoidIdeas with Large Capital RequirementsNeed $100 million -just to get started?10Consider...Do you have:•The skills to make the business happen?•Or, an “in” to acquire those skills?If not, your plan is just creative writing11Most Important Question•If the idea is so great...•Why hasn’t anyone done it before?•Might be –Technology didn’t exist before•Might be –Can’t make any money! 12Pull Together a TeamTeams --4 or 5 people with skill diversityManagement experienceMarketing personProduction /TechnicalFinancial 13MOST important•Do you get along?•Trust each other to work independently?•Laugh at each others’ jokes?14Writing the Plan•Goodbusiness plan --difficult to write75% of Plans•Badly written and incomplete 15Investor Perspective•Investors see hugenumber of plans•Maybe 5 to 10 --weekly•Many they neverread at all1 out of 100•Of those read --they will invest in:16Screening Process100 %Read full plan30Serious analysisRead summary Phone entrepreneurs103Do the deal1 %17Outline of the Plan --25+ Pages•Cover page•Disclaimer•Index•Summary•Main Body•Financial Projections•ExhibitsGoal: Induce Readerto want to learn moreGoal: Induce readerto actually read this18The Executive Summary•Summary must be great•That’s allmost people will read2 -4 pages long1,400 words or lessEasy to readEasy to understand19Content Counts•Quality--is critical> Exciting or uniquecontent> Well written•Well researched•Show you have thought about details 20Key Elements in the Summary1.Type of business 2.Uniqueness --what is special3.Management --experience4.Upside potential5.Exit 21Make Sure to Address:•What is the market opportunity? •How is the Company new/different?•Comparative advantages ?•Weaknesses ?22Your Market•How large is it? •Is it growing? By how much?•Projections for the future?•What are the gaps, needs, opportunities?23Research the Customers•Who are they –demographics, traits•How many are there?•What do they want?•What can you do for them?Find out!24The Product --or the Service Develop a one page “concept” summary•What does it do ?•How does it work ?•List the main features•List main benefits--to customers25Use the Product Description to:•Conduct interviews •Do surveys•Ask customers if they wantyour product !26Surveys•Survey Monkey = online survey toolEasy, nice looking, has analysis toolsFree for short, simple surveys•Keep your survey short, simple •Test your survey before sending!2727The Competition•Alwaysmore competition --than you think•Comparemajor features of your product> To all competitors’ products> To “do nothing” 28Key Avenues For Investigation•Why has no one done this before ?•What is unique? •Comparative advantage ?Construct a Competitor Grid29Competitor Grid --Reason To BuyReasonCo. ACo. BOur Co.PriceXXQualityXXXServiceXX30No Reason for Customer to ChangeMadeCompetitorBy UsBetterCheaperFasterOur TentsCompetitor ACompetitor BCompetitor CMadeCompetitorBy UsBetterCheaperFasterOur TentsCompetitor ACompetitor BCompetitor CXXXXXXXXBuyer has noreason to switch --probably won’t3131Beware the Status Quo•People hate to change•Or to pay--for what was freeFigure out: What is the Cost of “Doing Nothing” --versus paying you?32Management•Who are they? Relevant skills? •Who are you missing? •Advisors? 3333Sales and Marketing StrategyHow to get the customer to buy?•Use: mailings, flyers, yellow page ads•Hire: sales force, sales rep company•Buy: Shelf space, Internet ads3434Sales and Marketing StrategyWhen you do customer interviews --ask!•Where would you go to buy this?•What search words would you use?•Do you need to see, touch, try it –to buy?3535Production Plan•How will you make the product/service?•Deliver it?•Service it?3636Even if you are Selling a Service•Staff skills?•Facilities?•Equipment?37Other Executive Summary Topics•Growth strategy –start small, grow big•Profit strategy –how will you make money?•Financials, financing needs?•Deal terms38Sources for Research•Bloomberg •One Source•Yahoo! Finance•SEC --Edgar•Hoover’s•Annual Reports39Better Sources for Research•Lexis /Nexis •Factiva•Industry Publications•Mintel•Google40Best Sources for Research•Industry Associations •Competitors’ Websites•Talking to experts!41Beware of Common Mistakes“ Paradigm Shift Incwill revolutionize the industry with its game changing strategies.”•Why should I believe you? •What does this even mean?Unsubstantiated HypeHuh?42Good Things•Numbers! Data!•Details --explain what you mean!•Short paragraphs•Bulleted lists•Great, clear writing43Y2K Deadline: December 16, 6 AM•Explain:The market opportunityYour product conceptYour competitive advantage•Describe:Your team members and their skills44Questions?