business planning for a social enterprise paul kirsch program manager at the zell lurie institute...

Business Planning for a Social Enterprise

Paul KirschProgram Manager at the Zell

Lurie Institute for Entrepreneurial Studies

COPYRIGHT © 2006 THE REGENTS OF THEUNIVERSITY OF MICHIGAN ALL RIGHTS RESERVED

Zell Lurie Institute• At the University of Michigan, Ann

Arbor• Housed in the Ross School of Business

• Mission: – To build the entrepreneurial skillset and

develop the entrepreneurial mindset of students

– To support the formation, launch, growth and funding of student ventures

2

Zell Lurie Institute• Skillset and mindset

– Classes and symposia

• Funding– Two student led funds– Annual grant progam >$100,000

• Business Development– Competitions– Coaching and mentoring– Seminars

3

Entrepreneur• A person who can indentify an

opportunity and create an organization to pursue it

• A person who organizes and manages an enterprise usually with considerable initiative and risk

• A risk-taker who has the skills and initiative to establish a business

• One who starts a venture that promises economic gain but that also entails risks

4

Sustainable• To keep up or keep going • To keep in existence; maintain

• To rely on one's own capabilities or resources

• Free from external control and constraint

5

Social Enterprise

Social enterprises trade in goods or services for a social purpose.

Delivering on financial, social and environmental performance targets is often referred to as having a triple

bottom line. It could be that the profit from the business is used to support related social aims or the

business accomplishes the social aim through its operations.

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Social Enterprise• Social enterprises have non-financial

missions rather than being driven solely to maximize profit for owners.

• By using business practices and solutions to achieve public good, social enterprises play a distinct role in helping create a strong, sustainable and socially inclusive economy.

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Business & Social EnterpriseNon-profit ≠ non-revenue

• If social enterprises cannot generate revenue to be self-sustaining – mission = irrelevant– role = negligible

• Running a non-profit entity is as challenging as running a for-profit business

• Business tools, practices and perspective can enhance value of social enterprises

8

Entrepreneurs & ManagersThird sector managers and entrepreneurs• Need same skills• Use same perspective• Desire to create value• Manage competing demands• Create organizations to pursue

opportunities• Focus efforts on generating the

greatest return or impact9

Ideate Business

Assess Potential

Identify Opportunity

Develop Product

Business Stages Framework

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Integrate Launch Grow Exit

• Business development stages are typicallyillustrated in a linear fashion to articulate the distinct phases

• Reality: this is a highly non-linear, stochastic, circular and creative process.

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Creative Framework

OpportunitySpace

BusinessSpace

Diver

gent

Thi

nkin

g

Diver

gent

Thi

nkin

gConvergent Thinking

Convergent Thinking

OpportunitySource

BusinessPlan

Product/MarketDefinition

BusinessFormats

Customer Needs& Product Benefits

Process requires Divergent and Convergent of thinking

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Business Formation

OpportunitySpace

BusinessSpace

Diver

gent

Thi

nkin

g

Diver

gent

Thi

nkin


Convergent Thinking

OpportunitySource

BusinessLaunch


BusinessFrameworks

Product/Service

Description

Feasibility Study

Business Plan

Brainstorming BusinessHypothesis

Ideate Business

Assess Potential

OpportunityIdentification

IntegrationProduct

Development

Product/Service Description• Simple, plain language statement of

the product or service that will be sold– What makes this unique– How is this different

• Who are the typical users and/or customers?

• What are their needs, pains, desires

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Product/Service Description• Becomes starting point for investigation

– Low effort – Put words onto thoughts– Highly changeable and fluid

• In terms of WHAT is being sold– Focus: “Low interest, micro loans”

• Not: poorest 25% have no financial services

– Focus: “A battery that can provide light to a household for a week and recharges in hours”• Not: a breakthrough technology to increase battery

life

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Business Hypothesis

• Statement describing the proposed business

• Includes the plain language Product/Service description

• Focuses on the organization doing the selling– NOT the social mission of the organization– NOT the financial support needed– NOT the management team

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Business Hypothesis

• Statement describing the proposed business– Includes the plain language

Product/Service description– How will the business be built around this

product or service?• What value-added activities will the busin

ess conduct?• How is revenue captured?

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Business Hypothesis

• What is the competition already in the market?– Is the market pain being satisfied already?

• How?• Why?

– Why will customers pay for your solution?– How do you know?

– It is NEVER too early to begin talking to potential customers and users

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Business Hypothesis

• Formulates an organization around the product or service

• Allows focus on related ideas• Changeable as understanding deepens• Begins to address which activities to

control• Explores value chain relationships• First deep look at competitive

landscape

191919

Coordinated Message of Your Business

You need the right message

…for the right audience

…at the right time… clearly articulated… and delivered with

PASSION!

Business PlanBusiness Plan

Executive SummaryExecutive Summary

Elevator PitchElevator Pitch

Core ConceptCore Concept

Investor PresentationInvestor Presentation

202020


• 30 seconds• Oral, discussion

starter• Informal• Highlights:

– What you are– What you sell– Who’s buying, and

why?






212121


• 2 – 3 minutes• Oral, to get next

mtg• Informal to formal• Highlights:

– What you are and sell– Market pain and size– What’s unique






222222


• Written• 2 (up to 5) pages• Formal

– often read instead of the plan

• Highlights all major points of a full business plan






232323


• Written• 20 pages + appendix• Formal• Highlights all aspects

of business launch• Precedes formal

investing discussionBusiness PlanBusiness Plan





242424


• Oral• 15 – 30 minutes• Formal• Highlights:

– Business launch plan– Investment issues

• Part of investment discussion






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Core Concept

Purpose: To answer• What is your product/service?• Who are your customers?• Why will they use your product?

– Value proposition to the user• What does your company do?

– The company’s value adding activities• How does your company make

money?– Company’s value capture mechanism

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Core Concept

Delivery:• Generally always oral• Typically one or two sentence

description– no more than 30 seconds

• Can also be the first one or two sentences in your Executive Summary and Business Plan

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Core Concept

Audience:• Business professionals

– Funders e.g., angels, VCs, banks– Lawyers, accountants, P.R. Firms– Key hires

• Business professionals in other settings

Core Concept is NOT• Mission statement• The reason you are doing what you

are doing• A listing of market needs• A description of the technology

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General Format for Core Concept

<company name> is a <type of organization> that will provide

<product or service offering> that offers <key benefits> to <identify key

customer or target market>.

<companyname> will execute <business activities> and sell via

<preferred value chain>.

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Example• ABC Corp. designs and manufactures a

mass- produced line of professional dress shirts that are sized for non-standard-sized female bodies to working women and sells them through the internet and establish retail outlets.

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Example• DEF Co. is a consulting firm that

services the bio-energy industry by providing unique, high-value engineering services as well as biotechnical and engineering talent recruiting services.

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Example• GHI Inc. designs and sells a suite of

software products that improves the efficiency and management of a distributed network of financial advisors. Our customers are personal investment companies and we sell and service the software and train individuals through the internet.

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Example• JKL Ltd. integrates several remote

sensing and spatial technologies to aerially conduct inventory assessments of forestland that currently are performed manually with unreliable accuracy. Our customers are governments, timber companies and other large landholders and we sell using a consulting, fee-for-service model.

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Example• MNO Organization is a franchise of

independent health care facilities that will provide superior health care to the 70% of the Indian population currently underserved, or unserved, by the current system. The network of clinics will be supported by centralized operations focused on improving human resource, supply, scheduling and financial functions.

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Example• PQR Partnership provides online

solutions via our website for individual consumers to access digital receipts from multiple points of sale with benefits of anytime/anywhere access to convenient paperless receipt management.

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Example• STU Shop will provide a retailer

marketplace to allow online retailers to increase selection in their stores.

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Example• XYZ Center is a green building supply

wholesale/resale outlet specializing in environmentally friendly products, consumer information and installation services. We support both the individual homeowners as well as contracting firms in their green building endeavors.

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Example• T.H.I.S. Company develops and

manufactures implantable micro-scale electrodes based on silicon integrated circuit technology for use in healthcare research and product development to address and treat the symptoms of Parkinson’s and epilepsy. Our initial market is the researchers in these target areas.

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Random Thoughts• Activity for the sake of “doing

something” is rarely effective use of resources

• Sources of grant funding are subject to political agendas and are outside your control

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The Feasibility Study

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Feasibility Study

• In depth understanding of market– Target– Macro implications

• Investigates revenue generation and cost structure

• Explores other external constituencies• Frames ambitions, skills and goals of

team and managers

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• To increase the likelihood of success• To avoid doomed opportunities• To jumpstart the business planning

process

Purpose of the Feasibility Study

Feasibility Study• Reasons for failure

– Market– Industry and competition– Team and management

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Feasibility Study

• Target market assessment• Pain• Size, and growth rate• Options to grow into other segments

• Overall market assessment• Overall market size and growth rate• Macro-trends

• Industry assessment• Five forces analysis• Likely changes

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• Firm• Proprietary elements• Competitive advantage, superior performance• Economic viability

• Team• Mission, risk, congruence of goals• Ability to execute on Critical Success Factors and

manage around Fatal Flaws• Connectedness

• Conclusion

Feasibility Study

Feasibility Study

• Executive summary • The Micro-Market• The Macro-Market• The Macro-Industry• The Firm (a.k.a. Micro-Industry)• Team

– Mission, Aspirations, and Risks– Can you execute?– Connectedness

• Summary

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Before you get started• Any development document –

proposal, feasibility study, plan presentation, etc. – needs a statement that identifies what you do and sell.

• The “Core Concept” statement

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Micro-Market: Offering• A market is made up of people and firms

that PAY you for what you are offering.– user of a social networking site ≠ customer– patron of a free food program ≠ customer

• What customer pain will you resolve? • Do you offer this target market clear and

compelling benefits?• At a price your customers will pay?• What evidence do you have that

customers will pay for your offering?

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Micro-Market: Identified• Who, precisely, are the customers

that have the pain? – Describe your customers– Who they are, where they live and do

business, how they behave, what they do?

• How large is this segment?– How many buyers? – How many units? – How many dollars?

• How fast is the segment growing?49

Micro-Market: Potential• What evidence shows that your target

market has growth potential?• What other segments exist that could

benefit from this or a related offering?• Can you develop capabilities that are

transferable from one segment to another?• Is it likely that your entry into this segment

will provide an entry into other segments that you may wish to target in the future?

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Macro-Market: Now• Two aspects: now and future• What sort of business do you want?

– A huge business – An operation that simply sustains

• How large is the market? • How many ways have you measured it?

– # of buyers, units sold, $ spent

• Is the market large enough to allow multiple competitors to succeed?

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Macro-Market: Future• What’s the growth rate for last 1, 3, 5 years?• How quickly will it grow in the next 6

months, 2, 5, or 10 years?• What economic, demographic, socio-

cultural, technological, regulatory, or natural trends can you identify that will affect your market and business?

• Are you seeking venture capital?– Does this fit with the growth rate of your

business?

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Macro-Industry: Porter’s 5 Forces

• What is the threat of new entrants to this industry?

• How great is the power of suppliers to set terms and conditions?

• How great is the power of buyers to set terms and conditions?

• Is there a threat of substitution from other products to steal your customers?

• How intense is competitive rivalry?

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Macro-Industry: Top-level Issues

• What industry will you compete in? • Define it carefully

• Based on all five forces, what is your overall assessment of this industry? • Just how attractive is it?

• If your industry is a poor performer overall, are there specific and persuasive reasons why you will fare differently?

• What will likely change in response to the success of your venture?

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The Firm: “Proprietary-ness”• What proprietary elements do you

have that other firms cannot duplicate?• Patents, copyrights, trade secrets, etc.• Key managerial personnel (see Team)

• Can your business develop and employ superior organizational processes, capabilities, or resources that others can’t?

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The Firm: Financial Issues• Is your business model economically

viable?• Will your revenue be adequate and timed to

sustain the “start” that a capital investment will provide?

• Does sustainability require periodic infusions of funds from external sources?

• Have you weighed tradeoffs of different funding sources?• Loans, equity investment, grants

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The Firm: Financial Issues• How long before you start generating

revenue?• Revenue is NOT equal grant funding

• How much and how long will it take acquire and retain customers?

• Will your gross margins cover your cost structure?

• How quickly will customers pay?• How slowly can suppliers be paid?

57

The Team• Mission, Aspirations, and Risks

• You must talk with your team members now• Imagine how difficult in 1, 2, 5 years

• Can you execute?• Can your team execute on each and every CSF?• If not, have you identified how you will complete the

team to address the missing CSFs?

• Connectedness• Who do you and your team know within the value

chain, at your likely suppliers, with your customers, and at your competitors?

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Summary Information• Executive summary, set up your audience

– What business, business model are you testing?

– What are you selling?

• Summary: only 4 reasonable conclusions– Feasible as proposed and moving forward– Feasible with changes and moving forward– Feasible (with or without changes) but not

moving forward– Not feasible (with or without changes) and not

moving forward59

Optimal Conclusion• Identified a real need, problem for

which you have a solution• Opportunity to establish a sustainable

advantage• Large “enough” market• Attractive industry and competitive

situation• Team has right skills

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Random thoughts• New technology/no direct competition

MAY work well with early adopters• But “no direct competitors” regardless

of technology will be a tough sell to the majority of buyers.

• Time works against all start-ups make decisions and move

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Business Plan, Investor Presentation

• Full Plan– Executive summary– Operational plan: how to get there from here– Full financial model: narrative and

spreadsheets– Financing and exit issues

• Documentation and presentation for target funders– Friends and family– Angel– Institutional– Grantors generally do not receive

presentations

Assembling The FullBusiness Plan

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Agenda• Business plan in the context of

business development• Purpose • Audience• Contents• Format• Challenges • Pitfalls

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Business Formation

OpportunitySpace

BusinessSpace

Diver

gent

Thi

nkin

g

Diver

gent

Thi

nkin


Convergent Thinking

OpportunitySource

BusinessLaunch


BusinessFrameworks

Product/Service

Description

Feasibility Study

Business Plan

Brainstorming BusinessHypothesis

Ideate Business

Assess Potential

OpportunityIdentification

IntegrationProduct

Development

6666


You need the right message

…for the right audience

…at the right time… clearly articulated… and delivered with

PASSION!






67

Purpose• To force the entrepreneur to do thorough an

effective analyses• To provide a roadmap for development• To propose a new venture• To raise capital for the company• To benchmark progress• Should evaluate, not promote• Good plans take the emotion out of

decisions and focus attention on reality

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Purpose

• Always a work in progress– About the process NOT the document

• Ties all aspects of your business and plan together

• Offers clear linkage between

Visionand

ideas

Companyto make ithappen

Business Plan

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Business Plan Contents

• Executive Summary

• What is the concept?

• Market Need or Pain

• Market Size • Value Proposition• Business Model• Competitive

Advantage

• Competition and Industry

• Products and Services

• Marketing and Sales

• Management• Risk Mitigation• Action Plan,

Milestones• Key Financials• Exit Strategies

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What Is the Concept?

• Core Concept statement that defines product and business

• Can include– The “story” behind the business?– Relationship to current solutions

• Linear development or disruptive?• Improvement or new?• Evolutionary or revolutionary?

(continued)

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What Is the Concept?

• Be clear and complete• Be brief and to the point• State the idea for the company and what it

does– Not simply a cool website or product

• Plain language but – Use technical language, schematics where

necessary

• Plain language and– No MBA buzzwords or engineering geek speak– Get your head out of your assets

73

Market Need or Pain

• What is the pain in the market?• Market need drives business

– The product or service fills the need– Products, companies do not create a market

• What are potential customers doing now?– A current solution does exist

• Connect the listener to the problem• Why now? Connect timeliness of idea to

market pain• Staying power and permanence

– Fads can be very profitable

Know the differencebetween customers

and users!!

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In Discussion of Market• You must size the market• You must size the segments• From credible sources

– Which databases?– Summary of primary research

• Using three credible measures– Total dollars spent– Number of customers– Number of units sold

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Market Size

• Quantify “pain” in terms of true market opportunity - just how “big” is this?

• Which market segments are in the initial planning horizon of 3 to 5 years?

• Describe your customers• Quantify the segments:

– Geographically, demographically, psychographically

– Business, economics, SIC codes• http://www.osha.gov/pls/imis/sicsearch.html

Know therelationship

between customersand markets!!

http://www.osha.gov/pls/imis/sicsearch.html

http://www.osha.gov/pls/imis/sicsearch.html

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Definition of Market Segment

• Set of potential, actual customersfor

• Your set of products & serviceswho

• Have a common set of needs, wantsand

• Refer to one another when making buying decisions

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Relationship of Market Terms

• Total Addressable Market– All microprocessors – or –

• Target Market– Electronic device manufacturers – or –

• Market Segment– Cell phone manufacturer – or –

• Ideal or First Customer– Nokia or Motorola

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About the Target Customer• Is there an identifiable buyer?

– Accessible to your channel?– Able to pay?

• Referring back to the market pain– Does full product address full market pain?– Are auxiliary features, products, services

needed?

• Reason to buy now?– Can customer wait a year?

79

Value Proposition

• How valuable is your idea to your customers?– What’s your customer’s ROI?– Cost avoidance?– New revenue?– Cheaper, faster, prettier, better?

• Who else do you need to make this happen?– Value chain relationships– Be specific

• How are you going to extract this value from the marketplace?

80

Value Chain Players

Examples of value chain partners include:

• Suppliers• Technology or logistics partners• Sales partners: dealers, resellers,

retail chain• Ultimate customers• Users

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Business Model

• What is the business model?• This is really two questions

What do you do?How do you make money?

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Bus. Model: What do you do?

Distribution Sales Marketing Mfg Product Design

Technology

Raw Materials

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Bus. Model: How do you make money?

Product retail sales: using value chain Product internet sales: direct to customer B2B: commercial purchase on terms Advertising: provide ad space Licensing: per unit revenue, payable Consulting: fee for service or impactServices: per unit charges Transaction fees: per activity Subscription: content over time Affiliate: referrals and partnerships

HPDellXerox, BASFYahoo, ABCIBM,

universitiesMcKinseyH&R BlockeBayConsumer

ReportsAmazon

84

Competitive Advantage• What is your primary competitive

advantage?– Intellectual property

• Legal protections ≠ advantage– Management team– Exclusive customer relationships

• How are you going to act on it?– Being the “first mover” is not a sustainable

competitive advantage– What you do with the competitive advantage is

important!– Effective execution is more important than

being first

85

Competition and Industry• Who is your competition?

– Porter’s 5 Forces analysis• Threat of entry• Supplier power• Buyer power• Threat of substitutes• Competitive rivalry

– Write about the attractiveness of the industry that analysis uncovers• Do not write about the analysis

(continued)

86

Competition and Industry

• Value chain issues– How are you affected by competitors’

relationships with value chain partners?

• How will competition respond?– Always assume you will be successful

• The sincerest form of flattery• Established players are likely to be better

resourced• Then there’s the GoogleSoft approach

87

Products and Services• Detailed description• Intellectual property protection• Where in the product development

process?– Any R&D concerns?

• Where in the product life cycle?

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Marketing and Sales

• Product | Price | Place | Promotion

• State the price of the product• How are your going to price your product?

– Market-based– Value-based– Cost-based

• How are you going to sell your product?• Be realistic, don’t overpromise or

oversimplify

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Marketing and Sales

• What “beta” relationships exist? Why?• Who are your first prospective paying

customers?• In discussion of promotion, remember

to tie in the relationships between target market and total market

90

Management

• Highlight team’s ability to deliver – Past success is a good indicator of future

performance– Has team worked together before?

• Be honest about team’s missing skills• Can use Advisory Board to “bolster”

management skills

Risk MitigationType of Risk

What happens Example of how to address

Technology Science does not work repeatedly or in product

Utilize prototypes extensively

Market customers aren’t paying OR adoption rates are lower

Beta products provide early customer feed back opportunities

Competition More competitors exist or they are stronger than anticipated

Alter pricing strategy

Management

People with misaligned skills are in charge

Hire people with right skills for right phase; let others go

Execution Missing milestones Emphasize right priorities

Regulatory Product won’t pass current or pending regulations

Move on regulations as early as possible; get “preliminaries”

Financing Insufficient funds to continue or next round is in question

Always stay in fundraising mode

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Action Plan, Milestones• Overview of timeline• Demonstrates YOUR understanding of

KEY issues for YOUR business• Shows that the team knows what is

whose responsibility– Only items that are your responsibility can

be a milestone• Include product launch/first sales in

ANY discussion of milestones

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Key Financials

• Sales, revenue forecast is the starting point• Provide credible financial measures

Sales | Units | Margins | Customers | Market share• Cash flow is king• KNOW you assumptions • “The Good, The Bad and the Likely”• Be realistic: don’t overpromise or

oversimplify

(continued)

94

Financials: The Ask• How much are you seeking?• What is the money to be used for?• Most important: where are you now

and what will the money get you to?– Good examples: concept, prototype, beta

product, commercial product, first sales, profitability

– Bad examples: “through next year”, “while we wait for our patent”

• Where will the next round of funding come from?

95

Key Financials

• What do you need NOW?• What are your start-up costs?• Provide a Sources and Uses discussion

and appendix– Working capital is a legitimate use of

funds– Allowing a percentage of “cushion” is

okay• Estimate costs and revenues to the

best of your ability

96

Exit Strategy

• Investors don’t invest to get IN• Offer feasible exit strategies• For for-profit concerns: What is

“typical” in your industry?• In the non-profit arena, self-

sustainability is a desired outcome– Not investor return– Plan needs to show a “big enough” window

that demonstrates independent growth(continued)

98

Business Plan Contents

• Executive Summary

• What is the concept?

• Market Need or Pain

• Market Size • Value Proposition• Business Model• Competitive

Advantage

• Competition and Industry

• Products and Services

• Marketing and Sales

• Management• Risk Mitigation• Action Plan,

Milestones• Key Financials• Exit Strategies

99

Format of Document• Single or 1½ spaced within paragraphs,

double-spaced between paragraphs• Integrated graphics• 11 or 12-point font with 1-1-1-1 inch

margins• Numbered pages• Hard copies of business plans should be

professionally bound• Soft copies of business plans should be in

a single .pdf document(continued)

100

ChallengeMany plans are product/technology-centric or driven by perceived marketFocus on the intersection of market

need and technology/product benefits

Ideas andInventions

Needs andDesires

Technology Starter

Concepts

Solutions Effects

Community Personas

101

ChallengeMany plans are written in an academic

style, i.e., dry, boring

Put your passion for the business in the plan

Think about what story you want to tellThere is no right way to organize a

business plan

102

ChallengeMany entrepreneurs address preparing the

plan and giving the pitch as a necessary evil

It’s about the process, not the documentTreat “marketing” your company as essential as “running” your companyView opportunities for feedback as

invaluable instances that will be difficult to duplicate in the “real world”

103

Challenge“There’s no way to do this in 20 pages!”

Succinct and concise understanding AND presentation of key issues is

paramountView assembly of plan and presentation as much a communication challenge as

it is a business issueTeams have NO option in competitions

Typical Pitfalls• Product idea not linked to market need• Over-simplification of the issues• Unrealistic goals and/or timelines• No credible go-to-market strategy• The “1% market share” objective• Under-capitalized and/or over-

leveraged• Sources and uses of funds• Unclear role for the audience, investor

104

Typical Pitfalls• One-person show• Team composition and experience • Executive summary does not have a

“hook”• Important information is hidden• No contingencies• Document not reviewed • Document not reviewed by

“uninterested” parties105

This is YOUR story• Develop an engaging narrative• Make document readable

– Layout– Graphics– Font and spacing– Table of contents– Headings and emphasis

106

This is YOUR story• Infuse delivery with personality and

passion• Not a “right” way to tell the story• Different aspects of a plan will be

emphasized differently for different types of businesses

• Don’t give evaluators a reason to mistrust or disbelieve you or the plan

107

This is YOUR story• Have you demonstrated…

– Large potential market?– Logical go-to-market strategy?– Captivating idea with growth potential?– Sustainable competitive advantage?– Sound financial plan?– Strong, core team?

108

Miscellaneous Topics

111

The Critical Success Factors• Which assumptions are critical to the

success of your business? • What are the “big levers”?

– Sensitivity analysis– Typically time (to develop and through

the transition)– Market size (total sales)

Q&A: “I don’t know”• It’s okay to not know• SAYING “I don’t know” is a credibility

killer• Try: “That’s a very important issue for

us, and we’re trying to get our arms around that.”

• Use this as an opportunity to demonstrate knowledge of complex and interrelated issues and relationships

112

Q&A: “I don’t know” Alternatives

• That’s an excellent question that raises a lot of key points we are investigating.

• Our research has really been inconclusive so far but we feel this is important data to have.

• That technology may well be a serious threat, we will get back to you on how ours compares.

113

114

Alternatives to “no competition”

• There are currently no identifiable large players– many small fragmented competitors can be good

• Our research has not been able to uncover a direct competitor– Does this statement overlook the possibility of

another (100) start-up (s)?

• The closest competitive threat we see is XYZ.– Acknowledges established players can move into

identified markets

115

Where does it all start?

Drucker’s 7 Sources of Innovation1. Unexpected Occurrences2. Incongruities3. Process Needs4. Industry and Market Changes5. Demographic Changes6. Changes in Perception7. New Knowledge

Ref: Drucker, Peter F. Innovation and Entrepreneurship (1985)

116

Estimating Startup CostsS

ales

TimeDevelopment Transition Modest Growth

Working it backwards from the Steady-state numbers:• Obtain steady state costs (GS&A, etc, as % of sales from industry data)• Make costs constant over transition• Add development costs • Ramp down develop costs while ramping up operating costs

Costs

Examples of graphical ways to communicate major points in your

Business Plan

118

Example of operations

Phase I Phase II Phase III

Design Licensed In-house In-house

Mfg Contract Contract In-house

Service In-house In-house Direct

Sales Contract Direct Direct

Revenue

119

Suggestion for milestonesI.P

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$100K Founders

$0.5M Seed Round

$3.4 M Series A

$11M Series B

Break Even

$$Positive Cash Flow

$$First Revenue

$$

120

Leadership

CEOHenry Tappan

•Grass cutting•Ornamental shrubbery

CTO Mary Markley•Outdoor ponds•Aqua culture

VP Sales t.b.d. July ‘06•Door-to-door, in-home marketing

Board Members

Julie McCoy •Consumer marketing

Isaac Hayes •Agricultural/chemicals

t.b.d. Jan. ‘07•Environmental protection•Labor negotiations

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Accomplishments

• Sept ’06 – team formed• Oct ’06 – incorporated• Dec ’06 – prototyped developed, patent filed• Feb to May ’07 – customer testing, design

final• June ’07 – Begin manufacturing and sales• July ’07 - Seed funding request• Jan ’08 – recruit CEO from industry

business planning for a social enterprise paul kirsch program manager at the zell lurie institute...

Documents

business business tools

business social enterprise

business practices

business planning

social purpose

convergent of thinking

value of social enterprises

related social aims