time to take the leap
DESCRIPTION
Time to Take the LEAP. Convert Ideas to Opportunity Idea Generation, Evaluation, and Implementation Workshop February 29, 2012. Agenda. Generate Ideas Evaluate Options Plan for Business Develop a Budget Identify Funding Alternatives Explain Startup Process Q&A. - PowerPoint PPT PresentationTRANSCRIPT
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Time to Take the LEAP
Convert Ideas to OpportunityIdea Generation, Evaluation, and Implementation Workshop
February 29, 2012
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Generate Ideas Evaluate Options Plan for Business Develop a Budget Identify Funding Alternatives Explain Startup Process Q&A
Agenda
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Why Didn’t IThink of That?
Generating Ideas
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YOU◦ Internal Proficiency & Passion
Acknowledge your genuine interests and true passion Take stock of your professional and personal resources Consider your entrepreneurial characteristics and aptitude
OTHERS◦ External Observations & Behaviors
Solicit input from business associates, vendors, suppliers, customers
Converse with new/different people and general public Be original Observe social behavior and pay attention to ordinary living
Zoom In on Ideas
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SURROUNDINGS◦ Situations & Response
Question wisdom of continuing habitual responses Explore familiar surroundings, similar circumstances
or advanced areas Break your routine Tweak the existing
EXPECTATIONS◦ Attitude & Outlook
Break the rules Explore your intuition Reexamine failure and accidental results
Zoom Out on Ideas
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Immerse Yourself Specific Information General Information Sources Demographics & Trends
Search Multiple Sources& Fact Check
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Have Lots of Ideas Method of Capturing Be Open Build on Ideas Multiple Solutions Simple Don’t Judge Become a Collector
Generating Ideas
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The question is not what you look at
but what you see.-Thoreau
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Finding the Needle in the Haystack
Evaluating Options
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Answer These Basic Questions:◦ How does idea solve problem
better than alternatives?◦ What will competition do in
response to idea?◦ What proves idea is technically
feasible?◦ What prevents copying idea and
permits your legal use of idea?◦ How will competitive advantage
be sustained?◦ What external factors must you
consider?
Determine Your Destiny!
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Understand Why Trends Occur Acknowledge Intuition, but Support with
Data Make Fact Based Decisions Recognize Learning, Adapting, and
Improving easier than Complete Revolution Avoid a Poor Choice and Survive Consider Passing on to Someone Else Be Patient and Persistent
Idea Assessment Guidelines
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http://www.youtube.com/watch?v=HpvEF_GIhmw
Idea Evaluation Exercise
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Now What?Planning for Your Business
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ModelMarket
ManagementMoney
MARGIN
Motivation
Major Factors to Consider
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the method, approach, or system that will be used to obtain money for your products or services
Your planning for Business MODEL should: ◦ Describe product(s)/service(s) and
bundles/packages developed to produce revenue streams.
◦ Project frequency and quantity of customer purchase for each revenue stream.
◦ Explain strategy for maintaining proprietary information and competitive advantage.
◦ Clearly communicate the type of business - manufacturing, wholesaling/distribution, or retailing.
MODEL
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Whatever you think your business model is when you start, you are wrong.
Colin Angle – Co-founder and CEO of iRobot
Why Model Matters
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Customer Issues with Current Solution Benefits of Proposed Solution Evidence Yours is Preferred Magnitude/Seriousness/Cost of Problem Ability to Protect Idea (IP)
More About Your Business MODEL
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the people or organizations that will pay for your product or service
Your Planning for MARKET Strategy Should:◦ Describe target market(s) and specific market
segments most relevant for your enterprise.◦ Numerically quantify the addressable (initially feasible)
target market size for each revenue stream.◦ Estimate unit sales logically justified for each revenue
stream - monthly for year 1 and qtr/yr for years 2 - 5.◦ Explain introductory and LT/continuing sales strategy.◦ Clearly explain whether B2C, B2B, or B2G.
MARKET
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Why Market Matters?
http://www.youtube.com/watch?v=8bVblNA3drM&feature=related
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Identify Initial Market – Demographics & Psychographics
Include Future Market Opportunities Estimate Sales Support Current and Future Sales with
Evidence Compare to Alternatives – Chart with
Significant Purchase Decision Factors
More About Your MARKET
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the amount of profit your business will generate to keep the founders motivated, to repay the investors, and provide for growth
Planning for Your MARGIN Should:◦ Project cost of goods sold: estimate raw material and
labor cost to produce a unit/bundle.◦ Establish prices for proposed units/bundles for each
revenue stream.◦ Establish projections for revenue (price per unit * unit
sales) - preferred to market share percentages, OK to validate projections through market share estimates.
◦ Understand basics: Sales Revenue – Cost of Goods = Gross Margin – Operating Expenses = Profit
MARGIN
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Why Margin Matters
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Know Price and Profit of Similar Products/Services
Detail Material and Labor Costs Justify Cost Estimates with Actual Quotes Compare to Industry/Competitors Anticipate Impact of Competitor Response
and Cost Fluctuations
More About Your Margin
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the group of people with talent, experience, and commitment to start and run the business
Planning for Your MANAGEMENT Team Should:◦ Establish hiring priorities by determining what needs to
be done, then group common tasks into “jobs” or around people/founder(s) strengths.
◦ Identify the tasks that can be contracted/outsourced.◦ Project staffing budget.◦ Build advisory team to supplement existing
capabilities and fill gaps.
MANAGEMENT
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Why Management Matters Apple and Steve Jobs
◦ 1971 – Apple established◦ 1985 – Jobs was asked to resign◦ 1996 – Jobs returned◦ 1997-2011 – Jobs CEO
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Emphasize What is Needed More Than Who is Available
Plan for Future as Well as Present Develop Structure and Documentation Budget (and Incentivize) to Attract Talent Consider Founders, But Act for
Survival/Success
More About MANAGEMENT Team
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the resources, financial and otherwise, that are required to start and operate the business
Your Financial /MONEY plan Should:◦Project revenue - monthly for initial year and
quarterly/annually years 2 - 5.◦Project cost of goods - monthly year 1 and
quarterly/annually years 2 - 5.◦Project operating expenses - monthly year 1 and
quarterly/annually years 2 - 5.◦ Identify potential sources of funding/financing for
the venture.
MONEY
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Why Money Matters
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Quantify value of current investment in venture
Estimate cost of pre-venture and startup needs
Document assumptions for all estimates Create basic cash based budget Prepare what-if scenarios integrating
contingencies
More About MONEY
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the passion and inspiration that compels the founders to persist against incredible odds and tremendous obstacles
Your Plan for MOTIVATION Should:◦ Establish timeline with measures of success for
major steps - investment needs, hiring, product/service introduction, sales levels, break-even, exit.
MOTIVATION
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"Success is a lousy teacher. It seduces smart people into thinking they can't lose.“◦ Bill Gates
Why Motivation Matters
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Document Meaningful Outcomes Achieved Remember Factors Compelling Launch Describe Personal Rewards Expected Know Your Preferred Business Exit Scenario Define Significant Next Steps Along with
Resource Needs Demonstrate You Have “skin in the game” Anticipate Obstacles/Challenges Related to
Commitment of Founder(s) and Key Mgt
More About MOTIVATION
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How Much Do You Need?
Developing a Budget and Identifying Funding Options
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#1 Establish Cost of Goods #2 Calculate Potential Revenue Streams #3 Determine Potential Business Revenue Anticipate Operating Expenses Estimate Profit Potential
Developing a Budget
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Cost of GoodsSimple Estimate for Cost of Goods Sold per Unit*
step #1List Materials/Component Parts, Shipping, Packaging and Cost Labor Hours and Hourly Wage Rates1
1 ____________________________________ $ __________ for _____ minutes @ ______ $/hr $
2 ____________________________________ $ __________ for _____ minutes @ ______ $/hr $
3 ____________________________________ $ __________ for _____ minutes @ ______ $/hr $
4 ____________________________________ $ __________ for _____ minutes @ ______ $/hr $
5 ____________________________________ $ __________ for _____ minutes @ ______ $/hr $
6 ____________________________________ $
7 ____________________________________ $ Total Hourly Labor Cost $
8 ____________________________________ $ Estimated Labor Burden (use 30% if unknown) +
Total Estimated Material Cost $ Total Estimated Labor Cost $
Calculate Estimated Unit Cost
Total Estimated Material Cost $
Total Estimated Labor Cost $Total Estimated Unit Cost $
Establish Potential Sales Price and Gross Profit for a Unit
Using Your Information: Using Industry Information2:
Proposed Price3 $ Estimated Unit Cost $
(less)Estimated Unit Cost $ (divide by)Industry Cost of Goods as % of Sales %
Potential Gross Profit per Unit $ Potential Price per Unit $
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Revenue StreamsInitial Assessment of Potential Sales/Revenue for a Product/Service or Bundle/Package*
step #2Describe the Product/Service:
Identify the Target Market Segment / Primary Customer(s):
Individual Consumer Goods: Institutional Goods:Age IndustrySex Type OperationFamily Size Organizational Size
Income AreaRent or Own Home OtherNeighborhood, City, Parish, State, Region, NationOther
Define the Market Size1:Number prospective customers in specified geographic area # _____________________________________
Estimate Purchase Patterns for: product, service or bundle/package (please specify)Average price per purchase2 $ ________________________Number purchases per year3 # ________________________
Calculate Total Potential Sales for Market SegmentCustomers #(multiply times) Price $(multiply times) Frequency #
EQUALSPotential Annual (or other specific period) Sales4 $
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Business RevenueInitial Assessment of Potential Sales/Revenue for THE Business Venture*
step #3Calculate Potential Annual (or other specific period) Sales for ALL Revenue StreamsList Each Product, Service, Bundle/Package Revenue Stream and the Potential Sales for Each (during the same, specified time period) 1
1 ____________________________________ $
2 ____________________________________ $
3 ____________________________________ $
4 ____________________________________ $
5 ____________________________________ $
6 ____________________________________ $
7 ____________________________________ $
8 ____________________________________ $
9 ____________________________________ $
10 ____________________________________ $
11____________________________________ $
12____________________________________ $Total Potential Sales per specified time period $
(times) # time periods required to equal 1 year
Total Potential Annual Sales for Market $
How many others in the area also supply this market? List Competitors
1 ______________________________ 6 ______________________________
2 ______________________________ 7 ______________________________
3 ______________________________ 8 ______________________________
4 ______________________________ 9 ______________________________
5 ______________________________ 10 _____________________________
Determine Potential Sales for an Establishment
Using Your Information: Using Economic Census Information2:
Potential Sales $ Sales for Your Industry Segment within Area $
(divide by) Number Competitors #(divide by) # Establishments in Segment in Area #
EQUALSPotential Sales per Establishment $ Average Sales per Establishment within Area $
Sales per establishment (divided by) 12 = Potential Sales / Month $ $
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Loans◦ Guarantees, Microlending
Savings/Retirement Friends/Family Crowd Funding 2nd Job/Sideline Biz Advance Sales Investors Grants
Funding Options
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Where Do You Start?
Understanding the Startup Process
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Forms of Organization Choosing a Business Name Federal Registrations State Registrations Local Registrations
BASIC STARTUP PROCEDURES
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tbdc.latech.edu/
Google DocsGoogle Groups:
LA Tech TBDC Network
TBDC Facebook Pagefacebook.com/LATechTBDC
You’re Not Alone
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Kathy Wyatt, DirectorTechnology Business Development CenterLouisiana Tech UniversityP.O. Box 3145, Ruston, LA 71272Phone: (318) 257-3537Fax: (318) 257-4442Email: [email protected]
Questions?
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Take the Leap