1. Opportunity Evaluation
And
Different frameworks

2. Systematic screening – Why?
Most businesses fail in less than two years
Fewer than 1% of the business plans submitted to VCs get funded
Business failures lead to huge “collateral damages”
Failures are planned by lack of planning
You would much rather not overlook any critical questions, and risk failure because you end up in a fundamentally flawed business

3. Mullins 7 Domain Framework
Micro level Market assessment
Macro level Market assessment
Macro level Industry assessment
Micro level Industry assessment
The Mission, Personal aspirations and Risk Propensity test for entrepreneurs
“The can you and your team execute?” test
The Connectedness test

4. Mullins 7 Domain Framework
Markets and industries are not the same things
Both macro-and micro level considerations are necessary: markets and industries must be examined at both levels.
The keys to assessing entrepreneurs and entrepreneurial teams aren’t simply found on their resumes or in assessments of their entrepreneurial character.
At first glance, the seven domains model appears to simply summarize what everybody already knows about assessing opportunities. But upon careful scrutiny, the model goes further to bring to light three crucial distinctions that most entrepreneurs may overlook:

5. What do we mean by market?
A market consists of a group of current and/or potential customers having the willingness and ability to buy products - goods or services - to satisfy a particular class of wants or needs. Thus, markets consist of buyers - people or organizations and their needs - not products.
Example: One such market, for example, consists of businesspeople who get hungry between meals during their workday. We'll call this the market for workplace snacks.
“ markets consist of buyers, not products ”

6. What do we mean by industry?
An industry consists of sellers - typically organizations - that offer products or classes of products that are similar and close substitutes for one another.
Example: What industries serve the market for workplace snacks? At the producer level, there is the salty snack industry, the candy industry and the fresh produce industry, to name but three. There are also industries providing the distribution of these products to workplaces, including the supermarket industry, the restaurant industry, the coin operated vending machine industry, the coffee bar industry and so on. Clearly, these industries offer varying bundles of benefits to hungry workers. Some of these industries are more attractive than others to would-be entrants seeking to serve the workplace snack market.
“ an industry consists of sellers ”

7. Market, Industry - why care about the difference?
Why is the market-industry distinction important? Because judgments about the attractiveness of the market one proposes to serve may be very different from judgments about the industry in which one would compete.
This should not be - but often is - surprising, for the questions asked to assess market attractiveness are different from those for industry attractiveness, a point easily obscured when words like 'sector' and 'space' are used indiscriminately or carelessly in the opportunity assessment process. (Does the user of these terms mean 'market' or 'industry'?)
So, if market and industry attractiveness are both important, how should each be assessed?

8. Mullins 7 Domain Framework
1.Micro Level Market Assessment
a) Micro level questions about target markets
b) Three ways to define market segments
c) Micro market test
a) Micro level questions about target markets
Is there a target market segment where we might enter the market in which we offer the customer clear and compelling benefits, at a price he or she is willing to pay?
Are these benefits, in the customer’s minds, different from and superior in some way – better, faster, cheaper or whatever – to what’s currently offered by other solutions?
How large is this segment, and how fast is it growing?
Is it likely that our entry into this segment will provide us entry into other segments that we may wish to target in the future?
b) Three ways to define market segments
Who the customers are i.e demographic terms (age, gender, education, income etc) if it is business to business, then it will refer to the industry in which the customers do business, plus firm size and firm characteristics.
Where the customers are in geographical terms?
By how the customers behave (life style terms) or in business to business how the products may be used.
c) The micro market test
What customer pain will your offering resolve? How strong an incentive do customers have to give you their money? Will customers buy what you propose to offer?
Who precisely are the customers that have the pain? Do you have detailed accurate information about who they are, where they live or do business or what they do?
What benefits does your offering provide that other solutions don’t?
Does the target market have the potential to grow?
Are there other segments that could benefit from a related offering?
Can capabilities that are transferable from one segment to another be developed?

9. Mullins 7 Domain Framework
1.Micro Level Market Assessment
Micro level questions about target markets
Is there a target market segment in which we offer the customer clear and compelling benefits, at a price he or she is willing to pay?
Are these benefits, in the customer’s minds, different from and superior in some way –to what’s currently offered by other solutions?
How large is this segment, and how fast is it growing?
a) Micro level questions about target markets
Is there a target market segment where we might enter the market in which we offer the customer clear and compelling benefits, at a price he or she is willing to pay?
Are these benefits, in the customer’s minds, different from and superior in some way – better, faster, cheaper or whatever – to what’s currently offered by other solutions?
How large is this segment, and how fast is it growing?
Is it likely that our entry into this segment will provide us entry into other segments that we may wish to target in the future?
b) Three ways to define market segments
Who the customers are i.e demographic terms (age, gender, education, income etc) if it is business to business, then it will refer to the industry in which the customers do business, plus firm size and firm characteristics.
Where the customers are in geographical terms?
By how the customers behave (life style terms) or in business to business how the products may be used.
c) The micro market test
What customer pain will your offering resolve? How strong an incentive do customers have to give you their money? Will customers buy what you propose to offer?
Who precisely are the customers that have the pain? Do you have detailed accurate information about who they are, where they live or do business or what they do?
What benefits does your offering provide that other solutions don’t?
Does the target market have the potential to grow?
Are there other segments that could benefit from a related offering?
Can capabilities that are transferable from one segment to another be developed?

10. Mullins 7 Domain Framework
1.Micro Level Market Assessment
b) Three ways to define market segments
Demography
Geography
Customer Behavior
a) Micro level questions about target markets
Is there a target market segment where we might enter the market in which we offer the customer clear and compelling benefits, at a price he or she is willing to pay?
Are these benefits, in the customer’s minds, different from and superior in some way – better, faster, cheaper or whatever – to what’s currently offered by other solutions?
How large is this segment, and how fast is it growing?
Is it likely that our entry into this segment will provide us entry into other segments that we may wish to target in the future?
b) Three ways to define market segments
Who the customers are i.e demographic terms (age, gender, education, income etc) if it is business to business, then it will refer to the industry in which the customers do business, plus firm size and firm characteristics.
Where the customers are in geographical terms?
By how the customers behave (life style terms) or in business to business how the products may be used.
c) The micro market test
What customer pain will your offering resolve? How strong an incentive do customers have to give you their money? Will customers buy what you propose to offer?
Who precisely are the customers that have the pain? Do you have detailed accurate information about who they are, where they live or do business or what they do?
What benefits does your offering provide that other solutions don’t?
Does the target market have the potential to grow?
Are there other segments that could benefit from a related offering?
Can capabilities that are transferable from one segment to another be developed?

11. Mullins 7 Domain Framework
1.Micro Level Market Assessment
c) Micro market test
What customer pain will your offering resolve?
Will customers buy what you propose to offer?
Who precisely are the customers?
Do you have detailed accurate information about who they are, where they live or do business or what they do?
Are there other segments that could benefit from a related offering?
a) Micro level questions about target markets
Is there a target market segment where we might enter the market in which we offer the customer clear and compelling benefits, at a price he or she is willing to pay?
Are these benefits, in the customer’s minds, different from and superior in some way – better, faster, cheaper or whatever – to what’s currently offered by other solutions?
How large is this segment, and how fast is it growing?
Is it likely that our entry into this segment will provide us entry into other segments that we may wish to target in the future?
b) Three ways to define market segments
Who the customers are i.e demographic terms (age, gender, education, income etc) if it is business to business, then it will refer to the industry in which the customers do business, plus firm size and firm characteristics.
Where the customers are in geographical terms?
By how the customers behave (life style terms) or in business to business how the products may be used.
c) The micro market test
What customer pain will your offering resolve? How strong an incentive do customers have to give you their money? Will customers buy what you propose to offer?
Who precisely are the customers that have the pain? Do you have detailed accurate information about who they are, where they live or do business or what they do?
What benefits does your offering provide that other solutions don’t?
Does the target market have the potential to grow?
Are there other segments that could benefit from a related offering?
Can capabilities that are transferable from one segment to another be developed?

12. Mullins 7 Domain Framework
2. Macro level Market assessment
Macro Market Test
What sort of business is sought?
How large is the market?
How fast can it grow?
How quickly can it grow in the next 6 months or 2/3/5 years?
What trends can be identified and how will it affect the business?
Information from secondary sources – library materials, internet, newspapers, and publications on recent industry trends should suffice to answer the following questions.
The macro market test
What sort of business is sought? One with potential to become a huge business, or a small lifestyle operation? This along with the answers to the following question will determine the need for venture capital. A high potential business in a huge, rapidly growing market will require venture capital whereas a small lifestyle operation in a niche market will not need any.
Trends can be economic, demographic, socio cultural, technological, regulatory or natural trends can be identified

13. Mullins 7 Domain Framework
3. Macro level Industry assessment
a) Porter’s Five forces analysis
b) The macro industry test

14. Mullins 7 Domain Framework
3. Macro level Industry assessment
Five macro level questions to assess the industry based on
Michael Porter’s five forces -
Threat of Entry, Supplier power,
Buyer power, Threat to substitutes, Competitive Rivalry
Is it difficult for companies to enter this industry?
Do suppliers to this industry have the power to set terms and conditions? Do buyers have the power to set terms and conditions?
Is it easy or difficult for substitute products to steal the market?
Is competitive rivalry intense or genteel?

15. Mullins 7 Domain Framework
3. Macro level industry assessment
b) Macro Industry Test
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 or unattractive is it?
If your industry is a poor performer overall, are there persuasive reasons why you will fare differently?

16. Mullins 7 Domain Framework
4. Micro level industry assessment
The Micro industry test:
Do you require proprietary elements - patents, trade secrets and so on – that other firms cannot likely duplicate or imitate?
Can your business develop and employ superior organizational processes, capabilities or resources that others would have difficulty in duplicating or imitating?
Is your business model economically viable i.e. can you show that your company won’t run out of cash quickly?

17. Mullins 7 Domain Framework
Mission, Aspiration and Risk test for entrepreneurs
What’s your entrepreneurial mission?
What level of aspirations do you have for your entrepreneurial dream?
What sorts of risk are you and are you not willing to take ?
What’s your entrepreneurial mission:
To serve a particular market?
To change a particular industry?
To market a particular product?
Is the passion really there?
What level of aspirations do you have for your entrepreneurial dream:
To work for yourself?
To build something small or something big?
To do? To manage? To lead?
To change the world in some way?
What sorts of risk are you and are you not willing to take:
Will you risk a secure salary and the things that go along with your current employment? For how long?
Will you risk losing control of your business?
Will you put your own money at risk? How much?
Will you risk your home or time with your family or loved ones?
Do those you love accept the risks you will take?

18. Mullins 7 Domain Framework
Mission, Aspiration and Risk test for entrepreneurs
What’s your entrepreneurial mission?
What level of aspirations do you have for your entrepreneurial dream?
What sorts of risk are you and are you not willing to take ?
What’s your entrepreneurial mission:
To serve a particular market?
To change a particular industry?
To market a particular product?
Is the passion really there?
What level of aspirations do you have for your entrepreneurial dream:
To work for yourself?
To build something small or something big?
To do? To manage? To lead?
To change the world in some way?
What sorts of risk are you and are you not willing to take:
Will you risk a secure salary and the things that go along with your current employment? For how long?
Will you risk losing control of your business?
Will you put your own money at risk? How much?
Will you risk your home or time with your family or loved ones?
Do those you love accept the risks you will take?

19. Mullins 7 Domain Framework
6. “The can you and your team execute?” test
What are the few - only a handful, please – critical success factors (CSFs) in your industry?
Can you demonstrate - in past deeds, not mere words – that your team taken together can execute on each and every one of these CSFs?
Have you identified which CSFs your team is not well prepared to meet, for which you need help in filling out your team?
What’s your entrepreneurial mission:
To serve a particular market?
To change a particular industry?
To market a particular product?
Is the passion really there?
What level of aspirations do you have for your entrepreneurial dream:
To work for yourself?
To build something small or something big?
To do? To manage? To lead?
To change the world in some way?
What sorts of risk are you and are you not willing to take:
Will you risk a secure salary and the things that go along with your current employment? For how long?
Will you risk losing control of your business?
Will you put your own money at risk? How much?
Will you risk your home or time with your family or loved ones?
Do those you love accept the risks you will take?

20. Mullins 7 Domain Framework
The connectedness test
Who do you and your team know across the value-chain among your customers, suppliers, competitors and substitutes?
Who do you and your team know up the value chain in the companies that are likely suppliers to your proposed business and to your competitors? In suppliers to companies in other industries that offer substitute products for yours? Be sure you have names, titles and contact info.
Who do you and your team know down the value-chain among customers you will target, both today and tomorrow? Names, titles and contact info, please.
Who do you and your team know across the value-chain among your competitors and substitutes?
Names, titles and contact info, please.