Business Plan Preparation Frank Moyes Leeds School of Business University of Colorado Boulder, Colorado Competitive Advantage

Competitive Advantage Tonight’s Agenda Opportunity/Need Financial COMP’s Model Company Customer Research Importance of validation Locomotion Business Plan Elevator Speech Hand-in Interview list Competitive Advantage

Competitive Advantage Next Week Value Proposition Business Analysis Assignment Elevator Speech In the Fire – Opportunity/Need Competitive Advantage

Competitive Advantage Opportunity/Need What is the pain? What problem is being solved? Dissatisfaction with current products/services Poor quality or service Must be compelling Must be easily understood by TM Must provide validation Competitive Advantage

Competitive Advantage Financial COMP’s Company in your marketplace. NAIC code Publicly traded Industry ratios – see Selected Resources Guide Library Key financial measures to compare when developing strategy and projections Reality test Competitive Advantage

Competitive Advantage Financial COMP’s Competitive Advantage

Competitive Advantage Model Company Identify company in your marketplace Different segment, products, target market Has done just what you want to do Provides credibility Competitive Advantage

Customer Research Revisited Do customers recognize that they need your product/service? Are features compelling? Criteria for buying decisions? Who influences the decision? How much will they pay? Why would they not buy? Do they understand the benefits? Competitive Advantage

Customer Research Revisited II Conduct 20+ interviews with users, buyers, distributors Basis for questions should be George Deriso’s Qualitative Customer Survey Questions will change as you learn more about the customer Competitive Advantage

Competitive Advantage

Identify Your Resources Financial: access to capital (equity & debt), cash reserves, government grants, etc. Physical assets: plant & equipment, raw materials, location, working capital, etc. Human: social, employee knowledge, experience, accumulated wisdom, labor cost and skills, etc. Intangible: patents, trade secrets, know-how, copyrights, databases, etc. Organizational: culture, contacts, policies, Boards of Directors & Advisors, suppliers, service providers, etc. Competitive Advantage

Identify Your Capabilities World class management (serial entrepreneur) Network - well developed, high-quality, accessible contacts that take years to build Marketing - differentiation, branding, positioning Product/service - design features & benefits Sales & distribution - rep organization Total operational approach - Dell, Wal-Mart Supply chain management - Asia contacts Relationships - regulators, politicians, investors Competitive Advantage

What Barriers Can You Establish? Intellectual property: patents, trade secrets, copyrights, trademarks, etc Switching costs to your target market Customer loyalty Agreements with customers, suppliers, strategic partners Control of the distribution channel Competitive Advantage

Competitive Advantage Challenges Competitive Advantage Challenges Intellectual property Agreements with customers or suppliers Long term contracts Control of costs Control of prices Control of channel Location Differentiation First to market World class management Expertise Development lead time Brand Quality Service Execution Relationships Competitive Advantage

Sustainable Competitive Advantage Sustainable Competitive Advantage Understand the market Understand the competition Differentiation Innovation Resources & capabilities Really understand the market & competition Why is this so hard? Competitive Advantage

Competitive Advantages Competitive Advantages Most are easily copied Entrepreneur ignorant of or ignores competition Entrepreneur is not realistic about own resources & capabilities Entrepreneur ignores future Entrepreneur must be intellectually honest Competitive Advantage

Sustaining Competitive Advantage Is a Dynamic Process Market, competition, resources, and capabilities are continually changing. Competitive Advantage