Business Plan Preparation Introduction Frank Moyes Leeds School of Business University of Colorado Boulder, Colorado Business Plan Preparation: Choosing Good Opportunities

Tonight’s Agenda Choosing a good opportunity Discuss concepts Mullins 2 Students introduce selves Major What have done that is entrepreneurial? What want from course? What is your wicked idea? Frank Moyes David Drake Business Plan Preparation: Choosing Good Opportunities

Assignments for Next Week Sept 5 resume: post on eCollege Sept 8 – post your concept on eCollege Sept 11 – instructor to email the selected concepts & formation of teams Business Plan Preparation: Choosing Good Opportunities

Next Week Framework for writing a business plan Read Writing a Successful Business Plan from my website Market research – Gene Hayworth, Leeds School Librarian Importance of validation Interviews and Call Reports Business Plan Preparation: Choosing Good Opportunities

When Is an Idea an Opportunity? Open window Entry is feasible Management team Competitive advantage Economics Rewarding Forgiving Growth Attractive Durable Timely Adds value What does this mean? Timmons, New Venture Creation Business Plan Preparation: Choosing Good Opportunities

Good Opportunity Market is strong & accessible Compelling need Good Opportunity Market is strong & accessible Compelling need Sustainable competitive advantage Unique/different High margins Management Business Plan Preparation: Choosing Good Opportunities

Market Demand Is Strong Market Demand Is Strong Favorable trends Growing market Size is big enough to be worth the effort Market share attainable Favorable window of opportunity Venture Capital Perspective 30%+ per year $100 million to $1 billion potential Minimum 20% Business Plan Preparation: Choosing Good Opportunities

Market Is Accessible Market Structure Fragmented No dominant player SOT’s (slow, old or traditional) Response of competitors to new entrants is indifferent No proprietary barriers to entry Access to channels is possible Forgiving of mistakes Fragmented market strategy Ownership of resources Low cost producer Consolidation If dominant player(s) are: old, traditional, slow Response of competitors: Airlines, but Southwest Personal computers, but Dell Organized crime PC software, no buts Access to channels Air Florida Toothpaste, but Tom’s of Maine Will make lots of mistakes. Why need Hi margins Growth Resources Experience Business Plan Preparation: Choosing Good Opportunities

Compelling Need Solves a problem Unfulfilled niche Compelling Need Solves a problem Unfulfilled niche Dissatisfaction with current products/services Poor quality or service Needs Physical Physiological Emotional Social Financial Intellectual Manage information: Google Physical: food, warmth, shelter, sleep, etc. Physiological: health, cleanliness, comfort, fitness, safety, etc. Emotional: euphoria, love, prestige, stress, etc Social: ethical, honesty, power, competitiveness, integrity, friendship, etc. Intellectual: achievement, better decisions, artistry, etc. Economic: revenues, productivity, cost savings, maintenance, etc. Financial: ROI, DCF, payback, burn rate, etc. Business Plan Preparation: Choosing Good Opportunities

Competitive Advantage Competitive Advantage Understand the market Understand the competition Sustainable Innovation Differentiation Resources & capabilities Really understand the market & competition Major competitor is inertia Business Plan Preparation: Choosing Good Opportunities

Strong Competitive Advantages Intellectual property Agreements with customers or suppliers Long term contracts Business Plan Preparation: Choosing Good Opportunities

Competitive Advantages That Are Often Questionable First to market Highest quality Best service Lowest cost or overhead Patent protection Business Plan Preparation: Choosing Good Opportunities

Unique/Different You must differentiate your business – it’s already being done by someone More than unique product/service design Marketing – positioning Operations – process or value chain Channels – create a new channel Benefits Business Plan Preparation: Choosing Good Opportunities

High Margins Mind-set of high & low margin thinking Advantages of high gross profit margins Funding Cash flow Development & marketing Can solve the screw-up problem Slippery slope of low margin thinking Example of 40% vs 60% gross profit margin business Business Plan Preparation: Choosing Good Opportunities

Management Meets your personal interests & objectives Takes advantage of your experience Would your potential customers buy from you? You can put a management team together You are passionate and commit Business Plan Preparation: Choosing Good Opportunities

Concept Description Brief description Why is there an opportunity/need? What is the product/service? How will it be produced or delivered? Who is the target market? What are the unique benefits? Who is the competition? What advantages do you have over the competition? Profitability Revenue model Contribution margins Business Plan Preparation: Choosing Good Opportunities