startup roadmap 2014 vecsenyi

Startup roadmap Why? How? What?

Prof. János Vecsenyi

[email protected]

mailto:[email protected]



Contents

1. Why do you want to start a business? 2. Idea generation 3. The buinsess concept 4. The viability test 5. Risk management 6. Building your entrepereneurial team 7. Product development 8. Financing and Pitching 9. Business Plan 10. Foundation 11. Lean startup: Accelerating market entry 12. Market launch 13. Closing remarks 14. References

Startup Roadmap © J. Vecsenyi, 2014. 2

Even though you may be a born entrepreneur, you can still learn about

entrepreneurship.

Even though you may not be a born entrepreneur, you can still learn to become

one…. If you want.

Even if you don’t want to become an entrepreneur now, you can still be a good

person.


If you want to cook, all you have to do is read cookbooks and practice cooking.

The same can be said for starting a new venture.

Having instincts is simply a plus.

4 Startup Roadmap © J. Vecsenyi, 2014.

INGREDIENTS

The driving forces of a new business


Market opportunity

External / Internal resources

Entrepreneurial team

Source: Timmons (1990) New venture creation (3rd edition)

Opportunity driven

Competency, technology driven

Idea generation

Business concept definition

Entrepreneurial team formation

Product development &

design Financing

Company foundation

Market entry

A startup roadmap


Lean startup

WHY DO YOU WANT TO START A BUSINESS?

Why?


Why does anyone want to start a business?

8

Opportunity

To become rich

Fame Independence

Startup Roadmap © J. Vecsenyi, 2014.

To make a living Generation change

It is better to be a job creator than a job seeker

Unemployement

What kind of business would I like to have?


A business that satisfies local needs with typically traditional products and provides a moderate living for its founder and its employees. It has moderate growth potential and cannot operate without its founder in the long run, like most SMEs.

E.g., Pop&Mom’s Kitchen, T.J. The plumber

A business built on innovation based

products for global markets with scalablility and high financing needs.

Once turned into a structured company, it

can function without its founder and can be sold off, like most Innovation

Driven Entreprises (IDEs).

E.g., Prezi, Solvo, Ustream Indextools

A temporary business to utilize a relatively short window of opportunity

with traditional or innovative products to

gain short term profit as soon as possible.

E.g,. selling an invention or a seasonal service

Scalable & sellable Temporary

Project

Provides a Living

Source: Timmons (2003)

SME Entrepreneurship

• Initial focus on addressing local markets only.

• Innovation is not necessary to SME establishment and growth, nor is competitive advantage .

• “Non-tradable jobs”—jobs that must be performed locally (e.g. restaurants, dry cleaners, and service industry).

• Most often family businesses or businesses with very little external capital.

• People who start them seek to maintain control, not to create high growth. The company typically grows at a linear rate.

• When you put money into the company, the system (revenue, cash flow, jobs, etc.) will respond quickly in a positive manner.

IDE Entrepreneurship

• Focus on global/regional markets.

• The company is based on some sort of innovation (tech, business process, model) where they can go global or across regions.

• “Tradable jobs”—jobs that do not have to be performed locally.

• More diverse ownership base as the focus of founders is on high growth and creating company market value.

• The company starts by losing money, but if successful will have exponential growth. Requires investment.

• When you put money into the company, the revenue/cash flow/jobs numbers do not respond quickly.


What kind of business do we want to create?

Source: Aulet (2013)


Ab

ility

an

d a

ttit

ud

e to

en

trep

ren

eurs

hip

an

d c

ha

ng

e

High

Low Business and operational experience High

Dinosaurs

Traditional, large, bureaucratic ventures

Ants

Traditional small ventures

Gazelles

Fast growing. high potential new ventures

Where do your venture want to fit?

Tigers

Dynamic, large, expanding ventures

Source: Vecsenyi (1995)

11

12

A startup is a human institution designed to deliver a new product or service under

conditions of extreme uncertainty. (Ries, 2010)

A startup enterprise is a baby gazelle

venture with scalable market potential combined with growth ambition and global vision of the entrepreneur(s).

(Vecsenyi, 2013)


13

Do I want to be an entrepreneur?

Commitment

How much I want,

dare?

Lifestyle/ attitude

How would

I like to live?

Abilities

Who am I?

Competenecies

What do I know?

Aspirations, motivations

Why do I want to become

an entrepreneur?

Connections

Whom do I know,

who knows

me?

?


Before you start your business, make your list….

What can I gain if I start...

What would I regret if I don’t start …

What would I lose,

if I start…

Pros Cons

Which is stronger?


THE IDEA GENERATION

What did I find?


The business idea


The great match Market fit Product fit

17

From an idea to a business opportunity

(unique, new) product/service for a certain or potential need, if The idea

Market

opportunity

Business

opportunity

+ there is repeatable, growing buying potential and

+ capable to create profit

+ socially acceptable

+ worth to start a new venture on it

+

+


Is your VP fit and sexy?

18 Startup Roadmap © J. Vecsenyi, 2014. Is your offer relevant, unique, credible?

NEED

VALUE PROPOSITION

Value proposition: what do I want to offer?

19

Service Product Agency


Resource driven entrepreneurship Invention/ competence look for market opportunity


Invention Idea

Competence

WHERE can it be used?

WHO could use it?

WHY Would anyone

use it? Accountancy competence

Inventing heath protection material

Accounting services

Covering household appliances

Opportunity driven entrepreneurship Recognized need looks for solution


Unsatisfaction

Shortage, problem

New need

Invention idea

Competence

Hidden need

Frames for the paintings

Cordon for the qeue


The innovative idea

( Joseph Schumpeter)

22

• New combination (different, better, different way on the target market)

• Innovation= invention * commercialization

5 + 1 forms of innovation of

1. new goods

2. new methods of production

3. the opening of new markets

4. the conquest of new sources of supply

5. the carrying out of a new organization of any industry

6. New business model (making money in a different way)

What kind of idea?


• Established ground rules

• Well known products, services

• Existing business model

• Low groth potential

• Forseeable market

• Market niche for new innovations

In which industry is it worth starting your startup?

Traditional industries Creative industries

• No ground rules

• New, mostly knowledge based creative products

• Mostly new business model

• High growth potential

• Very uncertain market

• The industry niche


Startups can be launched in all

industries


Sources of ideas for new ventures:

• Determine customer wants/needs

• Follow previous job(s) experience

• Improve products and services already on the market

• Be open on foreign trips

• Elicit suggestions from channel members

• Check the Patent Office files

• Conduct your own research & development

• Surf on internet


Idea-generation tools

1. Searching for shortage, dissatisfaction Observing domestic and foreign markets (open eyes)

Idea notebook

Brain storming

Read newspapers, leaflets, brochures

Internet surfing

2. Recognizing mistakes, failures From failure to the solution

Penicillin, Teflon, Viagra

3. Finding market niche, blue ocean Where is a need for new invention with low

competition

iPod, iPhone, Body Shop

4. Studying trends Political, economic, social, ecological, legal trends

Industry reports, trends

THE BUSINESS CONCEPT

Can we make business out of it?


Conscious preparation for starting a new venture


Market need Value

proposition

Operation Entrepreneurial

team

Business model Financial model

Defining the business concept

Testing the viability of the business concept

Risk and strength

management

Strategy and action plan

Decision on the start

Deciding on starting the new venture

www.startmybusiness123.com

Startup Business Concept Map


Market needs

Value proposition

Operations Entrepreneurial

team

Business model Financial model

Mar

ket

nee

d

WH

Y?

FO

R W

HO

M?

Op

erea

tio

ns

HO

W?

Bu

sin

ess

mo

del

FR

OM

WH

AT?

HO

W M

UC

H?

Entrep

reneu

rial team

W

ITH W

HO

M?

Solu

tion

, offer

WH

AT?

Finan

cial mo

del

FOR

WH

AT?

HO

W M

UC

H?

Startup Business Concept Map


Customer segments

Market size and scalability

THE NEED, PROBLEM OF THE CUSTOMERS

Distinctive competencies CSFs

Basic conditions

CORE FUNCTIONS, COMPETENCIES

Competitive advantage, Uniquness

Positioning, pricing

VALUE PROPOSITION (PRODUCT/SERVICE )

Key internal people

External partners, suppliers

FOUNDERS/OWNERS/ OWNER MANAGERS

Mission, vision values

Sales strategy and channels

REVENUE STREAMS COST STRUCTURE

Financing needs

Financing sources and

methods

Mar

ket

nee

d

WH

Y?

FO

R W

HO

M?

Op

erat

ion

s H

OW

?

Bu

sin

ess

mo

del

FR

OM

WH

AT?

HO

W M

UC

H?

Entrep

reneu

rial team

W

ITH W

HO

M?

Solu

tion

, o

ffer W

HA

T?

Finan

cial mo

del

FOR

WH

AT?

HO

W M

UC

H?

Road on the Startup Business Concept Map

Will we have market?

Will we have product?

Will

we

hav

e re

ven

ue

?

Will the revenue be enough?

How much will it cost?

4.TEAM 3. OPERATION

Recognized need

Recognized solution

Will we have the right people?


You may want to repeat the circle whenever you

have new data


http://www.startmybusiness123.com/

On-line support software


1. Why is there a need and by whom?


Customer segments

Market size and scalability

THE NEED, PROBLEM OF THE CUSTOMERS

Market need WHY?

FOR WHOM?

a) What is the need, the problem and why does this need exist?

b) Who are our customers and what are their specific needs?

c) What is the size of the market and its growth potential?

The need, the problem


Dissatisfaction

Shortage, problem

New need

Hidden need

Dissatisfaction with current offers regarding quality, style, price, availability, assortment

Locally not available or achievable offer, solution

Unmet need

Traditional bakery, fast food, mobile application

These are issues and problems that customers face but have not yet realised

Drinking water, tapwater, alternative energy

Mobile phone, alternative energy

Smart phone, Rubik’s cube

Hierarchy of Your Customers’Needs

Emotional

benefits

Functional benefits

Product attributes What we build

into the offer

Functional benefits

sought from any

company

Psycho-social benefits

sought from any

company

Customers’

Values

Copyright © 2007 Impact Planning Group LLC.

To look for functional and emotional benefits vs. just product attributes or features

Why is it important?

Family ties

What do your customers need? Granma’s telephone example

Emotional

benefits

Functional benefits

Product attributes

Customers’

Values

Copyright © 2007 Impact Planning Group LLC.

Granma’s telephone?

Why whould she like it?

Easy to use and pleasant experience

How can we make it for her?

• Big, sharp screen • Big keyboard • Fast dialing • Big icons • Few functions • High voice • Wireless

How?

Who would be our customers?

38

Target group: the desirable and reachable segments

According to behavior

According to desirability

Which is the ideal spaghetti

sauce?

B2C

B2B

B2A

According to decison making


Segments: Groups with similar behavior pattern

http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.html

Who would be our customers?


Seller

Free user Paying customer

Primary income sources Secondary income sources

Consumer / end user who eats it

Customer who buys it

Buyer (Distributor) who purchases it

Seller (Factory) who manufactures the chocolate


Getting to know your customer

Who:

Who would make purchase decision? Focus on target market, segments: the industry, location, buying behavior, direct and indirect competitors, customer profile

What: Exactly what are you selling from your perspective? Factors that you try to sell and you should emphasize

When: Time of the day, seasonality, frequency. Adjust to existing habits

Where: Location, location, location. Focus on habits of your customer, offer your product that is convenient to the customer

Why: From the customer’s perspective, the specific reasons the customer purchases your product. Understand primary reason or create a reason

How: Purchasing for cash, credit, barter? Customer’s preferred purchasing method, technology.

Source: E. Solymossy, 2007

Market size


Total Available Market

Served Available Market

Ideal Available Market

Serviceable Obtainable

Market

TAM: population of 30-50 age group

SAM: Population of 30-50 age group with diabetes 2

IAM: Population of 30-50 age group with diabetes 2 and smart phone

SOM: Population of 30-50 age group with diabetes 2 and

smart phone, ready to change lifestyle

Window of opportunity

• Growing market need

Window of expansion

• Expanding market reach


Scalability potential

43

2. What do you want to sell, what is unique in it?

“People don’t buy what you do; people buy why you do it.” Simon Sinek


a) What is your value proposition product/ service you offer?

b) What is unique about your product, the competitive advantage your customers would buy?

c) Where will you position your offer on the value-price range?

http://www.ted.com/talks/lang/en/simon_sinek_how_great_leaders_inspire_action.html

What do you want to offer?


WHAT?

Same

Special New

UNIQUENESS & COMPETIVE ADVANTAGES perceived by customers

Who would be your competitors and how can you have competitive advantage?


Direct Indirect Substitute

AC

TUA

L P

OTE

NTI

AL

© 2007 Impact Planning Group LLC.

What and how do they offer? Where do we want to be better, different?


Positioning

Quality/

Value

Price

Price/

value

Premium Medium Mass

High

end

Low

end


3. What are the preconditions and what would be your core and distinctive competencies to start and operate?

a) What core competencies do you have to have to provide your Value Proposition?What do you want to do on your own and what will be outsourced?

b) What are your distinctive competencies and Critical Success Factors (CSFs) which enable you to provide competitive advantages?

c) What are the basic legal, official, physical, human conditions to start your operation?

How do you want to create value?


HOW?

SAME AS OTHERS

BETTER,

THAN OTHERS

DIFFERENT

THAN OTHERS

CO

MP

ETET

IVE

CO

MP

ETEN

CIE

S to

p

rovi

de

co

mp

etet

ive

ad

van

tage

s

49

Operational competencies

Core competencies

• Development • „Core activity” • Marketing and sales • Finance • Leadership and

management

Distinctive competencies

• Human • Phisical • Economic • Technological • Marketing • Legal

Creating Value proposition

Creating competitive advantage

Basic conditions

• Legal condition • Official licences • Phisical and

equipment conditions


Conditions to start and operate

Core functions, core competencies

Core functions and competencies to create and capture value

Development

Production / operations

Marketing and sales

Financial management

Leadership and business administration

Info-communication management


Critical Success Factors(CSFs)

CSFs are those factors which enables a business to be successful in a particular industry and make the business capable to win the competition. These are:

• Human CSFs: special knowledge or skills (e.g., an outstanding chef, PhD,

world class designer, a great team)

• Phisical CSFs: manufacturing, logistical capacity, machines, equipments,

location, sourcing reach, distribution channel (e.g., special, unique machine, equipment, facility, App store, iTunes)

• Business CSFs: access to resources, economy of sale, economy of

distribution

• Technological CSFs: unique or proprietary technology, special method,

process, IT system

• Marketing CSFs: Innovation, customer intimacy, operational excellence

• Legal CSFs: patents, copyrights, franchises


Essential conditions

Essential conditions are those conditions which are required by law or basics for operations Legal condition: Corporation, operational

licenses, opening a bank account

Official authorization: marketing authorization, operating permit, education, degree

Technical, personal, physical, conditions: facilities, tools and equipment (owned, rent)


53

4. Who would make it happen?


Key internal people

External partners, suppliers

FOUNDERS/OWNERS/ OWNER MANAGERS

a) Who are and will be the owners?

b) Who would we work with in the business, who would be the key managers and associates?

c) Who will be the external partners and suppliers?

Creating an entrepreneurial team


Self anaysis

• Purposes

• Abilities

• Competencies

• Connections

• Experiences

Corporations

• Owner, co-owners

• Key associates

• External partners, suppliers

Team building

• Goals

• Roles

• Processes

• Interpersonal relationship

Roles and responsibilities in the new venture


Suppliers

External contributors

Employees

Owners

Founder

Complementary competencies, resources personalities

Providing core competencies

Required, but outsourceable competencies e.g., accountant, lawyer, patent agent, designer, programmer

Key managers

Advisory board

Board of directors

Key personnel

Subcontractors


5. What would be the sources of revenue and how would we get it?

a) What will be the sources of revenue, what is the way of creating and capturing value (the business model)?

b) Why do we want run the business? c) How would we want to acquire revenue

by marketing and sales?

Sources of revenue


Asset sale Usage fee Renting fee

Leasing fee License fee Lending fee

Advertising Subscription Brokerage

The business model

1. The story: For whom, why, how do you create value with what?

2. The value chain: How do you create, capture value?

3. The money making: The revenue stream, the cost structure, the profit, the financing need, return?


Creating and capturing value

The business model

What are we doing for whom and why would anyone pay?

The story

59

Collection and distribution of job offers via the Internet

Profession.hu

Printing and copying

services for customers and

businesses

Copy General

User-friendly, personalized,

beautiful everyday IC

objects

Apple


Sample revenue generation/business models

• Online auction business model

• Online content

• Premium business model

• Professional open-source

• Retailer

• Pyramid scheme business model

• Razor & blades

• Servitization of products business model

• Subscription business model

• Premium

• Wholesale


• Asset sale • Auction business model • All-in-one business model • Brick & click • Collective business model • Cutting out middleman • Direct sale • Distribution • Franchise • Freemium • Low-cost carrier business model • Loyalty business models • Monopolistic business model • Multi-level marketing • Network effects business model

Mission, vison, values: your story.


Mission, reason for your busines exists

VISION, the state your business wants to reach

VALUES which govern your business life

VALUE PROP, the product you provide

STP marketing strategy


Define market for the business

Create market segments

Evaluate segments on set

criteria

Construct segment profile

Evaluate the attractiveness of

the segments

Selecting target market

Develop positioning

strategy

Develop and implement

marketing mix

Review performance

S Segmenting

T Targeting

P Positioning


6. How will the venture be profitable and how much money do you need for start and where do you want to get it from?

COST STRUCTURE

Financing needs

Financing sources and

methods

a) What will be your costs and how much profit you can make?

b) How much money do you need and for what to start your business?

c) Where do you get financing for starting your business?

How will you make money?

– Costs 2. For what, how much, when do you need to spend?

= Profit 3. How much profit can you make? When will

you break even?

Equity 4. How much capital do you need?

Return 5. When will your investment come back?

1. Who would pay, why, when and how

much? What would be the primary,

secondary sources of your income? How

much revenue will you calculate?

Revenues


What dou you need money for?

• Seed money

• Operational expenses

• Personal expenses

• Safety reserve


Sources of entrepreneurial financing


Founder

Bootstrapping

3Fs (Family, Fiends,

Fools)

Private investors

Business Angels

Venture Capital

Crowdfunding

Governamental support

Bank loan

VIABILITY TEST

Are you sure it’s a good idea?



5+2 initial questions before starting a new venture

1. Is there a real need/demand? – Finding, creating, fulfilling market niche with the right product/service

(Marketable)

2. Can we win it with a competitive value proposition? – Utilizing distinct competencies (better, special, different) (Competitive)

3. Can we do it? – Launching, managing the new venture with the right people, technology

(method) and organization (Operational)

4. Is it worth doing? – Making it profitable (Profitable)

5. Do I (we) really want it? – Mobilizing competence and commitment of a socially responsible

private individual (Commitment and competence)

6. How much money do we need to start? – Funds required to start the venture (Seed capital)

7. Do we have money for it? – Getting the seed capital for launching and starting (Capitalization)

Is your business idea viable?

1. Would it be marketable?

2. Would it be competitive?

3. Would it be feasible?

4. Would it be profitable?

5. Would you and your team be competent and committed?


Profitable

A viable business concept


with a competent and committed team

Marketable Comptetitive

Technically feasible

RISK MANAGEMENT How can you improve your chances?


Startup decision analysis


Risk and strength

management

Strategy and action plan

Decision on the start

Startup decision


Why will it be fine to start?

Why do we wait to start?

Why do we not start?

Later

ENTREPRENURIAL TEAM FORMATION

With whom do we want to make it?


Creating the entrepreneurial team


Self assessment

• Attitudes

• Abilities

• Competencies

• Network

• Experience

Partners

• Owner(s)

• Employees

• Partners

• Supplyers

Team

• Goals

• Roles

• Processes

• Interpersonal relationship


‘Must haves’ to become an entrepreneur?

Network

Whom we know Who knows me

Personality

sense …

abilities

motivations

Experience

Competencies

knowledge

skills

attitude

What I was born with

What I learned, am able and

want to apply

Those who can add

value

What I consciously

utilize

1. Know yourself and

build on that

2. Strengthen your

strengths

3. Cooperate with

others!

4. Learn from your

past!


Where is your strength?

Entrepreneur- expert – Working in her/his business – Executes things – Likes to deliver product

Entrepreneur-entrepreneur

– Working on her/his business

– Oversees chaos

– Likes to create business

Entrepreneur-manager

– Working in her/his business

– Makes order in chaos

– Likes to operate business

Source: M. E. Gerber: The E Myth Revisited. 1995

Whom do you need for your technology start-up?


Hackers (experts in

technology)

Hipsters (good in business and management)

Hustlers (great in sales and

marketing)

Business is not a one man show!

Early stage personal decisions

• Alone or with others?

• With family, friends, associates?

• Investors? Founder

• Employee, subcontractor, or owner?

• Quality or availability and compensation?

• Individual contributor or manager? Associates

• Whom I know, who knows me?

• Who would be the right external partners?

• Who would be the right supplyers, subcontractors? Partners


Startup is teamwork!

81

Key roles at the beginning

CEO

CTO

- Staffing, motivating, accessing people

- Managing Finances - Executing business

strategy - Networking, PR

- Product and technology development

- Building knowledge management system

CMO - Marketing management

- Design - Sales management

COO

- Organization design - IT systems - Sourcing - Logistics



The role of the board of directors

• Involvement of external people • Mentoring • Review operating and capital

budgets • Develop longer-term strategic

plans for growth • Support day-to-day activities • Resolve conflicts • Ensure proper use of assets • Networking

What do you need to clarify with co-owners and employees?

83

Goals

Roles &

responsibilities

Processes

Interpersonal relationship

Co

nflic

t reso

lutio

n

Pla

nn

ing

What are the key results, short, medium, long term goals and the reasons for existance?

Who does what?

What are the core values and grand rules?

What are the core processes, systems, action plans with deadlines?

Source: Beckhard, 1975


PRODUCT DEVELOPMENT & DESIGN

What the product will be like?


How to create product from the idea?


Source: http://www.innecs.com/html/Product%20development.html

http://www.innecs.com/html/Product development.html

LEAN STARTUP ACCELERATING MARKET PENETRATION

How can we create value faster and better?


http://bit.ly/LeanStartupBook

The lean startup methodology for product development

Ideas

Build

Product

Measure

Data

Learn


• Coding • Designing • Prototype /

Product building

• Check Quality • Test with users • Collect evaluations • Raise statistics

• Learn from users • Find conclusions • Generate new

ideas

Source: www.kickstarter.com

Minimal viable product (MVP)

1. Helps entrepreneurs start the process of learning as quickly

as possible

2. The goal is to test fundamental business hypotheses

3. Only one hypothesis at a time

4. One total circle of Define, Measure, Learn at a time

5. Do not push perfection just show the prototype,

or the concept to the customer



Source: http://huitale.blogspot.hu/2010/12/

http://huitale.blogspot.hu/2010/12/

More startup failed because of lack of customers than failures

of product development Steve Blank


FINANCING

For what, how much, from where?



• Entrepreneurship: Pursuing an opportunity beyond the resources currently controlled / Howard Stevenson

• Financing Obtaining the missing resources


Why For what

From where How

When you need

How much money

at the early phase of your new business?

Financing categories

Equity financing Investing

• Creates ownership

• Provides control and insight

• Equity increase expectations

• Occasionally dividend/ROI expectations

• Net loss in case of insolvency

• Obtained from capital markets

• Investor sometimes provides expertise too in startup phase

Debt financing Crediting

No ownership but collateral and/or tangible asset (property) is required

Pre-defined time frame

Interest bearing

Payback obligation, requires profit from operation (positive EBITDA)

Usually provided by banks, but due to high associated risks is not a preferred financing tool by commercial banks in startup phase


What financing do you need for?


Seed capital for development

Startup capital for quick start

Growth capital for expansion


What does the venture need the money for?

1. How much money do you have and how much will you need for personal use?

2. How much money will you need to start your business (start-up cost) ?

3. How much money will you need to stay in business (operational expenses) ?

What does the venture need the money for?


Development, startup costs

Operational expenses

Living costs Reserve needs

Research and development cost, Licenses, permits, Fixtures, equipment, Installing fixtures, equipment, Beginning inventory costs, Rent deposit, Insurance fee, Advertising for opening, Legal, professional fees, Unanticipated expenses

Be more realistic with the projections Minimum of 3-6 months operative expenses or 10-30%

Food, clothing, utilities, insurance, rent, entertaintment, transportation, health care, etc.

Employee wages, Your living expenses, Rent, Supplies, Utilities, Advertising, insurance, Taxes, Maintenance,Delivery / Transportation, Accounting fee, Membership fee, Miscellaneous


The Business model: Making money

– Cost 2. Spending on what, how much,

when?

Profit 3. How much, when will break-

even be reached, positive cash

flow?

Investment 4. How much investment is

needed?

Return 5. When will the investment return?

1. Who will pay for what, how

much, when? Revenue


Money

Fix cost

Volume/Time

Break-even analysis

Fix

cost

Variable

cost

Profit

Break- even point

Minimum volume

Minimum Price

Realistic? Enough?

Sources of entrepreneurial financing


Founder(s)

Bootstrapping

3F (Family,

Fiends, Fools)

Private investors

Business Angels

Venture Capital

Crowdfunding

Governmental support

Bank loan

How can we get out from the Valley of Death?


Valley of Death

Source:


Return

1. When will the operation become profitable?

– Operating break-even

2. When will the return on investment reach its break-even point?

– Duration of the Return on investment

3. What is the rate of investment compared to other investments?

– ROI

Two pitches for two kinds of audience

• Investment pitch wants to convince investors to give money to your business

• Sales pitch wants to convince customers to buy your product/service


Elevator pitch for investors


1. What is the problem/ need?

2. What is the solution/value proposition?

3. What is the value for the market and

for the investor?

• 2-5 minutes pitch • Raises investor’s attention to

the new venture

1. No nonsense 2. Easy to understand 3. Greed inducing 4. Irresistable

5. What we offer to, what we request from the investor?

4. Who are the members of the winning team?

Preparation for the elevator pitch

1. Define your business concept 2. Define why do you want to pitch, what do you want to

accomplish 3. Formulate what do you want to tell and how 4. PRACTICE, PRACTICE, PRACTICE 5. Ask for feedback 6. Tell your pitch to the investors 7. Listen to the questions 8. Give brief answers to the questions. Be prepared for

expected questions 9. Be calm in taking the results 10. Assess your performance and be prepared for the next

pitch


10

CREATING YOUR BUSINESS PLAN

How can you convince the investors?


www.startmybusiness123.com

Self confident Profound Concious Execution

Why do you need a business plan?


Detailed

BUSINESS PLAN

Viable STARTUP BUSINESS

CONCEPT

Idea

Systematic thinking using

WHY?

For the founders, for 3F investors and business angels

For the founders, investors

FOR WHOM? HOW? WHAT?

Detailed planning with Business plan toolkit

Convincing profound arguments

Self confident Planned Concious Execution Convincing,

credible document


A business plan for a new venture is

… a convincing and credible document for starting and financing a new venture to prove that in the next 2-3 years the new venture

with its products and services

on the target market

with the entrepreneurial team

can make profit

and manage risk

…prepared

for and by the founders to make a conscious decision on starting a new venture

for the investor to convince financing institutions or private investors


A business plan is…

when the founder Analyzed the market and

industry

Planned actions to market entry

Defined and designed products and services

Designed operational conditions of the business

Identified the necessary staff

Calculated the profit making potential

Calculated risks and risk management tools

to the founder that to start the business is rewarding and possible

to the investor that financing the new business is rewarding and safe

when it proves

Convincing Credible


Content of a business plan

1. Cover sheet

2. Executive summary

3. Introducing the business

4. Industry, market, competitor analysis

5. Product /service

6. Marketing plan

7. Operational plan

8. People and organization

9. Financial and financing plan

10. Risks and risk management

11. Attachments

Analyzing business environment


Industry Industry trends Growth potential Market segments and groups

Industry success factors Official regulations Technology trends

Preferred purchasing and payment methods Purchasing power Payment moral

Competitors Competitive value props Industry value chain

Labor market Networks Legal system

Investors’ ecosystem Accounting Act Tax Act

How much money will your startup make?

114

Income statement

Income statement

Sales

- Costs

Net income

Balance sheet

Debt Assets

Equity

Cash-Flow statement

Cash in

- Cash out

Cash Flow

Financial statements for entrepreneurial answers

Would it be profitable?

Would it be liquid?

Would it be thriving?


Financing

Closing

Balance

Sheet

Beginning

balance

sheet

FOUNDATION STEPS

How to start?


Business conditions


Tax regulations

Legal form

People

Organization

Core activities and products

Accounting Accountant

Experts Advisors

Investment

Site, office

Bank selection

Licences

Basic conditions for launching a new venture?

Patents

Insurance

Name selection

Sales strategy and force

Technical, organizational, human

Legal conditions

MARKET ENTRY

How do we start selling?


Steps to the market

1. Who would be our customers, what do we know about their buying behavior? (Segmenting)

2. What are the needs of our targeted segments? (Needs analysis)

3. What do our competitors offer? (Competitive analysis)

1. What do we sell, to whom, satisfying what needs? (Positioning)

2. How do we price? (Pricing)

3. How will we communicate to the market? (Promotion)

4. Where and how will we sell? (Sales channels, strategies execution)

Market research

Market entry

Market retention

1. How do we get feedback from our customers? (Correction needs)

2. How will we react to correction needs, short term? (Reactive customer service, complaint management)

3. How will we react to correction needs, long term? (Proactive actions, product development)


CLOSING REMARKS

Do you still want to start a business?


Instinct can never replace knowledge, but perfectly complement it.

Kristina Ohlsson, 2012


It is not enough to invent it… You should make it… You should sell it…

You should make money out of it


Staircase of entrepreneurial success

Technical

success You can make it

Sales

success You can sell it

Business

success You can make money out of it

Social

success It is useful, not harmful

to society

Personal

success You are happy

Enjoy the journey

not just the

destination!


1. Aulet (2013) Disciplined Entrepreneurship

2. Blank, Steve (2013) The Four Steps to the Epiphany

3. Béza és társai (2013) Kisvállalkozások finanszírozása. Perfekt

4. Gerber Michael E. (2001) The E-Myth Revisited

5. Ries Eric (2011) Lean startup

6. Szirmai P.-Klein S. Üzleti tervezés kívül és belül. Induló vállalkozások tervezése. EDGE 2000 Kiadó, Budapest

7. Timmons, J. (2003) New venture creation. Entrepreneurship for the 21st century. Irwine

8. Vecsenyi János: (2012) Kisvállalkozások indítása és működtetése. 72h

9. Wasserman, Noam (2012) The Founder’s dilemmas

Videos

1. http://www.ted.com/talks/lang/eng/simon_sinek_how_great_leaders_inspire_action.html

2. 8 secrets of success

3. If You Don’t Understand People, You Don’t Understand Business

4. http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.htm

5. Marketing Strategy

6. http://www.youtube.com/watch?v=Tq0tan49rmc

7. On pitching to VCs

8. The era of open innovation

9. Before Avatar ... a curious boy


Sources

http://www.ted.com/talks/lang/eng/simon_sinek_how_great_leaders_inspire_action.html

http://www.ted.com/talks/lang/eng/simon_sinek_how_great_leaders_inspire_action.html

https://www.ted.com/talks/lang/en/richard_st_john_s_8_secrets_of_success.html

http://www.youtube.com/watch?v=8grVwcPZnuw&feature=player_embedded




http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.htm

http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.htm

http://www.youtube.com/watch?feature=player_embedded&v=bilOOPuAvTY

http://www.youtube.com/watch?v=Tq0tan49rmc

http://www.ted.com/talks/lang/en/david_s_rose_on_pitching_to_vcs.html

http://www.ted.com/talks/lang/en/david_s_rose_on_pitching_to_vcs.html

http://www.ted.com/talks/lang/en/charles_leadbeater_on_innovation.html

http://www.ted.com/talks/lang/en/james_cameron_before_avatar_a_curious_boy.html

startup roadmap 2014 vecsenyi

Business

new business startup

references startup roadmap

lean startup

temporary business

business plan

kind of business

jnos vecsenyi

edition opportunity