Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Customer experience wikipedia , lookup
Marketing plan wikipedia , lookup
Customer relationship management wikipedia , lookup
Market penetration wikipedia , lookup
Customer engagement wikipedia , lookup
Marketing strategy wikipedia , lookup
Customer satisfaction wikipedia , lookup
Segmenting-targeting-positioning wikipedia , lookup
SESSION 2 THE START-UP FIRM 1. SELLING YOURSELF AND THE PRODUCT/SERVICE 2. THE BUSINESS PLAN 3. NEVER GIVE UP 4. EMELIE NORBORG, DELOITTE 1. SELLING YOURSELF AND THE PRODUCT/SERVICE Two sales processes coincide in the start-up phase Selling yourself and the business Selling the product or service Three-quarters of the Inc. founders we interviewed served as their company’s chief or only salesperson. In the high-ticket items sold by the Inc. start-ups [median sales unit $ 5,000], entrepreneurs reported that their personal passion, persuasiveness, and willingness to satisfy special requirements were as important as the attributes of their products. Bhidé (2000) Founder’s involvement in selling 10% 8% Main salesperson Heavily involved 82% Bhidé (2000) Somewhat involved The elevator speech 15-30 seconds is about how long most people have to introduce themselves. And it’s about the most amount of time that people who don’t know you are willing to listen to you. Content of the elevator speech: - Who are you? - What is your company (where is it located)? - What is the product or service you are selling? Goal: Enticing the listener to ask more questions. How to know if it works “Talk to people about your offering. Gauge their reaction. If they change the subject, look at you strangely, or look away, then your description may be off. If they say, “Tell me more” or “That’s interesting”, you are probably describing what you do well. I started out telling people that I help executives find their dream careers and I got a lot of blank stares. Today, I tell people that I work with executives who are out of work or overworked. Now they want to hear more.” Deborah Brown-Volkman, Surpass Your Dreams (2004) Is all this really necessary? Yes! Don’t ever underestimate the need for marketing yourself and the new product or service. “I was working really hard on networking, getting to know the important people. When things were at their peak, it was obvious that I was balancing a very fine line in terms of my workload.” Anders Wall 2. THE BUSINESS PLAN Typical contents Executive summary Product and company description Market analysis - Target market (customers) - Sales forecast - Marketing plan (4 Ps) Industry and competitor analysis Development plan Management team Financial plan - Financial projections Some add ‘Critical risks’ Human resources External events Finance Technology Manufacturing Critical risks Regulations Customers Suppliers Competitors Protection of idea A close relative - The business model 1. 2. 3. 4. 5. What is the offer to the customer? Who is the customer(s) or customer segment? What is the value created for the customer? What is the revenue model? How is this accomplished in terms of: - Technology - Sales and distribution - Partnerships, etc. Cost reductions Revenue increases Three aspects of business plans 1. They are not necessarily employed in the start-up phase. 2. More used by external observers than by the entrepreneurial team itself. 3. Few business plans are executed exactly as planned. “The idea about a company was that we had seen the second version of Palm Pilot Pro some time around 1998. And we thought that we could do something funny with hand-computers…that is how advanced the business plan was from the start.” Founder of start-up firm (from Sanz-Velasco, 2007). The business plan used by the entrepreneurial team ”… new venture managers loose couple the plan from their actual operations. Even the ones with the best intentions to consistently update the plan do not do it. They indicate that their business model develops too quickly and that they want to focus on doing business instead of writing about it.” Karlsson (2005) Is it of any use at all then? ”We found that those who wrote business plans were no more likely to persist in nascent activity as compared to non-planners ... We found that writing a business plan has no statistically significant effect on the profitability of the nascent organization … It appears that new organizations do not write business plans to improve performance, rather, they do so in order to conform to institutionalized rules and to mimic the behavior of others.” Honig & Karlsson (2004), data on 396 nascent entrepreneurs over a twoyear period. Business plans and performance in the growing firm Business plan Performance (survival) Legitimacy Financing Business plans are moving objects “More than one-third of the Inc. 500 founders we interviewed significantly altered their initial concepts, and another third reported moderate changes. Apparently, instead of committing to technology, customer, product line, and other such basic choices, entrepreneurs start with a set of tentative hypotheses tested rapidly through a series of experiments and adaptive responses to unforeseen problems and opportunities.” Bhidé (2000) “One of the significant characteristics of successful entrepreneurs is that they are constantly open to new solutions, listening to what the market and customers want.” Anders Brännström, Volvo Common faults in business plans (1) Too technically oriented: Business plans are about doing business, not what great things technology can do. (2) Too little emphasis on presenting and analyzing the skills of the top management team: All can promise commitment, top management skills differ. What do they know? Whom do they know? How well are they known? If skills are lacking, what are the plans to acquire these skills? (3) Too vaguely perceived customers: Can you name an existing customer, and who are the next ten customers? Common faults in business plans (continued) (4) Unspecified customer segment: “Many business owners are afraid to pick who their target audience is. They worry that they are walking away from something good, such as a missed opportunity or potential customers. They worry that they are being too narrow or limiting by specializing. What you really walk away from is an unproductive strategy. You cannot serve the whole world successfully. What you walk towards is something much greater – serving the kind of customers you understand well.” Deborah Brown-Volkman (2004) (5) Focus on potential markets, when early break-even is more important. Common faults in business plans (continued) (6) No assessment of what can go wrong, and of the consequences. Other aspects (1) Many, especially venture capitalists, focus on “customer need” and “customer value”: “Many would-be entrepreneurs call me telling me they have an idea for a new business and that they want to come and see me. Unfortunately, it’s impossible to see all of them, so I have developed a few questions that allow me to judge how far along they are “with their idea.” The most telling question is, “Can you give me the names of prospective customers?”. Their answer must be very specific. If they are unable to name several customers immediately, they simply have an idea, not a market.” William Bygrave, Babson College Other aspects (continued) (2) Right or wrong, many evaluators put a lot of emphasis on the venture team: “When I receive a business plan, I always read the résumé section first. Not because the people part of the new venture is the most important, but because without the right team, none of the other parts really matter.” “A typical professional venture-capital firm receives approximately 2,000 business plans per year…most venture-capitalists believe that ideas are a dime a dozen: only execution skills count.” (William A. Sahlman) “I invest in people, not ideas. If you can find good people, if they’re wrong about the product, they’ll make a switch, so what good is it to understand the product that they’re talking about in the first place.” (Arthur Rock, venture capitalist associated with Apple, Intel, and Teledyne) Other aspects (continued) (3) You are selling a business idea, not presenting it: - If you’re a researcher, likely to be “too honest” and focus too much on technological uncertainty. Write and present it with the receiver’s priorities in mind: - VC investor - Bank - Potential buyer Growth Firm size Industry Time horizon Management philosophy Stability Cash flow Collateral Other aspects (continued) (4) Communicating the essentials is more important than length: “Sometimes you get these really thick business plans, and then it’s almost like you start looking for what is wrong in there. Others present just five overheads, five, and everything is crystal clear, they’ve got it!” Anders Brännström, Volvo (5) Depending on the reader, you may need to state explicitly what you want: “We are looking for a first round of financing for a total of X.” 3. NEVER GIVE UP Brace yourself I “As incomprehensible as 39 rejections may be for many, the original proposal by founder Scott Cook to launch a new software company called Intuit, was turned down by that many venture capital investors before it was founded.” Timmons (2004) Brace yourself II Schultz of Starbucks pitched the idea to 242 investors, 200 turned him down. Brace yourself III “We get so many inquiries that we simply have to say no to a lot of proposals. Often, the people are surprised and distressed that we won’t even see them for an interview. I guess we only invite some 10 per cent of all entrepreneurs for an interview, and by the end of the day only 1 out of 50 may get funded.” Leif Gunnerhell, Roslagens Affärsänglar The “success rate” of business plans “The survival rate of the typical business idea is very small: for every 100 ideas presented to investors in the form of a business plan or proposal of some kind, only between one and three usually get funded.” Bragg & Bragg (2005)