Transcript Business Idea Screening and Business Plans

SIFE Lakehead 2009
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Characteristics of successful entrepreneurs
Ethics and entrepreneurship
Purposeful innovation
Road map from idea to commercialization
Ideas vs. Opportunities
Generating Ideas
What to Do when momentum is lost
Idea Generating Activity
Screening Ideas for opportunities
Passion for the
Business
Product/customer
focus
The Successful
Entrepreneur
Tenacity Despite
Failure
Execution
Intelligence
Bill Gates, Melinda Gates, and Warren Buffet at a press conference on Monday in New York.
Buffet recently announced his intention to give roughly $31 billion to the Gates Foundation.
(AP Photo)
Measures of success
Bill Gates and Warren Buffett want their charitable billions to be spent wisely. So how is the
effectiveness of philanthropic aid actually measured?
By Drake Bennett | July 2, 2006
When it was announced that Warren Buffett had pledged roughly $31 billion-the majority of
his fortune-to the Bill & Melinda Gates Foundation, the fact that the world's second-richest
man had entrusted his philanthropic legacy to an existing foundation instead of starting one
under his own name only added to the public acclaim. But Buffett said he was simply
following what has always been one of his tenets: investing in companies whose managers
he trusted, and letting them run the business. ``I've got some people who I say can give it
away better than I can," he said of the Gateses on Monday.
Corporate Philanthropy
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IDEO
3M
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Ideas – opportunities – feasibility – business
plan – implementation – evaluation –
modification - management
Ideas
Opportunities
Feasibility Screening
(Proof of concept followed by
Financial viability screening)
Business Plan
Implementation
(financing, resourcing)
Evaluation
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Brainstorming New
Product Innovations
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Screening Those Ideas
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Business Plan
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Implementation
Creative / Soft-Thinking (Right
Brain)
- brainstorm new product innovations
Logical / Hard-Thinking (Left
Brain)
- formal business planning (opportunity
screening, market forecasts, financial
forecasts)
Identifying Viable Business Opportunities
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Are a ‘dime a dozen’
Don’t fall in love with your own idea
Don’t hide it under a tarp in the back yard
Look before you leap (critically evaluate the potential
for the business before starting)
You have to screen from 100 to 1,000 different ideas
before you find a true opportunity that fits you in this
place and at this time.
◦ Avoid the service industry in a declining economy
◦ Avoid the retail industry in a declining economy
◦ Seek value-added, export-oriented businesses selling
into growing markets
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Ideas are “a dime a dozen”
Opportunities are business ideas that offer
the potential for a return on invested capital
that more than offsets the costs of that
capital on a risk-adjusted basis.
Ideas
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Harvest heavy metal
contaminants out of
river bottoms using
plants
Opportunities
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Sell pollution solution
technologies to
companies under
environmental cleanup
orders.
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A motivated and large market of customers prepared
to pay any price for the product or service you offer
Repeated purchases are necessary for customers to
satisfy their demand
Significant barriers of entry for any potential
competitors preserving your market dominance for a
long period of time
Little or no capital investment required
High profit margin (Selling price less cost to produce)
Few employees and little demand on your time
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Few customers, no repeat purchases, sporadic and
unpredictable demand
few barriers of entry for any potential competitors
making it easy for anyone to enter the market to
compete with you if you manage to develop the
market
Large initial and on-going capital investment
required
Low profit margin per unit (Selling price less cost to
produce)
HARD – Linear
critical - logical
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Logic
Reason
Precision
Consistency
Work
Exact
Reality
Direct
Focused
Analysis
Specifics
Adult
SOFT – often circular
Non-judgmental - illogical
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Metaphor
Dream
Humour
Ambiguity
Play
Approximate
Fantasy
Paradox
Diffuse
Hunch
Generalization
Child
Left-Mode
(Hard-thinking)
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Verbal
Analytic
Symbolic
Abstract
Temporal
Rational
Digital
Logical
Linear
Right-Mode
(Soft-thinking)
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Nonverbal
Synthetic
Concrete
Analogic
Nontemporal
Nonrational
Spatial
Intuitive
Holistic
Source: Betty Edwards, “Drawing on the Right Side of the Brain”
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Focus on the right answer
That’s not logical
Follow the rules
Be practical
Avoid ambiguity
To err is wrong
Play is frivolous
That’s not my area
Don’t be foolish
I’m not creative
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Techniques include:
 Group brainstorming/lateral thinking exercises
 Research – observation, enquiry, play, prototype,
experiment
 Focus groups
 Surveys
 Analysis of and reflection on trends:
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Economy
Society – social trends
Technology
Science
Political and regulatory changes
There is opportunity in change, chaos, complacency and even boredom.
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Opportunities are spawned in
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changing circumstances
chaos
confusion
inconsistencies
lags or leads
knowledge and information gaps
vacuums in industry or markets
Look for opportunities in the following:
 things that ‘bug’ you
 things that bother others or stop people from doing what
they want, when they want, and the price they want
 new advances in science and technology
 Solutions in one field being applied to another field
 look for problems that need to be solved
 changes in our world whether those changes be in:
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demography
society
technology
science
politics
etc.
When brainstorming, start to combine ideas. Use
each as stepping stone to something else. Don’t be
afraid to experiment.
Example:
Two ideas: pealing paint and gun powder
----I hate scraping old paint off the exterior of my house…..I wish
sometimes that I could blast it off!!! (Of course, that would destroy the
house….but…)
- maybe there is an additive that could be put in the paint before it is
applied, that would allow us to trigger it’s easy removal.
Simile often give us ideas or insights that logical thinking cannot.
Fibre is like glue.
Different simile will give you a whole new perspective on what it is that you are
examining.
Fibre is like a sieve.
Fibre is like gossamer.
Use the insight provided by different simile to look for ideas!
Example: Dolby is like a sonic laundry. It washes out all the noise or dirt from the sound without hurting
the sound.
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Use “What if” Questions
Play with the idea
Challenge the rules associated with the problem
Be a magician
Be a child
Be ambiguous…and look for the possibilities
(geeh…that pen is a pen, but it could be a pointer, a digging implement or
even a weapon or projectile)
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Go “hunting” for ideas from other fields…ideas that
could be creatively applied to your field of interest.
(Like Guttenberg who used the coin punch and wine press ideas to invent the
printing press.)
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At the edges of human experience: (at extremes)
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when
when
when
when
when
when
you
you
you
you
you
you
are
are
are
are
are
are
tired
at rest
pressed by a deadline or are stressed
playing
on vacation
exercising
Usually NOT when you are doing routine things!!!!
Try doing something differently…live your day
backwards…break the routine!
Necessity is the Mother of Invention…but play must be the Father!
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Requires creative thinking (soft-thinking)
Here are some suggestions to improve the
brainstorming process:
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Choose a facilitator
Small groups work better than large.
Freewheeling is encouraged – the wilder the idea the better.
Brainstorm spontaneously, copiously
No criticism, no negatives
6. Quantity – the greater the number of ideas, the greater the
likelihood of finding useful ones.
7. Record ideas in full view
8. Invent to the “void”
9. Resist becoming committed to one idea
10. Combinations and improvements are encouraged – ideas of
others can be used to produce still other new ideas.
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Identify the most promising ideas
Refine and prioritize
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Like brainstorming EXCEPT criticism is
allowed.
Ask the question:
“In how many ways can this idea fail?”
◦ After you have identified everything wrong about an
idea, you discuss ways to overcome these
problems.
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Written form of brainstorming.
(Bernd Rohrbach –
Method 635)
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Use 5 minute intervals.
Works best with 6 member groups.
◦ Each group member writes three ideas on small
card in each 5 minute period.
◦ The card is passed to the next adjacent person –
who writes down three new ideas on the same card
– who passes it to the next person…until each form
has passed all participants.
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Produce a list of problems with natural fibre.
Identify and discuss products in each category that have the
particular problem.
Example using food:
◦ Psychological:
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Weight – fattening – empty calories
Hunger – filling – still hungry after eating
Thirst – does not quench – makes one thirsty
Health – indigestion – bad for teeth – keeps one awake - acidity
◦ Sensory:
 Taste – bitter – bland – salty - sweet
 Appearance – colour – unappetizing - shape
 Consistency/Texture – tough – dry – greasy
◦ Activities
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Meal Planning - forget – get tired of it
Storage – run out – package would not fit
Preparation – too much trouble – too many pots – never turns out
Cooking – burns - sticks
Cleaning – makes a mess in oven
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Example using food….continued:
◦ Buying Usage:
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Portability – eat away from home – take lunch
Portions – not enough in package – creates leftovers
Availability – out of season – not in supermarket
Spoilage – get mouldy – gets sour
Cost – expensive – takes expensive ingredients
◦ Psychological/Social
 Serve to company – would not serve to guests – too much
last minute preparation
 Eating alone – too much effort to cook for oneself
 Self-image – made by a lazy cook – not served by a good
mother
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Developing a new idea through a list of related
issues:
◦ Put to other uses? New ways to use as is? Other uses if
modified?
◦ Adapt? What else is like this? What other ideas does this
suggest? Does past offer parallel? What could I copy?
Whom could I emulate?
◦ Modify? New twist? Change meaning, colour, motion,
odour, form, shape? Other changes?
◦ Magnify? What to add? More time? Greater frequency?
Stronger? Larger? Thicker? Extra Value? Plus ingredient?
Duplicate? Multiply? Exaggerate?
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Developing a new idea through a list of
related issues:
◦ Minify? What substitute? Smaller? Condensed?
Minature? Lower? Shorter? Lighter? Omit?
Streamline? Split up? Understated?
◦ Substitute? Who else instead? What else instead?
Other ingredient? Other material? Other process?
Other power? Other place? Other approach? Other
tone of voice?
◦ Rearrange? Interchange components? Other
pattern? Other layout? Other sequence? Transpose
cause and effect? Change pact? Change schedule?
◦ Reverse
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Developing a new idea through a list of
related issues:
◦ Reverse? Transpose postive and negative? How
about opposites? Turn it backward? Turn it upside
down? Reverse roles? Change shoes? Turn tables?
Turn other cheek?
◦ Combine? How about a blend, an alloy, an
assortment, an ensemble? Combine units?
Combine purposes? Combine appeals? Combine
ideas?
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Developing a new idea through a chain of
word associations.
◦ A word or phrase is written down – then another
and another
◦ Each new word attempting to add something new to
the ongoing thought process
◦ Thereby creating a chain of ideas ending with a new
product idea emerging.
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Developing a new idea by looking at
product combinations.
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Isolate the elements of the problem
Find the relationships between these elements
Record the relationships in an orderly form
Analyze the resulting relationships to find ideas or
patterns
5. Develop new ideas from these patterns.
Relationship/
Combination
Elements- Paper/Soap
Idea/Pattern
Adjective
Papery soap
Soapy paper
Flakes
Wash and dry travel aid
Noun
Paper soaps
Tough paper impregnated with soap
and usable for washing surfaces
Verb-correlates
Soaped papers
Soap “wets” paper
Soap “cleans” paper
Booklets of soap leaves
In coating and impregnation processes
Suggests wallpaper cleaner
Forms
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Developing a new idea by group members
regularly recording ideas.
◦ Use a small notebook that fits into a pocket:
 Record – statement of the problem, blank pages and
any pertinent background data.
 Each group member write their own personal ideas
three times each day.
 Give to group leader at the end of the day
 Group leader summarizes all material
 Final creative focus group discussion with all
participants.
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Developing a new idea by looking at the
positives and negatives.
◦ List the attributes of an item or problem
◦ Look at each attribute from a variety of viewpoints
◦ Originally unrelated objects can be brought
together to form a new combination and possible
new uses that better satisfy a need.
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Developing a new idea by thinking without
constraints.
◦ Dream (imagine) about the problem and its solution
(think big)
◦ Every possibility should be recorded and
investigated without regard to the negatives
involved or resources required.
◦ Ideas should be conceptualized without any
constraints until an idea is developed into a
workable form.
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Developing an idea by focusing on parameter
identification and creative synthesis.
1. Parameter identification
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Analyze variables in the situation to determine their relative
importance
Important variables are the focus and others set aside
2. Creative synthesis
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Relationships between parameters that describe the
underlying issues are examined.
Through evaluation of the parameters and relationships, one or
more solutions are developed; this solution development is
called creative synthesis.
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Immerse yourself in the topic
Brain dump
Develop a number system
Have fun!
Change your location
Use a different technique
Take a short break and do something
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If you are developing ideas about fibre:
◦ Grab as much fibre as you can
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Touch it
Smell it
Put it together in weird combinations
Talk to people who produce, use, modify fibre
Explore use of fibre in all aspects of human, animal, geologic
life
Talk to people who use fibre
Talk to people who convert fibre
Talk to people who hate fibre
Talk to textile experts – filter experts – basket weaving
experts – art teachers – artists – engineers - contractors
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Each person has to write as many ideas as they can
on one filing card.
Cards are thrown into a hat
Cards are pulled out one at a time.
Group members then have to argue why the idea is
great.
The key is to generate as many ideas as possible.
Eventually the group can vote on the ideas they liked the most.
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Identify six possible target markets for an application of fibre:
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General public
Boat manufacturers
Chemical manufacturers
Fishers
Aerospace
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Coarse/soft
Conductive
Tensile strength
Elasticity
Develop a list of possible features.
The group then has to develop as many ideas as possible using the
ingredients and the target market.
Repeat!
Learning from Nature
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Universe
Galaxy
Solar System
Planet
Star/sun
Earth
Water
Minerals
Fire
Flora
Fauna
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Insect use of fibre
Plant use of fibre
Invertebrate use of fibre
Animal use of fibre
Birds
Mammals
Reptile
Fish
Saprophitic use of fibre
Out of 100 ideas or more, there may be only one or two real
opportunities.
Superior business ideas that have the potential to become
opportunities have 4 anchors:
1. They create or add significant value to a customer or end
user.
2. They do so by solving a significant problem, or meeting a
significant want or need, for which someone is willing to
pay a premium.
3. They therefore have a robust market, profit margin, and
moneymaking characteristics.
4. They are a good fit with the founder(s) and management
team at the time and in the marketplace with a
risk/reward balance.
 Technical feasibility
 Requires no initial investment
 Has a recognized, measurable
market
 A perceived need for the product or
service is present
 A dependable source of supply for
the required inputs is available
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No government regulation
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Requires no labour force
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Provides 100 percent gross
margin
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Buyers purchase frequently
Receives favourable tax
treatment
Has a receptive, established
distribution system
Has great publicity value
Customers pay in advance
No risk of product liability
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Purposes:
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fully examine the potential of an opportunity
identify key success factors
identify critical risk factors
guide the entrepreneur in start-up
raise capital
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Involve all of the
management team in its
preparation
make the plan logical,
comprehensive and
readable - and short as
possible
demonstrate commitment
identify critical risks and
assumptions
disclose and discuss any
current or potential
problems in the venture
identify several alternative
sources of financing.
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Spell out the proposed deal
and how investors will win.
Be creative in gaining the
interest of potential
investors.
Remember the plan is not
the business.
Know your targeted investor
group.
Let realistic market and
sales projections drive the
assumptions underlying the
financial forecasts, rather
than the reverse.
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Don’t have unnamed,
mysterious people on the
management team.
Don’t make ambiguous,
vague or unsubstantiated
statements such as
estimating sales on the
basis of what the team
would like to produce.
Don’t describe technical
products using jargon that
only an expert can
understand.
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Don’t spend money on
developing fancy brochures,
or other ‘sizzle’ - instead,
show the “steak”
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complete
short
integrated
prepared for the audience
organized