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Businesses today must put forth sustainable VALUE propositions and establish a roadmap for achieving sound objectives.
Regardless of where we are in the inevitable business cycle, this much is true: To effectively build an organization, you need a clear vision as to where you want to go and a solid business plan that gets you there. Successful entrepreneurs create visions of the future , which inspires others to get involved in the venture. VISION is what they call it when others cant see what you see. Entrepreneurs are those with a distinct VISION or KEEN INSIGHT to an opportunity and drive it to its endpoint.
Vision
Sound management
Today, Sound management is when both the Board and the Management team set milestones for the company and often review progress against those goals. Knowing that you are on the right track is important; realizing that you may be wrong one is crucial.
Knowing what to do, and in what sequence is critical, especially since the entrepreneur has very limited time and resources. Starting companies is much like a rocket: If youre just a fraction of degree off, you could end up a thousand miles off course downrange.
Entrepreneurial Discipline
Discipline is the act of encouraging a desired pattern of behavior. Discipline procures success to the weak, esteem to all. Entrepreneurial Discipline is the orderly conduct that holds a new business venture all together.
ENTREPRENEURIAL MANAGEMENT
How does entrepreneurial management and practices differ from the management practices we know in the corporate world? Entrepreneurial knowledge is concepts, skills, and mindset that individual business owners MUST employ in the process of starting and operating high-growth-potential ventures.
Significant difference
Entrepreneurs are directly involved in the dynamic, and very complex , interrelationship between financial management and business strategy. This is the significant difference that sets entrepreneurial management apart from all business management practices. Entrepreneurial management is the practice of taking entrepreneurial knowledge and utilizing it for increasing the effectiveness of new business venturing.
Management Issues
What is this venture about? (Mission and value statement) Where should it go? (Goals and objectives) How will it get there? (Growth strategy) What does it need to get there? (People and Resources) What structure is best? (Organizational capabilities) How much money does it need and when? (Financial strategy)
Opportunity Recognition
It is important to research and understand the dimensions of the opportunity, the concepts itself, and determine how to decide whether it is attractive or unattractive. The individuals need to look internally and see if they are truly ready for entrepreneurship.
Opportunity Focusing
This is a sanity check a go/no go gate because it fleshes out shaky ideas and exposes gaping holes. The first phase of a company should be narrowly defined incorporating objective, outside viewpoints because different people can investigate the same opportunity and come to opposite conclusions.
Commitment of Resources
This stage starts with developing the BUSINESS PLAN to correctly allocate resources. BUSINESS PLAN shows how youll run your business. Without a plan, you dont know where youre going, and you cant measure your progress. Most entrepreneurs see commitment as incorporating their business or quitting their day job.
Plans are nothing. Planning is everything. Planning is a great exercise to help you think through all the business aspects and forces you to know your business. If youre starting a company, you must have a BUSINESS PLAN. If nothing else, its an educational exercise to learn what youll need to develop your business. It is very hard to have a dialog about financing without a well-conceived and well presented BUSINESS PLAN. Without a convincing BUSINESS PLAN, no one will seriously consider your business idea.
Plan
VALUE DRIVERS.
Business planning is the process of uncovering and identifying what creates and drives value in your business; the business plan is the document that communicates your VALUE DRIVERS.
INCREMENTAL VALUE
The first opportunity to create INCREMENTAL VALUE is through selling. Entrepreneurship is about selling your ideas, your mind, your labor, your skills, and your teams. The business plan will help you to develop immediate sales momentum or what we call traction.
Venture Drill
The venture drill is the formal process that all the entrepreneurs must address when raising money from outside investors. Refer slide No.3 The three steps to the venture drill are packaging, placing and presenting.(3Ps) Packaging is researching and writing an effective business plan. Placing is skillfully introducing the opportunity before the best investors. Presenting is communicating and making the deal in a formal meeting.
Business Plan
Your business plan acts as a reflection of you, showing that you have really thought things through. Writing a business plan forces you into disciplined thinking if you do an intellectually honest job. The overall business planning effort is based on the degree of uncertainty, the degree of complexity, and the potential threat from competitors.
STORY TELLING
The first step to writing a business plan is fleshing out your talking points and weaving them into a storyline. STORY TELLING is having the ability to communicate succinctly and precisely what you do, what you want to do, and what you need to do it. Crafting an excellent business plan is a very arduous task that involves hundreds of fully committed heads-down hours, so squeezing that amount of time into evenings and weekends and seemingly endless periods of researching, drafting, discussion, writing, and rewriting.
Executive Summary
Step:4 Drafting an Executive Summary From the storyboards efforts, write a threeto five- page summary, segmenting the slides into ten value drivers. Write a few talking points for each slide, adding some content to make complete sentences, and review for spelling errors. Discuss it with your partners, close friends, and your advisors.
Flight Testing
Step:5 Flight Test your Executive Summary with outside trusted individuals. Consider your banker, past business associate, non-profit trade organization, and business professors at the local universities. Too many entrepreneurs delude themselves because, they want so much to believe in their ideas that they listen only to what they want to hear and see only what they want to see.
Step:6 Focused writing and editing: You will be need to be narrowing down your strategic options, alternatives, and begin working on the precise language and wording. Step:7 Revising, More Flight Testing, reworking: The step involves the details: Proofreading, spelling errors, punctuation, and grammar.
The entrepreneur does not just invent things, but also exploits in novel ways what has already been invented. Five types of entrepreneurial activity: New product innovation or the introduction of new service. New process innovation or new methods of production. Market innovation or the opening of new markets. Input or resources innovation. Organizational innovation.
Creative destruction
Each venture needs to have in place the systems and management processes necessary not only to identify the risks associated with the business activities, but also to effectively measure, monitor, and control them. Identifying and being able to openly discuss the risks inherent in your venture is very key. Developing an effective strategy for dealing with the risks and uncertainty includes three key components: The business plan, Entrepreneurial knowledge and Entrepreneurial management.
Knot of uncertainty
Market Risk: How are the dynamics of this industry sector? Is there going to be room for growth in this market? What about the risks of other competitors? Technical Risk: Does the product work? What about some technology coming along in the future that will make this product /technology worthless. Strategic Risk: Is there a sustainable competitive advantage? Is there a right operations strategy with viable business model?
Entrepreneurs launching today must find ways to build revenue and be more capital- efficient than in the past. Pl. refer slide No.24 Even large corporations must batten down the hatches and watch each rupee more carefully.
4. Informal Dialogue, whereby additional details are requested from the entrepreneur through email and phone calls. If there is significant interest, the entrepreneur and team will be invited to present before the firms investment professionals. 5. Initial pre-screening meeting, much like an interview process, provides opportunity for the interested partners to be introduced to the entrepreneur and team and see them in action with the presentation. They discuss the next steps in the funding process, and how the firm can assist the entrepreneur and team.
6. Informal Due Diligence, a step for pre-investment analysis, typically it can be conducted in about a week but sometimes takes as much as three weeks. The investment committee, which is made up of all the partners in the firm, reviews and discusses the due diligence that has been conducted up to that point. 7. Formal Presentation, if a decision is made to continue, they will ask the entrepreneur to formally present before senor partners. After the presentation, the investment committee would then make a decision whether or not to make an offer for investment.
8. Investment decision, during the initial phase of either the informal and/or formal due diligence, the investors will present and finalize details of a Term Sheet. The Term Sheet will outline the general attributes of the relationship between the entrepreneur and the VC team. 9. Formal due diligence, a full firm-wise effort is applied to the in-depth investment review process. Generally, one of the partners will take the lead in this extensive analysis. This process includes additional reference checks of the entrepreneur and team, dialogue with industry and customer references, and interviews with independent subject matter experts.
10. Closing documents, a collaborative effort between the attorneys of the venture firm and the entrepreneur that will define the legal framework relationship between the venture and the investors. 11. Investment, provided that all reach an agreement, the VC then provides the funding and the two parties begin working together and creating sustainable value.
Types of Entrepreneurs
Seven types of Entrepreneurs:
1. Small business, Life style, and Family Entrepreneurs. Retailing is one of the few sectors where entrepreneurial activity is extensive. 2. Franchise Entrepreneurs: Franchising is where a franchiser is offering franchisee exclusive rights in return for their payment of royalties and conformance to standardized operating procedures. Franchising represents a great opportunity for entrepreneurs. An entrepreneur buying into franchise increases the odds for survival to as much as 90 percent over starting up independently.