Entrepreneurship Notes

What is a business plan? Plan for the creation and management of the business with special attention to - marketing plan describing match of products and strategy to current and future markets. Operations plan assessing all revenues, costs, and financial requirements and sources. Business plan format generally includes: (Suggested format from US Small Business Administration) 1. Executive Summary 2. Company Description 3. Market Analysis 4. Organization and Management 5. Marketing and Sales 6. Service or Product Line 7. Funding Request 8. Financials 9. Appendix Pricing Pricing requires understanding current and future customer & competitor desires & plans. Customer oriented pricing considerations are critical to setting prices throughout the product lifecycle; starting at the R&D stage. Pricing strategies require constant evaluation & refinement as the market reacts & evolves. This blog post is based on my learnings from the course on ‘entrepreneurship’ offered b...

A business model describes the rationale of how an organization creates, delivers, and captures value. Types of business models: 1. Sell a product: well defined, easy to scope and price, produce inventory with hope for sales 2. Sell a service: low startup costs, flexible to customer needs, tough to price 3. Sell a subscription: customer pay regularly, recurring fees and may receive regular product upgrades 4. License a technology: involve lower risk and lower reward 5. Advertising: works best when volume of users/viewers is large 6. Hybrids: sell products & offer services together This blog post is based on my learnings from the course on ‘entrepreneurship’ offered by Maryland Technology Enterprise Institute, University of Maryland through Coursera (2014).

Please read the business plan of Ruby Cup. What do you feel are its strengths? What do you perceive as its weaknesses? My answer: The Ruby Cup team prepared their business plan which had some weaknesses and strengths, but they learned a lot and corrected themselves along the way to take their plan from paper to practice. And, they seem to be successful so far. According to me, following were the strengths and weaknesses in their business plan: Strengths: 1. Dual market approach - Targeting low-income and high-income markets with different strategies. 2. Donations - They decided not to donate their cups in order to protect their brand and so that women don't feel that it is 'poor people' product. 3. They considered Prahalad's Bottom of Pyramid Theory. Weaknesses: 1. The team did not consider challenges that they might have to face like Kenyan bureaucracy etc. 2. It might have been more beneficial for them if they had considered working separately on different aspects of ...

Julie and Veronica, RubyCup co-founders Kai Hockerts, Professor, Copenhagen Business School Ruby Cup is on a mission to provide a sustainable and healthy menstrual hygiene solution to women and girls worldwide. What do RubyCup co-founders, Julie and Veronica, think of business plan writing process? 1. It helps in shaping the thoughts around the idea. 2. Provides means for communication with others. 3. It allows the team to know if there business is really viable. Kai Hockerts on RubyCup business plan: Strengths of the business plan: 1. Clearly identifies an uptapped market at the base of the pyramid 2. Social impact is convincing and strongly portrayed as potentially huge 3. Use of enganging story telling transports the enthusiasm of the founders Weaknesses of the business plan: 1. No clear information how the capital raised would be used. 2. Financial data generally comes late and is vague. Not very detailed and gives not much confidence on financial side of the plan. 3. Marketing pla...

Sudhanshu Rai, Professor, Copenhagen Business School Kristjan Jespersen, PhD Fellow, Copenhagen Business School A good business plan reflects upon four different and distinct points: aspirations, leadership, integration and society. These are components and ideas that a business creator, an entrepreneur has to sit down and think about. 1. Aspirations: Aspirations need to be clarified before you start writing your business plan. Where do you want to be in six months, fives years or one year? If an entrepreneur has ambiguity about this aspirational question, that ambiguity will translate into the business plan. 2. Leadership: Your leadership style needs to become visible in the business plan. The organization that you build is very much derived - it derives its energy from the creator of the organization. So, your style, your philosophy of leadership, your belief in a leadership, has to be very aligned to the organization you create. 3. Ability to integrate: Integration describes what re...

Ted Ladd, Professor, Social and Internet Entrepreneurship, Hult International Business School Professor Ted suggests that one should not write the business plan too early. Outline and test different pieces of the business model. You need to have valid, validated business model. A good business plan has four projection sections: 1. Financial: Revenue and costs 2. Staffing: Who is going to be there on your team? 3. Marketing: How are you going to reach your customer? 4. Operations: How are you going to actually produce the goods or the services and get it to the customers? These four projections are interlinked with each other. Have a baseline for each section, that is, what you think is going to happen if everything goes well - the best case scenario. Also, have a dream scenario for when everything goes so well and worst case scenario when everything is going down. If it gets worse than worse case scenario, you should have self discipline to stop or mindset to change, make major cha...

Kai Hockerts, Professor, Copenhagen Business School Financial projections are a key part of a business plan. You want to build a long-term projection that might run over the next five years. However, the key element is actually the next 12 to 24 months.Tell us what you expect, how your company will develop. Anything beyond that is highly uncertain, and only gives us an idea of what your plans for the future are. Therefore, it is important that you look at different scenarios, different options for the future. It is crucial that when you provide financials, you don't just give us overall turnover numbers. You need to provide the single unit economics. What is your variable cost? How many numbers of products are you planning to sell? If you have different products and services, tell us which ones are going to make up what part of your turnover. This blog post is based on my learnings from the course on ‘social entrepreneurship’ offered by Copenhagen Business School through Coursera (...

Kai Hockerts, Professor, Copenhagen Business School There are three areas that your business plan will have to cover: 1. How large is the market? How many beneficiaries are out there who you want to help with your social enterprise. How many of those can actually be reached, and how many of those are going to be reached by you? 2. Why you? Who is on the management team? What is your secret ingredient? You will have to address barriers to entry, competitive advantages, a long-term outlook, your path to profitability, when you expect to break even, your exit strategy. 3. An analysis of your competitors: Who are they? Non-profit organizations, charities or for-profit companies selling same services. How you differentiate yourself from these - different technologies & cost structures that allow you to be competitive in this market. Three typical problems in the business plans: 1. The biggest issue is that one doesn't get it. The logic in the business plan is simply too difficult to...

Kai Hockerts, Professor, Copenhagen Business School The goal of a business plan: 1. To align your team members' expectations, visions and missions. 2. Provides an operational plan, which outlines which steps you will have to walk through on your way towards starting the social enterprise. 3. A way of communicating externally and internally what your organization is about. 4. A business plan is about attracting funding. 5. Might also be used for merger of your organization or acquisitions by a larger social enterprise. What do readers typically look for in a business plan? 1. How the founders link together. How detailed oriented the founders are? 2. How big is the market that this social enterprise wants to serve. Is there a sustainable competitive advantage for your social enterprise? 3. How you plan to grow and replicate your social enterprise. What does your road map look like for the years ahead? 4. Financial projections: a key part of a business plan. Other things to keep in mi...