What to Run Before Your Business Plan Course What to Run Before Your Business Plan Course
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Transcript of What to Run Before Your Business Plan Course What to Run Before Your Business Plan Course
1© John Mullins 2006
What to Run Before Your Business Plan Course
John W. MullinsLondon Business School
2© John Mullins 2006
What’s Terrific About Your Business Plan Course?
• Pulls things together • Applies theory learned in the core• Gets students engaged: work on
their own ideas• Learning by doing
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What’s Not So Good About Your Business Plan Course?
• A “sales” mindset: no critical thinking • Puts them in a difficult position vs.
judges• Some students disengage if the idea
is not theirs• Most plans are pretty bad! Why?
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One Solution: Opportunity Assessment
Course• Course project: a feasibility study
for an opportunity they choose• No confirmation bias: “go” or “no-
go” are both OK• No embarrassment with judges• Brings together strategy, marketing,
OB• Jump-starts the business planning
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Motivated by Warren Buffett…
“When a business with a reputation for poor
fundamentals meets a management team with
a reputation for brilliance…
it’s the reputation of the former that remains
intact.”
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ProCom
• Bootstrapped the business with money from 3Fs to prove the model
• Raised $4 million from GE Capital when e-learning was all the rage
• Have treaded water since, no exit, but still around: the “living dead”
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Oxiden
• Raised £5 million from 3i• Took two years to get product to
market• Then, a very lengthy sales cycle
followed• There was another solution…• Died after 4 years
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Darian Holdings
• Raised small amount of angel money
• An opportunity arose to buy a competitor at a very attractive price
• Having considerable success
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Glencoren
• Turned down by several investors, but did eventually raise a small amount for proof of concept
• Now trying to raise the next round• A very long lead time play –
changing surgeons’ behavior takes a long time
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Research Question
How can entrepreneurs (and investors, too?) best assess
market opportunities?
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Point of Confusion #1: The Market / Industry
Distinction
• What’s a market?• What’s an industry?• These are frequently confused!
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The Seven Domains of Attractive Opportunities Market Domains Industry Domains
Market Attractiveness Industry Attractiveness
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Point of Confusion #2:The Macro / Micro
Distinction
• Large and growing markets are important, but…
• Structurally attractive industries (in a five forces sense) are also important, but…
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The Seven Domains of Attractive Opportunities
Macro Level
Micro Level
Market Domains Industry Domains
Market Attractiveness
Target Segment Benefits and Attractiveness
Industry Attractiveness
Sustainable Advantage
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Point of Confusion #3:What’s Crucial about
Entrepreneurs and Their Teams…
• It’s not found on their CVs• Not simply about “chemistry” or
“character” or “entrepreneurial drive”
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The Seven Domains of Attractive Opportunities
Macro Level
Micro Level
Market Domains Industry Domains
Mission, Ability toAspirations, Execute Propensity on CSFsfor Risk
Connectedness up and down Value Chain
Team Domains
Market Attractiveness
Target Segment Benefits and Attractiveness
Industry Attractiveness
Sustainable Advantage
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In Summary, for the Seven Domains…
• Scores are not additive: summing the scores across the seven domains is meaningless
• Strong scores at the micro level can mitigate poor macro-level scores
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What to Do Before (Or in?) Your Business Plan Course? • The seven domains
– Identify key weaknesses• Questions to be answered
– Suggest avenues for reshaping the opportunity if not mitigated by other domains
– Identify key strengths• Crucial in telling your story to resource
providers
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Remember Warren Buffett’s Words
“When a business with a reputation for poor
fundamentals meets a management team with a
reputation for brilliance, it’s the reputation of the former
that remains intact.”