APS 1015: Social Entrepreneurship
Class 10: Scaling Social Enterprise Wednesday, July 10, 2013
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Instructor: Norm Tasevski ([email protected]) Karim Harji ([email protected])
© Norm Tasevski & Karim Harji
Agenda
• Seizing the Scale Opportunity • Managing the Scale Opportunity • Break • Overview of Final Presentations
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Seizing the Scale Opportunity
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The “Scale Opportunity”
The point in time when you have a critical choice: grow substantially larger, stay purposely small, or quit
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The Entrepreneurial Life Cycle
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IDEA DEVELOPMENT PROOF OF CONCEPT START-UP SCALE REPLICATION EXIT
• Few/no critical decisions made about business model
• Pre-revenue (no product, no customers)
• Timing – typically a few months
• Preliminary business model identified, but may change quickly/fundamentally
• Pre-revenue (product to be validated, customers to be validated)
• Timing – typically <1 year
• First business model decided upon (but could still change)
• First revenues (first product launched, first customers ID’d)
• Timing – 1-2 years (or more)
• Business model solidifies (& new business opportunities emerge)
• Stable revenues (product established, mature understanding of customers)
• Timing – ongoing
• Business model in flux (minor/major changes made regularly)
• Revenues in flux (inconsistent) • Timing - ??? (varies)
The Scale Opportunity
© Norm Tasevski & Karim Harji
How Do You Know You’ve Reached the Scale Opportunity Point?
• Short answer: – You won’t know until you get there…
• Long answer: – You’ve overcome bumps in the road (imperfect product,
imperfect decision making, unstable cash flows)
– You have a track record behind you (satisfied customers, refined product offering, brand recognition in the market)
– Your strategy conversations change (from “how do we stabilize the business?” to “how do we grow the business?”)
– In some cases, an “outside force” emerges (a big funder/investor looking to invest substantially, another company wanting to partner/merge, etc.)
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Managing the Scale Opportunity
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There are Risks to Scaling…
• Scaling too quickly without the “fundamentals” in place – There is a desire to scale much sooner than the business is
ready – Fundamentals:
1. Systems (decision making, cash management, product development, production, etc.)
2. Financial resources (retained earnings, outside capital) 3. Human resources (the “right” people deployed
effectively) – The risk: implosion (i.e. get too big too quickly that the systems
can’t keep up) • Scaling without a proper read of the market
– You have a superficial/imperfect understanding of the market – The risk: financial ruin (i.e. the customers you were anticipating
don’t materialize)
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© Norm Tasevski & Karim Harji
Planning Around These Risks
• Plan Ahead – Conduct regular strategic planning – Be deliberate, not opportunistic (i.e. know when to say “no” to business opportunities)
• Stay Tuned into the Market – Do not assume you ever fully know who your customers are (constantly check in) – Question whether you are targeting the right customers
• Build the “Right” Systems – Construct a rigorous decision making system – Establish core business standards (e.g. documentation, policies and procedures for making
and following through on decisions) – Hire the right people to manage the scale effort (experienced entrepreneurs) – Construct a rigorous information system, and collect data (CRM, online info tracking tools,
etc.) • Stabilize your cash runway
– Begin investing profits into a reserve – Seek outside capital for specific purposes (e.g. use of funds targeted to growth objectives) – Create a rigorous budgeting and financial tracking system
• Welcome Change! – Complacency = threat – Be fully committed to your strategy, but flexible in your approach
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Your Presentations…
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© Norm Tasevski & Karim Harji
Presentation guidelines
• Due Dates – Investment Pitch: Midnight on Sunday, July 21st
• Format – PowerPoint deck
• Time Allotment – 12 min presentation (strict) – will give you 5 and 2 minute
warnings – 6 min Q&A
• Grading – To be done by Karim and Norm – Judges will inform me, but not assign your grades
• Feedback from Judges – Norm will email his and judges’ feedback shortly after the
class to integrate into angel investor pitch
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© Norm Tasevski & Karim Harji
Timing
• Arrive by 6:30pm!!
• Group order will be assigned on the Monday prior to the presentation
• At the end of the pitches, the judges will deliberate (for 10 minutes)
• Judges will then provide feedback to the entire class (and I will provide individual group feedback)
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© Norm Tasevski & Karim Harji
Advice for your presentations
• Focus on the key components of the business model, and highlight the key financial #s – Can you clearly explain how your business works? How it
makes money? How it generates social/environmental change?
• Comfortably stick to the time allotment – In your practice, aim to deliver your presentation in 10-11
minutes
• Anticipate the investor questions – If you were investing your own money into the business,
what would you care to know about the business model?
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© Norm Tasevski & Karim Harji
Contents for the Presentation…
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• Overview and mission • Management and
Advisors • Problem
– social issue being addressed
• Size of the problem – how big is the social issue
• Solution – Here’s how it works…
• Value proposition – Inc. social benefit
• Business model • Competitive advantage • Collaboration/
partnerships • Marketing and Sales • Financial projections • Financial requirements
© Norm Tasevski & Karim Harji
PowerPoint tips
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© Norm Tasevski & Karim Harji
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© Norm Tasevski & Karim Harji
An Example…
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