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Entr. Opp. Rec.
Terms in this set (14)
good entrepreneurial ideas tend to come from the following
1. opportunities created by macro-trends
2. opportunities found by living and experiencing the customer's problems
3. opportunities created through scientific research
4. opportunities proven elsewhere that you can transform and adapt for the local context of where you hope to do business
3 steps before writing a business plan
1. come up with an idea that you think might fly, one that solves genuine customer problems or needs
2. asses and shape your idea using the 7 domains framework
3. write a customer-driven feasibility study - a memo to yourself- that lays out the conclusions you've reached from your data and analysis
4 common flaws in business plans that fail to raise capital
1. the opportunity is fundamentally flawed
2. the persuasive nature of business plans, with its main purpose often being to raise money, forced their proponent entrepreneurs into the "everything about my opportunity is wonderful" mode
3. most business plans are focused on the entrepreneur(s), idea, and why the idea is wonderful. They are "me focused" and "my-idea focused," rather than "customer focused"
4. there is an abundance of uncertainty in most entrepreneurial opportunities even after you have put time and effort into a rigorous 7 domains analysis. And that uncertainty may be too high to attract investors during early stages of development, before the business has developed any track record of potential and/or success.
5 common traps
1. the large market fallacy
2. the better mousetrap fallacy
3. the no sustainable business model trap
4. the me too trap
5. the hubris trap
2 domains that can be deal breakers
1. micro-market: target segment benefits and attractiveness
2. team domain: ability to execute on CSFs
to help identify your industries CSFs, it may be helpful to ask the following 2 questions
1. which few activities are the ones that, if gone wrong, will always have severely negative effects on company performance?
2. which decisions or activities, done right, will almost always deliver disproportionately positive effects on performance?
with respect to determine what level of risk that you are willing to bear. Some important questions to consider are...
1. will you risk losing control of your business?
2. will you put your own money at risk? and if so, how much?
3. will you risk a secure salary and the things that go along with your current employment, if so, for how long?
4. will you risk your home or time with your family and loved ones?
5. do those you love accept the risk you plan to take?
there are 3 things that founders need to consider
1. how big they want the business to become in terms of sales, profits, number of employees, number of locations, and so forth
2. what role they want in the organization, in terms of wanting to be a leader or manager
3. how long do they want to remain involved in the organization
3 key elements that drive an entrepreneur's dream
1. a mission that determines what kind of business to build or what kinds of markets to serve
2. a set of personal aspirations that guides the level of achievement to be sought
3. some level of risk propensity that indicates what sort of risks are to be taken and what kind of sacrifices are to be made in pursuit of the dream
to determine if a company is economically viable, the following questions should be considered
1. will revenue be adequate in relation to capital investment required?
2. how much will it cost to attract and maintain customers?
3. are gross margins sufficient to cover the necessary cost structure
4. are operating cash cycles favorable?
how do firms develop a sustainable competitive advantage
1. intellectual property- proprietary elements such as patents and trade secrets
2. superior organizational processes, capabilities, or resource that are difficult for other to duplicate or imitate
3. an economically viable business model, in that the company will not run out of cash quickly
porter's five forces (five macro level factors)
1. competitive rivalry
2. buyer power
3. supplier power
4. threat of entry
5. threat of substitutes
macro level trends are critical for determining the long term growth potential of your business. There are 3 important questions that you should ask yourself
1. is the market large enough to allow many competitors the opportunity to serve different segments without getting in each other's way
2. what are the predictions for your market's short term growth rate
3. what are the predictions for your market's long term growth rate
3 ways to define a market segment
1. who the customer are (gender, education)
2. where the customers are (geographic location)
3. how your your customers behave (what are their habits? are the health conscious? are they athletes or couch potatoes?)
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