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Establishing an eBusiness CITM360 – Week 3

Establishing an eBusiness CITM360 – Week 3. Steven A. Gedeon, PhD, MBA, PEng s2gedeon@ryerson.ca. This Week’s Agenda. Elevator Pitches Business Plan Overview Market Analysis Market Lifecycle Crossing the Chasm Segmentation Porter’s 5 Forces Assignment #1 (for next week).

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Establishing an eBusiness CITM360 – Week 3

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  1. Establishing an eBusinessCITM360 – Week 3 Steven A. Gedeon, PhD, MBA, PEng s2gedeon@ryerson.ca CITM360 – Week 3

  2. This Week’s Agenda • Elevator Pitches • Business Plan Overview • Market Analysis • Market Lifecycle • Crossing the Chasm • Segmentation • Porter’s 5 Forces • Assignment #1 (for next week)

  3. Elevator Pitch Evaluations • Business Overview – Did it contain the major elements (product, customer, revenue, goals)? • Clarity – Was it easily understood? • Success – Is it a good idea? Do you think it will succeed? • Excitement – Are you interested in hearing more? Would you like to be involved? • Presentation Delivery • Overall Score (% out of 100)

  4. Business Plans • What is the Purpose of the Plan? • Raise Financing? • Clarity of Thought? • Operating Plan for Employees ? • Report to the Board? • Who is the Audience? • Angel, VC, Banker, IPO • Acquirer or Acquiree

  5. Business Plan Overview • Executive Summary • Mission, Goals & Objectives • The Business Opportunity (Big Picture) • Market Analysis • Key Success Factors (Strategy) • Marketing Plan • Processes and Technology Plan • Organizational Matters • Financial Plan • Concluding Comments • Appendices

  6. The Business Planning Process • Identify the Opportunity (Start with an Idea) • Marshal Scarce Resources (Skunkworks, Prototype) • Market Analysis (Gather Info, Meet with Customers) • Determine Key Success Factors • Articulate the Business Opportunity • Create Plans (Market, Technology, Org, Financial) • Articulate the Goals and Objectives • Create and Disseminate the Business Plan • Implement the Plan • Monitor and Revise the Plan

  7. Executive Summary • Must be a Stand Alone Document • Normally the First Thing you Send Out • Many People will Only Read This even if Attached to the Full Business Plan • Must Contain All the Essential Elements to Understand the Business and Stimulate Action (Accept a Followup Meeting or Ask for the Full Plan) • Normally Written Last

  8. Mission, Goals & Objectives • This Should Motivate the Reader or Don’t Bother • No “Motherhood/Apple Pie” Statements • Give an Overview of the Size of the Opportunity • Is this Business Capable of Hitting $100M/yr in Rev? • Are there Non-Financial Goals of the Business? • Financial Goals • E.g. break even in 6 mo? $2M within 2 years? • Exit Strategy • E.g. position ourselves to be acquired by Microsoft…

  9. The Business Opportunity (Big Picture) • This is Also a Motivational Opportunity • Need to Provide Crystal Clear Understanding of the Business before Delving into Potentially Confusing Market Information and Plans • All Info in the Plan must be Integrated with This Section • You may Need to Rewrite this Section Most Often as You Discover Info and Refine your Understanding of the Business The Better we can Define the Opportunity and Value Proposition, the More Likely we are to Capitalize on it

  10. Market Analysis • Focus on the Facts • Provide References and Recent Info • Focus on Detailed Understanding, not Just Broad Overviews • Nobody Ever Hits “1% of the Gazillion Dollar Market”! • Businesses are Built One Segment at a Time – Pick Good Ones and Understand them in Detail More Details on Market Analysis Later in Class

  11. Key Success Factors (Strategy) • Synthesis of the Data and Strategy • What are the Few Key Things we Must Do to Succeed? • What are the Few Key Things that Drive the Rest of the Plan? • What are the Biggest Hurdles that we must Address? This May be the Most Important Section

  12. Marketing Plan • Product • Core, Actual and Augmented • Detailed Description of how it addresses the Customer Need • Price • Revenue Model, Pricing Strategy (Penetration, Skimming…) • Place (Distribution Channels) • Promotion

  13. Processes and Technology Plan • This is Often in the Appendix (or a Separate Document) • May be more Important if the Company Depends on Patents and/or Intellectual Property • May want to provide Overview in Plan with Details in Appendix

  14. Organizational Matters • Whether or not you need this Section may Depend on the Purpose of the Plan • This is Often in the Appendix (or a Separate Document) • May want to provide Overview in Plan with Details in Appendix • Many Plans Only Provide a Good Overview of Management Team and Board of Directors

  15. Financial Plan • Most Investors (and All Bankers, VCs…) WILL READ this in detail and feel that this is the true Heart of a Plan • Most plans Fail on this section • Provide Proforma Financials in the Appendix • Clearly State Key Drivers and Assumptions • This section should demonstrate that you understand the Key Issues and Costs of doing business: • CPM Understanding if Revenues based on Traffic • Understanding of the True Cost of Sales and Sales Cycle • Demonstration of how to Manage Cash (Cash is King)

  16. Concluding Comments • Last Chance to Motivate the Reader • This is not a Summary – It’s a Conclusion • Highlight the Key Things you want them to Remember

  17. Appendices • Make sure you maintain a logical flow to the Business Plan. Anything that breaks the flow, but needs to be included, should be put in the appendix • Resumes, Technical Details, Reports, Financial Statements all belong in the appendix • Nice way to show you’ve really done your homework by including lots of backup information

  18. Final Business Plan Comments • Edit, Edit, Edit! Mistakes and obvious spelling and grammar errors are deadly! • Put Contact Information on Front Page and at end. You never know where your plan will end up and who may want to call. • Format should be appropriate to your stage (don’t make it too slick for a startup). • Add some color, figures, logos…

  19. Marketing Analysis • “You don’t conduct business in a vacuum-you do it in a world already inhabited by buyers and sellers” • Describe the customers, competitors and trends affecting the marketplace

  20. Market Analysis • Focus on the Facts • Provide References and Recent Info • Focus on Detailed Understanding, not Just Broad Overviews • Nobody Ever Hits “1% of the Gazillion Dollar Market”! • Businesses are Built One Segment at a Time – Pick Good Ones and Understand them in Detail

  21. Market Analysis Section Outline • Macroeconomic Trends • Overall Market Analysis (Growing, Flat, Trends, other info) • Customer Analysis (Segment and Define the Customer & Influencers in Detail!) • Company Strengths & Weaknesses • Competition (Current and Future)

  22. Market Analysis References • http://homebiztools.com/analysis.htm • http://www.va-interactive.com/inbusiness/editorial/sales/ibt/market_analysis.html • http://www.inc.com/articles/1999/12/15964.html

  23. Macroeconomic Trends • This section of the plan is highly overrated • This must be directly relevant or don’t bother writing about it • You are selling to a specific market and segment now. Trends that might affect your segment in 5 years may not be important in your plan

  24. Overall Market Analysis • Product Lifecycle Curve • Market Lifecycle Curve • Industry Consolidation • Shortening of the Product Lifecycle • Enabling Technologies

  25. Customer Analysis = Segmentation • Detailed Understanding of their Pain • Detailed Understanding of the Niche Segment • Detailed Understanding of WHO within the company/family will decide/influence (titles) • What are their other Choices? • Share of Mouth/Mind/Ear? • Other websites? • What do you know? What do you need to know? Where will you get this information?

  26. Moore’s Crossing the Chasm Bowling Alley

  27. Crossing the Chasm Refs • http://www.testing.com/writings/reviews/moore-chasm.html • http://www.moneyhaven.com/entrepreneurs/hightechmarketing.html

  28. Summary of Moore • You Start by Selling to Enthusiasts and Visionaries (Very Different than mainstream) • If the Market is More Mature, you Need to Sell to Bowling Pin Segments within the Bowling Alley (then leverage one pin to hit the next logical pin or two) • Need to know When in the Market you are, which Pin/Segment, and Characteristics of that Segment

  29. Company Strengths & Weaknesses • Strategy and Plans should Focus on taking Advantage of your Strengths, not trying to fix your Weaknesses • Ideally your Strengths will align with your Competitors’ Weaknesses • Be Honest and Specific • The Importance of this Section will Depend on the Purpose of your Plan

  30. Competitive Opportunities and Threats • Description of main competitors is essential in business plan • Need honest assessment of competition, which are your most serious competitors? • What are their weaknesses? • Substitutes? New Entrants? Suppliers? • What are the Opportunities for Partners? • All Companies Need Friends, Partners, Channels…

  31. Porter 5 Forces

  32. Porter 5 Forces References • http://home.att.net/~nickols/five_forces.htm • http://www.quickmba.com/strategy/porter.shtml

  33. Assignment #1 (due Jan 31) Get the Assignment Details off Blackboard Purpose: Identify Business Opportunities and Hone Research Skills Research Various Trends Some sample websites shown but go beyond this! Outline a Business Idea Can be your Group Idea or a different idea you are interested in Do Your Own Work even if all Team Members have same Business Idea! This will prevent GroupThink by thinking through the business independently and doing your own independent research Think outside the box: Be Resourceful

  34. Assignment Questions • What useful information for e-business planning did you get from your research? Summarize 3-4 key insights that will help you identify an e-business opportunity. (6 marks) • 2. Building on your answer to the previous question, outline an idea for an e-business that you think is likely to be successful. Your answer should explain what the value proposition for this business is, and why you believe the business has the potential for success. (6 marks) • 3. Explain the revenue model for this business. The business does not need to be profitable in its first year of operation, but you must demonstrate how this business will generate revenues. (3 marks)

  35. Format • Length limit: 1000-1200 words • Submit Word file to turnitin.com • Class ID: 1244069 • Enrollment password: ebiz Note: The Original ID and password in the Outline Handed Out in Class is WRONG!

  36. Group Work - • Further refine the business idea based on the feedback received during the Elevator Pitch • Draft an outline of the Market Analysis and assign sections to various team members to focus on • Define your market segment and specific customers as clearly as possible • Identify what market research is still needed

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