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Time to Take the LEAP

Time to Take the LEAP. Convert Ideas to Opportunity Idea Generation, Evaluation, and Implementation Workshop February 29, 2012. Agenda. Generate Ideas Evaluate Options Plan for Business Develop a Budget Identify Funding Alternatives Explain Startup Process Q&A.

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Time to Take the LEAP

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  1. Time to Take the LEAP Convert Ideas to Opportunity Idea Generation, Evaluation, and Implementation Workshop February 29, 2012

  2. Agenda • Generate Ideas • Evaluate Options • Plan for Business • Develop a Budget • Identify Funding Alternatives • Explain Startup Process • Q&A

  3. Why Didn’t IThink of That? Generating Ideas

  4. Zoom In on Ideas • YOU • Internal Proficiency & Passion • Acknowledge your genuine interests and true passion • Take stock of your professional and personal resources • Consider your entrepreneurial characteristics and aptitude • OTHERS • External Observations & Behaviors • Solicit input from business associates, vendors, suppliers, customers • Converse with new/different people and general public • Be original • Observe social behavior and pay attention to ordinary living

  5. Zoom Out on Ideas • SURROUNDINGS • Situations & Response • Question wisdom of continuing habitual responses • Explore familiar surroundings, similar circumstances or advanced areas • Break your routine • Tweak the existing • EXPECTATIONS • Attitude & Outlook • Break the rules • Explore your intuition • Reexamine failure and accidental results

  6. Search Multiple Sources& Fact Check • Immerse Yourself • Specific Information • General Information Sources • Demographics & Trends

  7. Generating Ideas • Have Lots of Ideas • Method of Capturing • Be Open • Build on Ideas • Multiple Solutions • Simple • Don’t Judge • Become a Collector

  8. The question is not what you look at but what you see.-Thoreau

  9. Finding the Needle in the Haystack Evaluating Options

  10. Determine Your Destiny! • Answer These Basic Questions: • How does idea solve problem better than alternatives? • What will competition do in response to idea? • What proves idea is technically feasible? • What prevents copying idea and permits your legal use of idea? • How will competitive advantage be sustained? • What external factors must you consider?

  11. Idea Assessment Guidelines • Understand Why Trends Occur • Acknowledge Intuition, but Support with Data • Make Fact Based Decisions • Recognize Learning, Adapting, and Improving easier than Complete Revolution • Avoid a Poor Choice and Survive • Consider Passing on to Someone Else • Be Patient and Persistent

  12. Idea Evaluation Exercise http://www.youtube.com/watch?v=HpvEF_GIhmw

  13. Now What? Planning for Your Business

  14. Major Factors to Consider Model Market Margin Management Money Motivation

  15. MODEL • the method, approach, or system that will be used to obtain money for your products or services • Your planning for Business MODEL should: • Describe product(s)/service(s) and bundles/packages developed to produce revenue streams. • Project frequency and quantity of customer purchase for each revenue stream. • Explain strategy for maintaining proprietary information and competitive advantage. • Clearly communicate the type of business - manufacturing, wholesaling/distribution, or retailing.

  16. Why Model Matters • Whatever you think your business model is when you start, you are wrong. • Colin Angle – Co-founder and CEO of iRobot

  17. More About Your Business MODEL • Customer Issues with Current Solution • Benefits of Proposed Solution • Evidence Yours is Preferred • Magnitude/Seriousness/Cost of Problem • Ability to Protect Idea (IP)

  18. MARKET • the people or organizations that will pay for your product or service • Your Planning for MARKET Strategy Should: • Describe target market(s) and specific market segments most relevant for your enterprise. • Numerically quantify the addressable (initially feasible) target market size for each revenue stream. • Estimate unit sales logically justified for each revenue stream - monthly for year 1 and qtr/yr for years 2 - 5. • Explain introductory and LT/continuing sales strategy. • Clearly explain whether B2C, B2B, or B2G.

  19. Why Market Matters? http://www.youtube.com/watch?v=8bVblNA3drM&feature=related

  20. More About Your MARKET • Identify Initial Market – Demographics & Psychographics • Include Future Market Opportunities • Estimate Sales • Support Current and Future Sales with Evidence • Compare to Alternatives – Chart with Significant Purchase Decision Factors

  21. MARGIN • the amount of profit your business will generate to keep the founders motivated, to repay the investors, and provide for growth • Planning for Your MARGIN Should: • Project cost of goods sold: estimate raw material and labor cost to produce a unit/bundle. • Establish prices for proposed units/bundles for each revenue stream. • Establish projections for revenue (price per unit * unit sales) - preferred to market share percentages, OK to validate projections through market share estimates. • Understand basics: Sales Revenue – Cost of Goods = Gross Margin – Operating Expenses = Profit

  22. Why Margin Matters

  23. More About Your Margin • Know Price and Profit of Similar Products/Services • Detail Material and Labor Costs • Justify Cost Estimates with Actual Quotes • Compare to Industry/Competitors • Anticipate Impact of Competitor Response and Cost Fluctuations

  24. MANAGEMENT • the group of people with talent, experience, and commitment to start and run the business • Planning for Your MANAGEMENT Team Should: • Establish hiring priorities by determining what needs to be done, then group common tasks into “jobs” or around people/founder(s) strengths. • Identify the tasks that can be contracted/outsourced. • Project staffing budget. • Build advisory team to supplement existing capabilities and fill gaps.

  25. Why Management Matters • Apple and Steve Jobs • 1971 – Apple established • 1985 – Jobs was asked to resign • 1996 – Jobs returned • 1997-2011 – Jobs CEO

  26. More About MANAGEMENT Team • Emphasize What is Needed More Than Who is Available • Plan for Future as Well as Present • Develop Structure and Documentation • Budget (and Incentivize) to Attract Talent • Consider Founders, But Act for Survival/Success

  27. MONEY • the resources, financial and otherwise, that are required to start and operate the business • Your Financial /MONEY plan Should: • Project revenue - monthly for initial year and quarterly/annually years 2 - 5. • Project cost of goods - monthly year 1 and quarterly/annually years 2 - 5. • Project operating expenses - monthly year 1 and quarterly/annually years 2 - 5. • Identify potential sources of funding/financing for the venture.

  28. Why Money Matters

  29. More About MONEY • Quantify value of current investment in venture • Estimate cost of pre-venture and startup needs • Document assumptions for all estimates • Create basic cash based budget • Prepare what-if scenarios integrating contingencies

  30. MOTIVATION • the passion and inspiration that compels the founders to persist against incredible odds and tremendous obstacles • Your Plan for MOTIVATION Should: • Establish timeline with measures of success for major steps - investment needs, hiring, product/service introduction, sales levels, break-even, exit.

  31. Why Motivation Matters • "Success is a lousy teacher. It seduces smart people into thinking they can't lose.“ • Bill Gates

  32. More About MOTIVATION • Document Meaningful Outcomes Achieved • Remember Factors Compelling Launch • Describe Personal Rewards Expected • Know Your Preferred Business Exit Scenario • Define Significant Next Steps Along with Resource Needs • Demonstrate You Have “skin in the game” • Anticipate Obstacles/Challenges Related to Commitment of Founder(s) and Key Mgt

  33. How Much Do You Need? Developing a Budget and Identifying Funding Options

  34. Developing a Budget • #1 Establish Cost of Goods • #2 Calculate Potential Revenue Streams • #3 Determine Potential Business Revenue • Anticipate Operating Expenses • Estimate Profit Potential

  35. Cost of Goods

  36. Revenue Streams

  37. Business Revenue

  38. Funding Options • Loans • Guarantees, Microlending • Savings/Retirement • Friends/Family • Crowd Funding • 2nd Job/Sideline Biz • Advance Sales • Investors • Grants

  39. Where Do You Start? Understanding the Startup Process

  40. BASIC STARTUP PROCEDURES • Forms of Organization • Choosing a Business Name • Federal Registrations • State Registrations • Local Registrations

  41. You’re Not Alone tbdc.latech.edu/ Google Docs Google Groups: LA Tech TBDC Network TBDC Facebook Page facebook.com/LATechTBDC

  42. Questions? Kathy Wyatt, Director Technology Business Development Center Louisiana Tech University P.O. Box 3145, Ruston, LA 71272 Phone: (318) 257-3537 Fax: (318) 257-4442 Email: kwyatt@latech.edu

  43. Take the Leap

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