New Venture Development Process-Truefan

Successful New Venture Development
Process, Tools & Methodology

www.companycrafters.com
The Venture Value Chain

A Conceptual Framework For Building New Businesses
The Venture Value Chain

A Conceptual Framework For Building New Businesses
Innovation
Shape Shape
Launch Launch
Scale Scale
Refine Refine
Harvest Harvest
Define Plan Validate
Prove Concept Prove Market
Franchise Repeat Grow
Perfect Operations Refine Incrementally
IPO M&A Cash Cow
A Roadmap to Startup Business Success

Know the road ahead and anticipate the potholes Manage new business risk avoid common mistakes Know where to focus at each step along the way Critical success factors
Copyright 2005-2006, CompanyCrafters Solutions LLC
The SHAPE Stage
The Business Planning Process
Shape Shape
Product/Service Offering Compelling Value Proposition Business Model Target Market, Segments, Needs Competitive Positioning Sales & Marketing Plan Financial Model
Develop & Validate The Business Plan - Only 50% Of Which Will Be Right
The LAUNCH Stage
Going Live With the Plan
Launch Launch
Legal Formation Financing Proof of Concept Proof of Market Proof of Sales Reference Customers
Narrow in on the Working Business Model Figure Out Which 50% of the Plan is Right & Fix the Rest!
The SCALE Stage
Franchise the Business Model
Scale Scale
Once the model is proven Repeatable, replicatable business model Scale and replicate success Hyper growth phase Drive to sustained profitability Tinkering NOT encouraged
Focus On Execution - Do One Thing Extremely Well and Scale!

The REFINE Stage
Managing The Company For Predictable Growth In Revenue And Profitability
Refine Refine
Consistently cash-positive, self-sustained operations Wanted: great operators Focus on smooth operations & incremental refinement
Manage The Successful Business Model

The HARVEST Stage
Achieving Liquidity For Shareholders

Outside investors, founders & option holders
Through:
M&A (sale of the company) IPO (public offering) Dividends from cash flow
Harvest Harvest
Challenge for Corporations

New Business Creation Presents a Unique Challenge
innovation
Shape Shape
Launch Launch
Scale Scale
Refine Refine
Harvest Harvest
Goal: develop & scale a successful business model Lots of experiments Lots of reality checks Lots of failures Some successes Entrepreneurs are trained through failures
Goal: maintain & grow the successful business model High degree of repeatability Incremental innovation Higher risk avoidance Managers are trained and selected through successes
CompanyCrafters Methodology
Planning, Launching, & Growing New Businesses
What CompanyCrafters Does

Shape Launch Scale Shape Launch Scale
Refine Refine Exit Exit
innovation
CompanyCrafters Specializes In Leading Businesses Through the First Three Stages of the Venture Value Chain 1. Shape 2. Launch 3. Scale
11
The CompanyCrafters Methodology

Contrary to Popular Belief .
Business planning can be a disciplined, repeatable process Launching a new business is can have a definitive execution plan New venture risk can be quantified and mitigated
CompanyCrafters Delivers:
A coach-able, teachable process for launching new ventures Practical, analytic tools for business planning Unbiased and deep understanding of the business opportunity Alternative business models to capitalize on the opportunity Long term participation and advise as the business evolves
12

Shape Shape
Deliverables: Business Plan
Financial Model Go-to-Market Plan
Launch Launch
Business Formation Recruit Exec Team Bus Plan Execution
Scale Scale
Predictable Sales Growth Market Leadership Remove Growth Obstacles
Internal Investor Facing Customer Facing Team Development

Business Planning & Execution Methodology Business Planning & Execution Methodology Financial Strategy & Control Financial Strategy & Control Sales and Marketing Sales and Marketing Leadership & Board Development Leadership & Board Development
13

Shape Shape
Business Plan Financial Model Go-to-Market Plan
Launch Launch
Scale Scale
Business Planning & Execution Methodology Business Planning & Execution Methodology
Market Analysis Market Segmentation Value Proposition Evaluation Competitive Analysis Whole Product Evaluation Industry Map Value Chain Analysis Value Chain Margin Analysis Pre-Flight Checklist Core Values & Corp Mission 30/60/90 Day Execution Plans CEO Dashboard Weekly/Daily Metrics & Huddles VQ Risk Mitigation Model Strategic Planning Process Annual Operating Plans Quarterly Goals & Themes
Financial Strategy & Control Sales and Marketing Leadership & Board Development
14

Shape Shape
Launch Launch
Scale Scale
Business Planning & Execution Methodology
Financial Strategy & Control Financial Strategy & Control

Financial Model Development Reality Check vs. Industry Metrics Expansion & Growth Financing Legal Formation Recapitalization Equity Structure Corporate Governance Structure Budget & Accounting Systems Start-up Financing
Sales and Marketing Leadership & Board Development

15

Shape Shape
Scale Scale
Launch Launch
Business Planning & Execution Methodology Financial Strategy & Control
Sales and Marketing Sales and Marketing

Strategic Pricing Marketing Platform Development Branding Product Launch Trial Marketing Programs Face-to-Face Sales Campaign Reference Customer Devt Channel Formation Marketing & PR Programs Marketing Metrics Marketing ROI Sales Management Major Account Management Channel Expansion
Leadership & Board Development

16

Shape Shape
Scale Scale
Launch Launch
Business Planning & Execution Methodology Financial Strategy & Control Sales and Marketing
Leadership & Board Development Leadership & Board Development

Executive Team Skills Pre-recruiting of Potential Executives Executive Team Participation Executive Coaching Executive Recruitment Start-up Executive Network Corporate Governance Structure Board Charter & Recruitment
Interim Executive Assignments Performance & Compensation Board Participation & Leadership Experienced Executive Network
17
Sample CompanyCrafters Clients
18
SHAPE Stage Overview

The Planning Challenge and Process For New Businesses
SHAPE Stage Goals

Develop a Clear Target For Your Business
Compelling business model
Shape
Is This A Business Thats Worth Investing In?

Business planning process - go/no go decision
Deliverable: Pitch For Internal Funding, Attract Partners Precision Doesnt Mean Accuracy
Objective tools for subjective business decisions
. At Best 50% Of The Plan Will Be Right

20
SHAPE Stage The Planning Challenge For Startups

Dream Explore Reality Check Plan Validate
Initial Concept
21
Step #1 - Dream
Articulate the Market Need & Your Unique Solution
Who is your customer? What is their unmet need? How are they addressing that need today? How do you solve that need better, faster, cheaper or cooler? How would you make money?
Professional Circles Reading Brainstorming Domain Expertise Personal Experience

Initial Concept
22
Step #2 - Explore
Flesh Out the Market Need
Competitive Analysis Market Research Google Industry Analysis Customer Interviews
What else is being done in this arena? Who are the players & how do they interact? Whats the state-of-the-art? Is the market fragmented or consolidated? How do target customers buy? What are the prevailing business models for current players?
23
Step #3 - Reality Check

Potential Investors Trusted Advisors
Test the Business Concept First Order Confirmation

Technology/product feasibility Size of addressable market Nature of competition Fundability of new business
Technology Experts
Potential Customers
Potential Partners
24
Step #4 - Plan
Elevator Elevator Pitch Pitch Executive Executive Summary Summary Investor Investor Presentation Presentation Detailed Financials Detailed Financials Business Plan Business Plan Due Diligence Notebook Due Diligence Notebook Domain Knowledge Domain Knowledge
Sell the Plan to Investors
Demonstrate & Prove the Business Model
Core Knowledge & Homework
25
The Business Plan

Questions the Plan Answers:
Elevator Elevator Pitch Pitch Executive Executive Summary Summary Investor Investor Presentation Presentation Detailed Financials Detailed Financials Business Plan Business Plan Due Diligence Notebook Due Diligence Notebook Domain Knowledge Domain Knowledge
Target market, segments & order of penetration Market size & growth rate Market penetration rate and sales ramp Compelling value proposition Business model & product/service mix Unique, sustainable competitive advantages Position in value chain Partnering strategies Product roll-out plan Pricing & gross margin Sales & distribution plan Pro-forma financial models Staffing requirements Operations Plan Time to Revenue Long term profitability & sustainability
Interrelated Questions, Iterative Planning

26
Step #5 - Validate
Garner Indications Of Serious Interest
From strategic partners From funding sources With prospective executive team Contingent orders, LOI, interest from lead customers
Strategic Partners
Seed Investors
Customers
Key Employees
Update & Revise Plan on New Information & Feedback
27
The Typical Business Planning Process in Tech Companies:

How do I get my great innovation to market?
Suppliers Suppliers Your Business Your Business Distribution Distribution Channels Channels
Economic Economic Buyers Buyers Key Key Influencers Influencers
End Users End Users

28
The Correct Planning Approach:

Start With The Customer & Their Reason to Buy and Work Backwards to the Business Plan
Suppliers Suppliers Your Business Your Business Distribution Distribution Channels Channels
End Users End Users

Distribution Distribution Channels Channels Your Business Your Business Suppliers Suppliers
End Users End Users How do I get my great innovation to market?

What does the market need that I can deliver?

29
Critical Questions
End Users End Users
Opportunity Evaluation Industry Structure
Who are your customers? What is their unmet need (their pain)? How are they meeting these needs today? What is the impact of that pain?
Distribution Distribution Channels Channels Your Business Your Business
Who controls the budget & writes the check? Who influences the purchaser & user? From whom do the customers buy?
Business Model Risk Management
What is the business model? What is the go-to-market plan? What is the financial model?
Suppliers Suppliers
What IP is critical to own/control? Which suppliers are critical to your success? How do you protect your competitive advantage? 30
Business Planning Tools

End Users End Users
Opportunity Evaluation Industry Structure
1. 2. 3. 4. 5. 6. 7. 8.
Market Analysis Market Segmentation Compelling Value Proposition* Competitive Analysis Industry Map* Whole Product Requirements Value Chain Analysis Value Chain Margin Analysis
Distribution Distribution Channels Channels Your Business Your Business
Business Plan Risk Management
9. Value Chain Position 10. Strategic Pricing 11. Financial Modeling 12. Key Metrics & Ratios 13. Marketing Platform 14. VQ - Risk Analysis*
Suppliers Suppliers
31
Key Take-Away Points:

The Challenge of Business Planning
1. Business Planning For New Ventures Should Be A Science 2. Start With The Customer & Their Reason To Buy and Work Backward to the Business Plan 3. Its Important To Use Consistent framework Repeatable methodology Common tools Common language
32
CompanyCrafters Value Proposition

We Deliver:
Consistent, Disciplined Approach to New Venture Development Teachable Methodology and Processes Repeatable, Analytic Tools
Apply to broad spectrum of businesses
Experienced Entrepreneurial Leadership & Coaching
A Disciplined Business Planning Changes the Odds

Through out the Venture Value Chain SHAPE LAUNCH SCALE REFINE Understanding, Controlling, and Addressing Risk
33

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Successful New Venture Development

Process, Tools & Methodology

The Venture Value Chain

The Venture Value Chain

Define Plan Validate

Prove Concept Prove Market

Franchise Repeat Grow

Perfect Operations Refine Incrementally

IPO M&A Cash Cow

A Roadmap to Startup Business Success

The SHAPE Stage

The Business Planning Process

The LAUNCH Stage

Going Live With the Plan

The SCALE Stage

Franchise the Business Model

Focus On Execution - Do One Thing Extremely Well and Scale!

The REFINE Stage

Managing The Company For Predictable Growth In Revenue And Profitability

Manage The Successful Business Model

The HARVEST Stage

Achieving Liquidity For Shareholders

Copyright 2005-2006, CompanyCrafters Solutions LLC

Challenge for Corporations

Copyright 2005-2006, CompanyCrafters Solutions LLC

What CompanyCrafters Does

The CompanyCrafters Methodology

Copyright 2005-2006, CompanyCrafters Solutions LLC

The CompanyCrafters Methodology

Internal Investor Facing Customer Facing Team Development

The CompanyCrafters Methodology

The CompanyCrafters Methodology

Business Planning & Execution Methodology

Financial Strategy & Control Financial Strategy & Control

Sales and Marketing Leadership & Board Development

The CompanyCrafters Methodology

Business Planning & Execution Methodology Financial Strategy & Control

Sales and Marketing Sales and Marketing

Leadership & Board Development

The CompanyCrafters Methodology

Leadership & Board Development Leadership & Board Development

Sample CompanyCrafters Clients

Copyright 2005-2006, CompanyCrafters Solutions LLC

SHAPE Stage Overview

SHAPE Stage Goals

Is This A Business Thats Worth Investing In?

. At Best 50% Of The Plan Will Be Right

SHAPE Stage The Planning Challenge For Startups

Copyright 2005-2006, CompanyCrafters Solutions LLC

Professional Circles Reading Brainstorming Domain Expertise Personal Experience

Copyright 2005-2006, CompanyCrafters Solutions LLC

Competitive Analysis Market Research Google Industry Analysis Customer Interviews

Copyright 2005-2006, CompanyCrafters Solutions LLC

Step #3 - Reality Check

Test the Business Concept First Order Confirmation

Copyright 2005-2006, CompanyCrafters Solutions LLC

Sell the Plan to Investors

Demonstrate & Prove the Business Model

Core Knowledge & Homework

Copyright 2005-2006, CompanyCrafters Solutions LLC

The Business Plan

Interrelated Questions, Iterative Planning