Business Plan

Entrepreneurship 4543
Module leader: Dr Shehryar Shahid Office: 418-C Email: mshehryar@ucp.edu.pk

Genius is the ability to make the most mistakes in the shortest amount of time

Course Objective
The objective of this course is NOT to teach you how to write a business plan It will teach you how to PLAN a business

What is a typical business plan?

Assumptions, assumptions, assumptions ................ Appendixes, appendixes, appendixes

Why NOT business plan?

They are NOT for start-ups Only a price of entry to venture funding
VCs thought of startups as smaller versions of large companies. Large companies wrote business plans, so VCs made startups write business plans. Large companies had VPs of Sales and Marketing, so VCs made startups organize that way as well. Large companies executed plans well and when they didn't, they fired the executives who screwed up. So VC's assumed that startups should equally unfold per the plan - firing executives when reality intruded
(Steve Blank, 2012)

Why NOT business plan?

They are static and assume minimal new learning They teach entrepreneurs little about how to build a company Most business plans DIE on the first customer contact You can fake it!

Business plan competitions are GREAT for schools and BAD for students
They are a match for the How to write a business plan classes that are offered It makes the school appear relevant to their constituencies; students, donors, faculty and VCs Business plans are easy to grade and judge Business plan competitions offer VCs a PowerPoint beauty contest For the rest a genuine excuse to bunk classes

Business plan competitions perpetuate everything that is wrong about trying to make plans that were designed to be used in large companies fit startups. (One of my favourites: Judging will include factors as: Market opportunity, reward to risk, strategy, implementation plan, financing plan, etc.). All of which may be true in large companies. But little of it is relevant to the chaos and uncertainty in the life of a startup

Steve Blank
Professor of Entrepreneurship Stanford University

What is a start-up?
Start-up is an EVENT surrounded by high uncertainty and low control It is an EXPERIMENT An experiment to search for a repeatable and scalable business model A start-up is a mindset of LEARNING and ITERATING Most start-ups change their business model multiple times

Surprise, surprise....
The root cause of most business start-ups is premature execution Therefore, start-ups need time spent in a mindset of learning and iterating, before they try to launch

Start-ups Model, Companies Plan

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So, how should we learn how to start a business?

The learning model
Non-linear learning Experiential Iterative

Sara Sarasvathy

Associate Professor, Darden School of Business, UVA

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Entrepreneurship Process
Growing set of means

New means

Who I am What I know Whom I know

What I CAN do

Interact with people

Effectual stakeholders commitment

New goals

Perceiving new forms of business

Entrepreneurship Process
Growing set of means

Interventions
Who I am What I know Whom I know Effectual stakeholders commitment

New means

What I CAN do

Interact with people

New goals

Perceiving new forms of business

Getting to Plan B

RANDY KOMISAR Lecturer on Entrepreneurship, Stanford University & A serial entrepreneur

DR JOHN MULLINS Chair in Entrepreneurship, London Business School & Mentor to more than 100 active start-ups

Getting to Plan B
If the founders of Google, PayPal, or Starbucks had stuck to their original business plans, wed likely never have heard of them. Instead, they made radical changes to their initial models, became household names, and delivered huge returns for investors. How did they get from their Plan A to a business model that worked? Why did they succeed when most new ventures crash and burn?
(Mullins and Komisar, 2009)

Getting to Plan B
It is about Street-Testing your Plan A and getting to a better Plan B The rule of the game is simple - the faster, the better

Four key building blocks

Analogs: Dont reinvent the wheel Antilogs: Be different Leaps of faith: Ask the right questions Dashboards: Guide and track your journey

Steve Blank

8 startups in Silicon Valley Semiconductors Supercomputers Consumer electronics Video games Enterprise software Military intelligence

The Lean Launch Pad at Stanford University

Getting to Plan B
Methodology
Business Model Canvas

Customer Development Model

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Business Model Canvas

9 building blocks of a business model

CUSTOMER SEGMENTS

which customers and users are you serving? which jobs do they really want to get done?

VALUE PROPOSITIONS

what are you offering them? what is that getting done for them? do they care?

CHANNELS

how does each customer segment want to be reached? through which interaction points?

CUSTOMER RELATIONSHIPS

what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?

REVENUE STREAMS

what are customers really willing to pay for? how? are you generating transactional or recurring revenues?

KEY RESOURCES

which resources underpin your business model? which assets are essential?

KEY ACTIVITIES

which activities do you need to perform well in your business model? what is crucial?
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KEY PARTNERS

which partners and suppliers leverage your model? who do you need to rely on?

COST STRUCTURE

what is the resulting cost structure? which key elements drive your costs?

key activities

value proposition

customer relationships

key partners

customer segments

cost structure

key resources

revenue streams channels

images by JAM
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sketch out your business model

But, Realize Theyre Hypotheses

9 Guesses

Guess

Guess

Guess Guess

Guess
Guess Guess

Guess

Guess

Customer Development
The founders

Get Out of the Building

More startups fail from a lack of customers than from a failure of product development (focus on who more than what)

Customer Development
Product Introduction Model
Concept/ Bus. Plan Product Dev. Alpha/Beta Test Launch/1st Ship

Customer Development

Customer Discovery

Customer Validation

Customer Creation

Company Building

Pivot

Customer Discovery

Customer Discovery

Customer Validation

Customer Creation

Company Building

Pivot

Stop selling, start listening Test your hypotheses Continuous Discovery Done by founders

Turning Hypotheses to Facts

Test Hypotheses: Product Market Type Competition

Test Hypotheses: Problem Customer User Payer

Test Hypotheses: Channel

Test Hypotheses: Channel (Customer) (Problem)

Test Hypothesis: Processes Activities

Test Hypotheses: Test Hypotheses: Demand Creation Product Market Type Competitive

Test Hypothesis: Physical, Human and Financial resources

Test Hypotheses: Problem Customer User Payer

Test Hypotheses: Channel

Test Hypotheses: Size of Opportunity/Market Validate Business Model

Test Hypotheses: Pricing Model / Pricing

The Pivot

The heart of Customer Development

Iteration without crisis Fast, agile and opportunistic

How does this class work?

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15 weeks and SO MUCH to do!

Introduction Business Model Canvas

Business Model Canvas

Case Studies/Class Exercise

Entrepren-eurial Strategies

16th March BC 0

Blue Ocean Strategy

17th April BC 2

3rd

April BC 1

Pricing & Costing

Bootstrapping

1st May BC 3

Case Studies

15th May BC 4

Final Presentations
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Business Clinics
Each group will present for max 10mins You will present the lessons learned from getting out of the building You will be graded and guided Be relaxed, they are NOT formal presentations No bashing Each group will have to submit interview notes and pictures as a piece of evidence Each BC will be attended by a panel of friendly critics
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Getting out of the building

It is what the effort is about Each team will be engaged with the industry; talking to,
Customers (25-30 interviews) Partners/Distributors (3-5 interviews) Suppliers (3-5 interviews) Competitors (3-5 interviews)

If you cant commit the time to talk to stakeholders, this course is not for you
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Assessment Criteria
Assignments Class Participation Business Clinics Final Presentation/Report Final Exam 10% 20% 40% 15% 15%

NO quizzes & NO midterm exam!

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This Class is Hard, but Real

You cant pass by attending the class Your grade is determined by the work you do outside the class Theres a lot of it You are dependent on teamwork and teammates communication is critical Good news - by the time you finish this course, the hard part is over

Let me emphasize, it is an exercise that, if you put your heart and soul into it, will serve you for many years
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You will be ALMOST READY to launch a business of your own

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