&

Business plan lecture 1

Vienna, Jan-Feb. 2013

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: the business plan and me a long story

Restructuring at UBS the effect of a credit bubble.
I2B largest business plan competition in Austria in 1999.
Prepared e-business investment of 25 mio. with 5 large companies as
shareholders.
Restructured the e-business company at the end of the e-business
bubble.

Restructured a number of conventional companies in Eastern Europe, the

effect of another credit bubble.

Same mistakes generating the same consequences over and over

2

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Structure of the lecture

About entrepreneurship and business plans
How to write a business plan
Business case: producer of enamel pots in Eastern Europe

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

1. Before we start
2. Definition
3. Reasons for writing

3. Circumstances
4. Particularities

5. Case study
6. Next steps

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start:
Who knows what is a business plan?
Who has already written a business plan or part of a business plan?
Who wants to be an entrepreneur?
Who already has an idea and wants to implement it (has started to
develop it)?

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: motivating the entrepreneur

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: motivating the entrepreneur

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: some examples of failures

Large Format Digital
Based in Edgerton, Wis., the company printed advertisements on the side
panels of trucks. It opened in 1998 and closed in March.
AT ITS PEAK In 2006, business took off, growing about 60 percent a year
until 2008. In 2007, sales were $3 million and the company had 15
employees.
WHAT WENT WRONG When the business was growing, Ms. Kavanaugh
and Jeff Rank, her co-founder and husband, decided to spend $1 million to
build their own installation facility, which they believed would save them
money in the long term. The mortgage closed on the same day in September
2008 that Lehman Brothers filed for bankruptcy. Within a month, Large
Formats workload fell 50 percent. It was literally like someone turned off a
faucet, said Ms. Kavanaugh.
8

http://www.nytimes.com/2011/01/06/business/smallbusiness/06sbiz.html

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: some examples of failures

SixDegrees.com was the original online social network
SixDegrees.com was the original online social network, based on the game "six
degrees of Kevin Bacon" and the idea that we're all six degrees away from
everyone on Earth. It had high growth from its start in 1997 but people probably
weren't ready for a full fledged social network.
Believe it or not, Webvan was NOT doomed
Webvan's home groceries delivery service is eponymous for many of the doomedto-fail startup. You may be doomed to fail if you spend $1 billion on warehouses
and SUN servers before you launch. But home groceries deliveries online is a
great business for latecomers like FreshDirect
Read more: http://www.businessinsider.com/startup-failures-2011-5?op=1#ixzz2FJV9wtZq

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: is this opportunity for me*?

Good opportunities are rooted in personal experience
Experience shapes the perception of opportunities; they are not the same
for everyone.
Your skills and capabilities provide the basis of your comparative
advantage in exploiting an opportunity

A real opportunity is one that enables you to use and leverage the skills
and expertise you have acquired over time
Ask yourself: What makes this opportunity mine?

10

*Source: entrepreneurship lecture, London Business School, 99

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: is this opportunity for me*?

Innovation in product:

11

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: is this opportunity for me*?

Innovation in process:

12

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: is this opportunity for me*?

Innovation in customer experience:

13

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: is this opportunity for me*?

Entrepreneur with experience in electronics who wants to set up a chain of
fast food restaurant

14

Investor:

have you ever worked in a fast food restaurant?

Entrepreneur:

work in one? I would not even eat in one. I

cannot stand fast food

*Source: entrepreneurship lecture, London Business School, 99

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: a strong team means*

Proven relevant experience in the industry, market, technology
Track record in achieving results, particularly P&L
Diversity of personal qualities, styles and perspectives
Completeness and balance in terms of skills and expertise
Mutual trust, commitment and ability to manage conflicts.

15

*Source: entrepreneurship lecture, London Business School, 99

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: VC and buyout investors are financing strong

teams*
For VC
Leadership potential of lead entrepreneur
Leadership potential of management team

Recognised industry expertise in management team

Track record of lead entrepreneur
Track record of management team

For buyout
Leadership capabilities of management team
Track record of management team
Sustained share competitive position
Track record of team leader

Completeness and balance within the management team

16

*Source:

Trade-off in the Investment Decisions of European Venture Capitalists, Sue Birley, Dan Muzyka and Benoit Lejeux
Management Buyout: Perception of Opportunities, Sue Birley, Michael Hay and Dan Muzyka

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: is the timing of the opportunity right*?

Personal time
Enough experience accumulated to start
I can move rapidly to seize the opportunity

I and those around you can bear the personal costs

I am devote enough of my time to do it and for long enough

Industry or market time new opportunities

Technology internet, electric cars,.
Regulations low cost airlines
Social new ways of working, communicating,
Fragmented industries

Investor time
Window of opportunity for financing
Does the time plan of my investor coincide with my time plan?
17

*Source: entrepreneurship lecture, London Business School, 99

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: is the timing of the opportunity right*?

Industry or market time new opportunities
Technology internet, electric cars,.
Regulations low cost airlines

Social new ways of working, communicating,

Fragmented industries

18

*Source: entrepreneurship lecture, London Business School, 99

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: is the opportunity scalable and saleable*?

Is it a life style opportunity or a scalable opportunity?
VC are interested in scalable opportunities, not in life style
businesses.

Entrepreneurs should consider life style opportunities as the chances

to succeed are much higher.

19

*Source: entrepreneurship lecture, London Business School, 99

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: scalability means very few make a lot of

money

20

*Source: http://app-promo.com/wake-up-call-infographic/

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Before we start: am I developing an opportunity or an idea*?

What distinguishes and opportunity from an idea is its
Timeliness
Fit with personal experience and expertise

Tangible value proposition that creates real customer benefit

A way of creating customer value that is generalisable to many customers

21

*Source: entrepreneurship lecture, London Business School, 99

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

1. Before we start
2. Definition
3. Reasons for writing

3. Circumstances
4. Particularities

5. Case study
6. Next steps

22

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Definition*
A business plan is not only a requisite for seeking finance from investors,
its is also an essential document for describing aims and objectives and
enabling the measurement of progress towards achieving them.
The business plan provides the means to:
appraise the present and future of the business
define short- and long-term objectives

establish a framework for action to achieve those objectives.

It is not just a set of numbers. It is a story,

23

* Business ,the Ultimate Resource, A&C Black, London, 2006

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

1. Before we start
2. Definition
3. Reasons for writing

3. Circumstances
4. Particularities

5. Case study
6. Next steps

24

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Why ? Do I need a business plan?

Zuckerberg: Startups Don't Need Or Have The Time To Write A Business Plan
Read more: http://www.businessinsider.com/mark-zuckerberg-facebook-business-plan-for-startups-2012-5#ixzz2FJkTFpu5

60 %of the Inc 500 CEOs surveyed did not create formal written business plans
before launching their companies.
"In these highly turbulent markets, the costs of doing the analysis or writing a plan
exceed the benefits.
Read more: http://www.antiventurecapital.com/plans_bhide.html

25

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Why ? Do I need a business plan (summary of video) ?

1. Identify and clearly articulate your Heart and purpose. Whether you want to call it
vision, Heart, purpose or calling, be very clear on the why of a business the bigger
goal at hand.
2. The team is more important than any idea or plan. The top three priorities should be
people, followed by people, and then people.
3. Think big, start small, then scale or fail fast. Per Lederhausen's advice, set the right
first "start small" milestone; it will usually involve seeing people's willingness to buy or at
least try your product.
4. Focus on a well-defined market sub-segment or niche. At least to start, think of
where you can potentially be the best. This strategy is almost always more successful
than being just another player in a massive market.
5. Understand your business model. How you will make money is more important than
pages of Excel showing financials that are simply too hard to predict at this early stage
anyway. Understand instead the basic way you will make money - is it through
transactions, advertising, subscriptions, etc?
Anthony Tjan is CEO, Managing Partner and Founder of the venture capital firm Cue Ball, vice chairman of the advisory firm
Parthenon, and co-author of the New York Times bestseller Heart, Smarts, Guts, and Luck (HBR Press, 2012).

26

But! That is a business plan

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Particularities of Steve Jobs approach ?

We have a great product

Is it enough to be successful??

27

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Why ? Yes I need a business plan.

For sure, I need a plan. I need to know what I am about to start because I
will need to convince:
myself
my family if they help with financing
my financing partners

my colleagues and future colleagues

my suppliers and customers.

BUT: it is unlikely that the plan will be implement as designed.

28

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Moving in phases

29

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

The plan has to be implemented

If it is necessary to have a plan, it is of course even more important to
have the necessary strength to implement it:
Kochabo, the idea and already 250/T from investors

30

2004, Rezeptkonzept, the idea and the missing implementation

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

1. Before we start
2. Definition
3. Reasons for writing

3. Circumstances
4. Particularities

5. Case study
6. Next steps

31

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

When to write a business plan

Start-up
New product / service
Unproven market

Unproven team
No/limited financing

Turnaround situation
Existing product / services

Changing market
Quality of team
Financing issues
32

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

1. Before we start
2. Definition
3. Reasons for writing

3. Circumstances
4. Particularities

5. Case study
6. Next steps

33

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Particularities
Complex task
Trying to predict the future
Working in team, in most cases with team members that have a different idea
of the venture or of the situation.

This is my baby syndrome

Requires a deep understanding of the functioning of a company from the client
to the finished products and its delivery, including the impact of this process on
the financial situation.

34

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

1. Before we start
2. Definition
3. Reasons for writing

3. Circumstances
4. Particularities

5. Case study
6. Next steps

35

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

Kochabo
Sizing the opportunity
Who is a typical customer?
How large is the market in Austria ?

36

FH JOANNEUM, BUSINESS PLAN, IIB/2011/VO

To end up on a positive note:

My dream is that we would have a National Entrepreneur Day, with the
following message:
Most of you will fail, disrespected, impoverished, but we are grateful for the
risks you are taking and the sacrifices you are making for the sake of the
economic growth of the planet and pulling other our of poverty. You are the
source of our antifragility. Our nation thanks you*.

*Antifragile, Nassin Nicholas Taleb, Random House, 2012

37