Presentation of the major mistakes that lead new ventures to failure.

1. BAD TO WORSE Why Some Start-ups Go Down the Tubes … and Others Don't GREG FISHER #1 BESTSELLER

3. Top 10 Mistakes of Entrepreneurs

4. “ I don’t care about the product, I just want to make loads of money” 1 NO REAL PASSION FOR THE BUSINESS

5. Linking Market Demand with passion, skills and resources to create an entrepreneurial opportunity Market Demand Passion Skills Resources

6. The Key Elements in Creating an Entrepreneurial Opportunity Opportunity Market Demand Passion Skills Resources Entrepreneur

8. “ We want one so everyone will want one ” 2 NO UNDERSTANDING OF THE MARKET

10. “ We are going to be just like Amazon.com, only better” 3 NO DIFFERENTIATION

11. Assessing an Opportunity [VENTURE] Concept Attractiveness Competitive Advantage [ENTREPRENERIAL TEAM] Low Low High High Market Size Market Growth Differentiation Customer Need Skills Resources Passion / Energy Network 10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8 9 10

12. Response [VENTURE] Concept Attractiveness Competitive Advantage [ENTREPRENERIAL TEAM] Low Low High High Avoid / Wait & Reassess in Future Build / hire / develop the required capabilities Identify / exploit a specific under served niche Revise product or business model Invest and pursue the opportunity 10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8 9 10

13. Strategy Formulation Questions Why do we exist? Purpose What are our personal objectives Whom do we serve? What value do we deliver? Why do we matter? Where are we at? Current status What are our strengths? What are our weaknesses? What are the opportunities for the business? What are the threats for the business? How do we create value ? Business Recipe What is our org sustainability model? What is our value proposition? What makes us different? How will we evolve as a business? What is our organizational character? Organis-ational Character What assumptions guide us? What turns us on? What is not negotiable? How do we behave? What must we do and how will we make it happen? Goals, Action & Priorities What are our 3 year goals? What are our 1 year goals? What needs to happen in the next 30 days? Who is responsible?

14. “ We are so unique that we have no competition in the market” 4 NO COMPETITORS

17. Competitor Analysis FACTOR My Business Strength Weakness Competitor A Competitor B Competitor C Importance to Customer Products Price Quality Selection Service Reliability Stability Expertise Company Reputation Location Appearance Sales Method Credit Policies Advertising Image

18. “ We will work out our revenue and cost model as we go along” 5 NO BUSINESS MODEL

19. Business Model Income Stream 1 Income Stream 2 Income Stream 3 Source of Revenue Costs Investment Critical Success Factors

21. Business Model Diagram New Business Inputs Required (Cost Drivers) People Product Premises Marketing etc. Buyers What they buying Range of products or services Volumes; Frequency How they pay Timing of payment Up Front Investment Equipment Premises Branding Training Working Capital Etc Input Output Input $ $ $ Critical Success Factors What are the factors that are required to ensure that this model works? Revenue Costs Investment

22. “ We are four CAs so all is okay” 6 NO BALANCE IN THE TEAM

23. 0 Rands Revenue Investment Extremist Revolutionary Growth Entrepreneur Lifestyle Entrepreneur Survivalist Breadline Time Types of Entrepreneurs

24. The Entrepreneurial Team Creativity and Innovation General management skills, business know-how and networks Low High High Source: Timmons & Spinelli. New Venture Creation.2004. McGraw Hill. Inventor Entrepreneurial Team Promoter Manager, administrator

26. “ Who cares about cash when you’ve got the profit margins we’ve got ” 7 NO CASHFLOW FORECAST

29. Cash Flow Forecast (NB) M1 Budget M2 Budget M3 Budget M4 Budget M5 Budget M6 Budget … M12 Budget Total Budget Units Sold Opening Cash Balance + + + + + + + Cash Inflows + + + + + + + Fixed Cash Outflows _ _ _ _ _ _ _ Variable Cash Outflows _ _ _ _ _ _ _ Closing Cash Balance = = = = = = =

30. Sales Forecast * State the assumptions on which these numbers are based M1 Budget M2 Budget M3 Budget M4 Budget M5 Budget M6 Budget … M12 Budget Total Budget Cat 1 Units Sold* a Sales Price Per Unit* b Category 1 TOTAL axb=Z Cat 2 Units Sold* c Sales Price Per Unit* d Category 2 TOTAL cxd=Y Monthly Total Z + Y

31. Start Up Expenses Start Up Expenses Real estate XXX Capital equipment XXX Location and admin XXX Opening inventory XXX Advertising and promotions XXX Other expenses XXX Reserve for contingencies XXX Working capital XXX TOTAL XXXX Sources of Capital Owners investment XXX Bank loans XXX Other loans XXX TOTAL XXXX

32. P & L Forecast M1 Budget M2 Budget M3 Budget M4 Budget M5 Budget M6 Budget … M12 Budget Total Budget Revenue + + + + + + + Cost of Sales _ _ _ _ _ _ _ Gross Profit = = = = = = = Expenses _ _ _ _ _ _ _ Profit before tax = = = = = = = Tax Expense _ _ _ _ _ _ _ Profit after tax = = = = = = =

33. P & L Forecast EXAMPLES Salaries & wages Other operating expenses Interest payments Depreciation EXAMPLES Direct cost of goods sold M1 Budget M2 Budget M3 Budget M4 Budget M5 Budget M6 Budget … M12 Budget Total Budget Revenue + + + + + + + Cost of Sales _ _ _ _ _ _ _ Gross Profit = = = = = = = Expenses _ _ _ _ _ _ _ Profit before tax = = = = = = = Tax Expense _ _ _ _ _ _ _ Profit after tax = = = = = = =

34. Cash Flow Forecast (NB) M1 Budget M2 Budget M3 Budget M4 Budget M5 Budget M6 Budget … M12 Budget Total Budget Units Sold Opening Cash Balance + + + + + + + Cash Inflows + + + + + + + Fixed Cash Outflows _ _ _ _ _ _ _ Variable Cash Outflows _ _ _ _ _ _ _ Closing Cash Balance = = = = = = =

35. Cash Flow Forecast EXAMPLES Cash sales of goods or services Collection of accounts receivable Interest earned Sales of fixed assets or investments Capital from investor Loan received EXAMPLES Payment of cash expenses Payment to creditors Payment of salaries and wages Purchase of inventory for cash Purchase of fixed assets or investments Payback loans Payout dividends M1 Budget M2 Budget M3 Budget M4 Budget M5 Budget M6 Budget … M12 Budget Total Budget Units Sold Opening Cash Balance + + + + + + + Cash Inflows + + + + + + + Fixed Cash Outflows _ _ _ _ _ _ _ Variable Cash Outflows _ _ _ _ _ _ _ Closing Cash Balance = = = = = = =

38. “ We need R10m in venture capital and then we will get going” 8 NO MOMENTUM UNTIL CAPITAL IS RAISED

39. New venture financing and the equity gap Stage Source Demand Supply Pre-seed Seed / Start-Up Early Later Founders Family Friends Angels / Angel Alliances Venture Funds Private Equity 100k 500k R5-10 mil R20 mil Government Funds Equity Gap Adapted from a model proposed designed by Jeffery E Sohl – Center for Venture Research, University of New Hampshire

43. “ We have hired offices in Sandton, acquired Hummer’s for the directors and will pay the most to get the best” 9 NO FRUGALITY

45. “ Our marketing plan will be a combination of print, TV and internet advertising” 10 MISGUIDED MARKETING PLAN

46. Simple Marketing Plan Marketing mix component Description of the component Key questions to be answered by the entrepreneur Considerations Product Good marketing begins with a good product or service. Does it meet a specific need? What is that need? Must we customize our product or service? Do we deliver the appropriate quality for the customer? Product variety Quality Design Features Packaging Services Warranties Returns Price You need to find a balance between attracting customers and making profits. What does it cost us to produce the good or service? What are the competition charging for similar goods or services? Why are we charging more or less than the competition? How would revenue and profits be affected if we increased or decreased the price? List price Discounts Allowances Payment period Credit terms

47. Simple Marketing Plan Marketing mix component Description of the component Key questions to be answered by the entrepreneur Considerations Place This is about getting the product or service to the customer. Customers will only buy products or services that they have access to, thus it is critical to have distribution channels that reach the customer. Are we going to sell locally, regionally, nationally or globally? How will we reach the customer? Do we need more than one channel for reaching the customer? Should we create our own distribution channel or partner with an established distributor? Channels Coverage Transport Promotion Promotion is about communicating the merits of the product or service to target customers and persuading them to buy. How will we make customers aware of the benefits of buying our product or service? Advertising Sales force Public relations Direct marketing

48. New Venture Creation Model OPPORTUNITY Demand Passion Skills Resources STRUCUTRE Business Model Legal Form Tools / Facilities Team FUNDING Traditional financing Bootstrapping Cash flow SALES Product Price Promotion Place Word of mouth Growth Research BUSINESS PLAN