9. Source: Lange, Mollov, Pearlmutter, Singh and Bygrave (2007)
ânew ventures launched with formal written
business plans do not outperform ones
launched without them.â
38. âI'd just go sell it. I don't believe in market
research. Somebody once told me the only
thing you need is a customer."
Source: Sarasvathy (2007)
44. scientific business strategy
Source: Fairlie and Robb (2007) in Shane (2009)
High School University grads
(25% greater sales)
Post-grad degree
(75% greater sales)
49. How novel the idea is
Extent the idea is based on new technology
Superiority of product/service
Potential to change the industry
Intuition or gut feel
Source: Baron & Ensley (2006)
106 Novice entrepreneurs evaluated opportunities
50. Source: Baron & Ensley (2006)
106 Novice entrepreneurs evaluated opportunities
Solving a customers problem
Ability to generate positive cash flow
Speed of revenue generation
Manageable risk
Others in network to develop venture with
51. What are the key elements of a
good business opportunity?
Research on 5 of Canada's top angel investors
showed they looked for the following 8 elements
A summary of Business Angel Decision Making By Andrew
Maxwell, a PhD Thesis.
52. Is there a large market for this product?
Key Question:
No evidence of market potential presented
Fatal flaw ifâŚ
Examples
I cannot see any demand for this productâŚ.
The market is already well servedâŚ.
1 Market potential
53. Will customers in target market easily adopt [buy] this product?
Key Question:
No clear benefits, or major adoption issues
Fatal flaw ifâŚ
Examples
You have not convinced me that anyone will buy this productâŚ.
There are only a few major customers for your product, and it will
take you too long to sell any of themâŚ.
2 Product Adoption
54. How easy will it be for other people to copy the product or service?
Key Question:
Anyone could copy the product or service easily
Fatal flaw ifâŚ
Examples
No barrier to entry, as soon as you are successful, others will
enter the market and you will find it hard to competeâŚ
Without a clear advantage you will just have to compete on price,
which will reduce your profits to zeroâŚ.
3 Protectability (Barrier to entry)
55. Does management have the direct and relevant experience?
Key Question:
No evidence of required experience
Fatal flaw ifâŚ
Examples
I am concerned that without any direct experience of the retail
market you will be able to achieve successâŚ.
While the product is great, this is a business, and you havenât
shown me you have what it takesâŚ
4 Entrepreneur experience
56. Product ready for market, or major work required before it ships?
Key Question:
Needs more research and development
Fatal flaw ifâŚ
Examples
The product is still in the research and development phaseâŚ
Currently each product is hand made, not clear that have put any
thought into how you could scale up manufacturingâŚ.
5 Product Status (Stage of product development)
57. Is there a realistic marketing plan and route to market?
Key Question:
Limited thought given to distribution issues
Fatal flaw ifâŚ
Examples
Why would an existing distributor switch to you as a supplierâŚ
You have not allowed enough margin for a retailerâŚ
6 Route to market
58. Is the first customer identified? Does the product meet need?
Key Question:
No identified first customers?
Fatal flaw ifâŚ
Examples
You have not identified a first customer who would be likely interested
in your productâŚ.
You have not considered the switching cost for potential customers to
adopt your productâŚ.
7 Customer Engagement
59. Profitable and sustainable cash flow?
Key Question:
No evidence of profit or cash management
Fatal flaw ifâŚ
Examples
You will run out of money before you are able to raise more money
from investorsâŚ.
There is simply not a path to profitabilityâŚ.
8 Financial model
60. 11 2 3 4
8765
Market
Potential
Product
Adoption
Protectablity Business
Experience
Product
Status
Route to
Market
Customer
Engagement
Financial
Projections
65. â150,000 pounds for 15% of the companyâ
â5 pound per property to monthâ
âRentals only pay when emptyâ
â14,000 on the site with 3,000 payingâ
â200,000 hits per monthâ
âNumber 1 rental site in the UKâ
Have you done anything to increase revenue?
âDone reverse bill SMS (1.50 sms) and hosting sites for landlordsâ
AccomdationforStudents.com â Additional Information
66. ďź Financial projections â3000 are not rented out and payingâ
ďź Protectability âI donât see anything I couldnât do very simply, very
quickly myselfâ
ďź Financial projections âI canât see how it is going to generate
incomeâ
ďź Insufficient return âIf we not talking the same ballparkâ
ďź Insufficient return âyou have put me in a position where I have to
ask for a great deal of equityâ
AccomdationforStudents.com
Investment offers: 2
Performance: Survived (14 countries, not in top 100,000 sites)
69. â25% for 75 000 poundsâ
âLeft school worked for Natwest bank for 5 years. Changed career a
couple of times. Sold steel for 7 years what I am good. Worked
for husband.â
âDone 10 parties and made 2600 poundsâ
â8 ladies average spend 20 to 30 poundsâ
âProjection:
Consultants doing 1 party per week @ 250 pounds per partyâ
â4 working consultantsâ
âProjections year 1 â 750k with 64k profit; Year 2 6 million poundsâ
âAims to recruit 500 consultants in 2nd yearâ
Truly Madly Babyâ Additional Information
70. ďź Unrealistic projections âI do not believe the 6 millionâ âI think you
projections are truly madlyâ
ďź Not scalable âLifestyle business it is not scalableâ âIt is not that
scalableâ
ďź Wrong distribution channel âhave you thought about direct mailâ
ďź Wrong business model âI can see potential I have got some ideas
to a completely different strategy. I think there is a big opportunity
on the webâ
Truly Madly Baby
Investment offers: 2 (Peter Jones invested 75,000 pounds)
Performance: Survived (500 consultants; Website; Startup 100 list)
74. âAsking for 70,000 poundsâ
âMBA from Stanford Business Schoolâ
âSales projections Y1 â 180,000; 270,000â
âProfit projections Y1 â 110,000; 240,000â
âTrivial pursuit for Bollywoodâ
âFunded from personal funds and familyâ
âFull time day job runs business part-timeâ
Must be games â Additional Information
75. ďź Product quality âlooks cheapâ âbadly madâ
ďź Product adaption âI donât see an interest in your gameâ
ďź Poor pitch âYour pitch was far to long and totally uninspiringâ
âMade a bloody hash of your presentationâ
ďź Not unique âmany games like this on the marketâ
ďź Competition âThe market for board games is heavingâ
ďź Protectability âanybody can create a board gameâ
ďź Lack of commitment âI never invest in someone who isnât in the
businessâ
ďź Entrepreneur âI wonât be investing in youâ
Must be games
Investment offers: 0
Performance: Failure (No evidence of company existence)
78. âAsking for 200 000 pounds
âWe employ 5 peopleâ
âDoes commercial opening showsâ
âCustomer include Audi, Hotel for Butlinsâ
âBreakeven in 600,000 poundsâ
âThis year will do 800,000 pounds turnoverâ
The Generating Company â Additional Information
79. ďź Not scalability ânot going to be able to leverageâ âit is not
scalableâ
ďź High risk âthis is a high riskâ âthis is similar to theatre production
which can have a number of failureâ
The Generating Company
Investment offers: 2 (160,000 for 40% from Peter & Theo)
Performance: Success (2006 & 2007 played to over 1 million
people internationally)
83. â39 years oldâ
âCame up with the idea at universityâ
âthe over 50s control 100 billion poundsâ
âI am looking for help to show me how to market the productâ
âSuspects it will cost 1.50 to make and sell at 8 poundsâ
âCompetitors products (no spring) are 1 to 2 poundsâ
âI am wanting to produce a pre-production prototypeâ
âAsking 70,000 poundsâ
Light Fitting â Additional Information
84. ďź Small market size âI donât know whether there is a big enough
marketâ âIf there is a market I suspect it is very narrowâ âI donât
think it will sell in big quantitiesâ
ďź Product status âyou have not built a pre-production modelâ âI
donât know if the product worksâ
ďź Entrepreneur experience âyou might be a good product design
but you are not an entrepreneurâ
Light Fitting Company
Investment offers: 0
Performance: Failure (Still employed - Linkedin)
87. âCompetition is Go-karts and bicyclesâ
âSold 2,000 in Irelandâ
âIt has all the relevant safety standards. It is safer than a bicycleâ
âI am an importer and distributorâ
âI donât manufactureâ
âNext product is the extreme pongo
stick that jumps 5 feet in the airâ
âI have the sole right to import in the UK and Irelandâ
âdebtors 70,000 eurosâ
âcreditors 160,000 eurosâ
âdonât know how much they owe the VAT manâ
âis not paying the VAT man all the timeâ
Atomic Toys â Additional Information
88. ďź Product life span âwonât get another product and wonât be a long term
successâ âyou have one productâ âI think it is a fadâ
ďź Poor pitch âI think it was a poor pitchâ
ďź Entrepreneur âI donât think you are professionalâ
ďź No legal compliance âYou havenât paid the VAT man so for that reason
I am outâ âWhen someone thinks it is okay I have a serious problemâ
Atomic Toys
Investment offers: 0 (2 interested, didnât invest due to non VAT pmt)
Performance: Success (Small business award, multi-million euro
Business, distributes in UK and Europe)
This is one thing were the idea of business plan as spread all over. Of the studies that have looked at business plan nearly all of them show that business plans donât have an impact on performance, or worse they actually hinder performance. And there are very real reasons why spending a week or 2 writing a business plan is a bad idea.
Also, when you look at the best.
Neither did the founder of Intel corporation the largest manufacture of micro-processors build a
Baby in topless bar.
Julius Malema in builders warehouse.
Take for an example a 6 year study they did on Silicon chip manufactures start ups in the US. They compared teams which started with more then tree members, at least 50% of the team had joint experience and had three years industry experience in the team. The difference was massive a full 73% in six years become successful companies were only 19% with weak times become successful.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.
The results showed the vast majority, 81%, gave themselves a 7 out of 10 chance of success or greater.