-
1
Entrepreneurship, Business
Modeling and Business Planning 18 March 2015
Hans Landström
SKJ Centre for Entrepreneurship
Lund University, Sweden
[email protected]
Content today: Business models and
business planning
9.15-12.00 Lecture: Entrepreneurship process,
business models and business plans
(theory)
HLa
12.00-13.00 LUNCH
13.00-14.45 Lecture: Canvas (tools) SOL
Vincent
Pirenne
14.45-16.30 Project work: Your business model
Canvas
Business
Advisors
16.30-17.15 Reflections SOL
HLa
mailto:[email protected]
-
2
Agenda
1) The entrepreneurial process
2) Business models
3) Business plans
4) Course examination
5) Advice
The entrepreneurial process
-
3
The Entrepreneurial Process: Four approaches
Activitiy-based approach Business platform approach Paul
Reynolds
Magnus Klofsten
Decision approach Evolutionary approach
Saras Sarasvathy
Howard Aldrich
Activity based approach
Activities Example:
Concrete activities
Example:
Planning activities
1. Generate ideas Business Opportunity Recognition
- Discuss with friends and family - Think …
2. Identify business
opportunities
- Talk to potential customers
- Google competitors
- NABC-analysis
3. Prepare and plan Prepare Conceptualize
- Find team members
- IPR application
- Seek finance
- Market analysis
- Business model (eg Canvas)
- Business plan
4. Start-up Launch and manage
- Find office space
- Buy equipment
- Establish legal entity
- Financial projections
- Management and control
systems
5. Post-start activities - Marketing activities
- Production activities
- Reqruite staff
- Acquire inputs
- Growth planning
- Planning for
internationalization
-
4
Start-up activities
Business start-ups do not all follow one and the same
process
Any sequence of events is possible. There is no correct way
(but
maybe a couple of better ways…) to start a venture
Study in Norway 400 start-up processes
Variation in start-up processes (Aldrich, 1999), examples:
Context
Industry (different logics)
Newness (e.g. innovative-necessity, new vs old industries)
Individual-team
Typically it is a mix of planning and action with a touch of
luck
Start-up Gave-up Continued ...
Concrete activities
Many activities
Planning activities
Few activities
The Entrepreneurial Process: Four approaches
Activitiy-based approach Business platform approach Paul
Reynolds
Magnus Klofsten
Decision approach Evolutionary approach
Saras Sarasvathy
Howard Aldrich
-
5
Decision approach: Causation
Rational start-up process
GOALS MARKET MEANS
We know We know We know Start your
our goals! how the who we are! venture:
market We know the Rational
looks like! resources decision
we have! mode
Decision approach: Effectuation
Trial-and-error process
MEANS GOALS
Who I am? What can Interact Commit Start your
What I know? I do? with stake- venture:
Who I know? people. holders. Trial-and-
I know. error decision
mode
New goals/
new means
-
6
Decision approach: Causation and Effectuation
CAUSATION PROCESS Business opportunity 1 Business opportunity 2
EFFECTUATION PROCESS
Discussion
What do you perceive as the most difficult
activity/decision in the commercialization of your
idea? Why?
-
7
Business models
The entrepreneurial process
Development of business idea Idea Business Business Business
opportunity model plan New venture Career- Decision to start choice
a new venture Development of a new venture
-
8
Business modeling – definition
The business model describes how a company creates
something valuable for the customer and earn money
(generate revenue streams) from its business – answering
the questions:
Who are the customers and how do we create a
relationship to them?
What are the products/services that will deliver values,
satisfy needs or solve problems for the customers?
What are the resources needed to accomplish the
business model?
How do the company create a revenue stream to the
company?
Conceptualize your business:
Business idea to Business model
E-business
Business Idea Concept Business Model Concept
Richard Normann Jonas Hedlund (1943-2003) Thomas Kalling
Skapande The Business Model Concept
företagsledning, 1976 European J. of Information System,
2003
Porter (1985) Barney (1990)
Value chain Resources as valuable, rare, difficult to imitate
and support each other
Amit & Zott (2001) Value Creation in E-business, Strategic
Mgmt J.
Core Morris & Schindehutte & Allen (2005), The
entrepreneur’s business
works: model, J. of Business Research.
Osterwalder & Pigneur & Tucci (2005), Clarifying
Business Models,
Communications of AIS.
-
9
Business idea (Normann, 1976)
General business idea
Business area and focus
Differences from competitors
Market and customer
- Our market is …
External efficiency - Our function on the market …
(make the right things)
Product/service FIT
- We will offer …
Internal efficiency
(make things right)
Resources
- Our resources and competences are …
Exemple:
General business idea: Contribute to a better everyday life for
the many people!
External efficiency (make the right things): Offer a wide range
of functional home
furnishings to low prices that as many as possible will afford
to buy them.
Internal efficiency (make things right): Lowering the price
without decreasing quality
Each supplier produces the part that they can deliver best och
cheapest.
Customers assemble their furniture The parts are packed in flat
packages
themselves. in order to make costs for deliveries
and warehousing as low as possible.
The customers could themselves
select, collect and transport
the furnitures.
-
10
Conceptualize your business:
Business idea to Business model
E-business
Business Idea Concept Business Model Concept
Richard Normann Jonas Hedlund (1943-2003) Thomas Kalling
Skapande The Business Model Concept
företagsledning, 1976 European J. of Information System,
2003
Porter (1985) Barney (1990)
Value chain Resources as valuable, rare, difficult to imitate
and support each other
Amit & Zott (2001) Value Creation in E-business, Strategic
Mgmt J.
Core Morris & Schindehutte & Allen (2005), The
entrepreneur’s business
works: model, J. of Business Research.
Osterwalder & Pigneur & Tucci (2005), Clarifying
Business Models,
Communications of AIS.
Business Model (Alex Osterwalder)
Pillars Building blocks
Customer
interface
Describe the segments of customers a company wants to offer
value to.
Describe the various means of the company to get in touch with
its customers.
Explain the kind of links a company established between itself
and its different
customer segments.
Product Gives and overall view of a company’s bundle of products
and services.
Infrastructure/
management
Describe the arrangement of activities and resources.
Outlines the competencies necessary to execute the company’s
business model.
Portrays the network of cooperative agreements with other
companies necessary for
commercialize value.
Financial aspects Sums up the monetary consequences of the means
employed in the business
model.
Describe the way a company makes money through a variety of
revenue flows.
-
11
Business Model Canvas (Osterwalder) Workshop by Sven Olsson in
the afternoon
Business Plan
-
12
The entrepreneurial process
Development of business idea Idea Business Business Business
opportunity model plan New venture Career- Decision to start choice
a new venture Development of a new venture
The business plan – definition
A written document prepared by the entrepreneur that
describes all relevant external and internal elements
involved in starting a new venture and running a business
– answering the questions:
Where am I now?
Where am I going?
How will I get there?
Marketing
Production
Business Organization/Management
Model Ownership
Finance
etc.
-
13
Business Planning – History 1916 Henri Fayol: ”General theory of
business administration”
1960s-1970s Key tool in large corporations: Strategic
planning
Drucker (1954); Ansoff (1957); Porter (1980)
1980s-1990s Strategic management scholars rushed into the
field
of entrepreneurship:
- Business planning became a key tool in starting new
ventures
and institutionalized among business advisors, investors,
educators, etc.
- 78% entrepreneurship curricula and 100+ books on BP
2000s- Entrepreneurship scholars started to question the use of
BP:
Bhidé (2000; 2009): Google, Microsoft, Apple and Dell
started
without a BP
Honig (2003): No difference in success based on the use of
BP
Sarasvathy (2001): New ways of understanding the
entrepreneurial process
Preparing the business plan
Readers of a business plan: (1) action plan for the
entrepreneur, and
(2) selling document to investors, bankers, potential partners
and
employees, suppliers, customers, potential board members and
advisors, auditors, etc.
Depending on who is reading the plan they will read it
differently!!! Prepare different versions of the business
plan.
The preparation of a business plan is more or less
difficult:
Apple YouTube
Innovative Google
Product/service
Existing Craftman Amazon
Dell
Existing Innovative
Business model
-
14
Business plan: Disposition
Summary
1. Business Model
2. Products
3. Market plan
4. Management
5. Organization
6. IPR
7. Production
8. Owners
9. Financial overview
10. Realization
Supplements
Literature
VentureCup
Jepser Forslund (2014), Connect
Affärsplan FTW How to write a successful
Lean Publishing business plan
www.connectsverige.se http://www.venturecup.se/
ideutveckling/utbildnings
material/
Hisrich, R.D., M.P.
Peters and D.A.
Shepherd (2013)
Entrepreneurship
New York: McGraw-Hill
Chapter 7
http://www.connectsverige.se/
-
15
Write or not write: that’s the question Delmar and Shane (2003)
Honig and Karlsson (2004)
Arguments BP is an important precursor to
action in new ventures: (1) helps
founders to make more quick
decisions, (2) manage resources
more time-efficient, and (3) turn
abstract goals into concrete
actions.
The economic efficiency of writing a BP can be
questioned – it is more an institutional issue:
(1) public support agencies, (2) industries
where BP is deeply rooted, and (3) business
educations are influencing the writing of a BP.
No positive outcomes in terms of profitability
and survival.
Similarities Database: Swedish Panel Study of Entrepreneurial
Dynamics (PSED)
30,427 individuals between 16-70 years 223 new venture
started.
Differences Performance measures:
- Product development
- Organization activities
- Disbandon
Performance measures:
- Profitability
- Survival
Results BP is a valuable activity:
- Enhance likelihood of new
venture survival
- Facilitate product development
- Facilitate organizational efforts
Institutional forces:
- Contact with public agencies
- Working in industries rooted in BP
Writing a BP will not increase propensity of
profit or survival.
Discussion
Based on the articles by Honig & Karlsson (2004) and
Delmar
& Shane (2003):
What are the arguments for writing and against writing a
business plan?
When should you write a business plan?
In what way will a business plan differ dependent on the
reader (e.g. potential partner, investor, etc.)?
-
16
Arguments for writing a business
plan
A way for the entrepreneur to make his/her idea concrete
– different part of the idea must fit together.
A plan for the future work roadmap that will govern the
work and identify the resources needed.
An important way to communicate the business idea to
external actors selling document.
Evaluation document dynamic document.
The business plan makes you think through the
business thoroughly!
Arguments against writing a business
plan
It will take time – time that could be spent on marketing
and meeting with the customers.
The risk that you search for information that support your
idea reinforce wrong discussions.
The business plan identifies the difficulties in starting
the
venture hamper the driving force of the entrepreneur.
Always a risk to be criticized.
-
17
Assessment of the business plan Market demand
Market potential? For how long?
Market structure
Development phase? Market fragmentation? Barriers of enter?
Possibilities to earn money on the market
What does the cost structure look like? How much money do I
need? How long will it take to break-even?
Your goals
High-growth firm or making a living? Your view on ownership?
Start-up team
Relevant experience? Relevant network? Passion for the
venture?
Course Examination
-
18
Requirements for the Course
10 – max(!) 15 pages: no supplements
Focus: Summary
Business Idea, Value Proposition, Business Model
Market Analysis
Intellectual Properties Strategy
Risk Analysis
Other chapters in Business Plan only schematically
General guidelines from the course shall be applied
Advice
Create an interesting story ...
… depending on the audience and you can decide the
audience for your business plan.
Know your industry and your business.
Detailed and proven facts.
Be involved in the writing of your business plan – it’s a
learning process.
Max 15 pages, comprehensible and simple language,
focus on essentials, stick to the truth, well edited.
-
19
Q&A
Thank you for your attention!
Hans Landström [email protected]
mailto:[email protected]