INFORMATION TECHNOLOGY ENTREPRENEURSHP

1. INFORMATION TECHNOLOGY ENTREPRENEURSHP CLASS FOUR: THE BUSINESS PLAN & THE ELEVATOR PITCH Elikem Nutifafa Kuenyhia Management Consultant & Corporate Lawyer

2. Agenda For Class Four • Hand in Homework Assignment • Recap of Class Three Discussion • Discussion of Sedina Attionu Case • The Business Plan & Elevator Pitch • Guest Speakers: Michael Antwi, Business Development Manager, Africa Development Fund [Confirmed] and Eli Kumekpor, Consultant, Deloitte & Touche USA • Give you opportunity to ask questions

3. Homework Exercises • Spend five to ten minutes to analyse yourself, your strengths, weaknesses and ask yourself whether you consider yourself a born entrepreneur based on the traits of successful entrepreneurs discussed. • Based on the presentations of Michael Amankwah & Mrs Villars and on the case studies (TravelKing/Pak Wo Shum and Sedina Attonu) would you say there is a particular entrepreneurial mindset?

4. Recap of Class Three

5. Developing A Business Plan • BPlan should highlight uniqueness of particular venture • Should demonstrate entrepreneur has • Thought through proposed venture & its key success factors • Carried out relevant research • Considered Pros & Cons of proposed venture

6. Developing a business plan • A business plan should tell a complete picture about: • Management team • Product/Service • Financing Needs • Strategies • Financial & Non-Financial Goals of enterprise

7. Developing a business plan • A business plan should: • Balanced • Present both positives and negatives about business • Forward looking – frame of about 3 years • Clear, concise and well organized • Simple to understand • Provide realistic data • If seeking investment, be clear on returns & exit • Provide projected financial statements

8. Each Plan though is unique • The detail you focus on will depend on the type of business • For start ups, may focus more on substantiating the existence of market demand • Start ups may also focus disproportionately on the quality of the management team • If inventing new technology based on research, may focus on Research & Development section

9. Role of Business Plan • Internal document • 'bible' for running the company, charting its course, recording successes etc • Should become a 'living' document • Pro-active Problem solving document • Reveals potential problems & gives entrepreneurs chance to think through them • Forces industry understanding • For a good business plan, entrepreneur would have to completely understand the industry he seeks to operate in

10. Role of Business Plan (cont'd) • Provides analytical discipline • Forces entrepreneur to think through whether venture will make money & from which sources etc • Attracts lenders & investors • Provides medium for entrepreneur to 'sell' his business to lenders & investors • Enhances chances of success • Greatest value is in actually drawing up plan • The process & framework makes entrepreneur better equipped

11. Executive Summary • Brief summary of the key highlights of plan. • Objective: Grab attention/Encourage reader to read to the end. • Should provide a good overview of venture to enable investor determine make decision • Clearly communicate existing consumer pain and how business would deal with this pain • Communicates the business concept and what differentiates it from competition

12. Mission Statement • Is the broadest statement of a company's purpose and defines the direction in which it will move • Basically will capture • What the enterprise is • What it will become • What it stands for

13. The Entity • Provides info about the company or other entity behind the business plan • If company has been in existence for a while, will include some historical background • Describe how the entity is organised – operating structure • Describe key processes involved in providing service or product & any relations with sub-contractors etc

14. Entity • This section will answer the following key questions: • What form of entity? • When established? By whom? • Shareholding structure • Level of commitment to running business • Is it a start up or growing concern? • Location • Number of employees • Any outsourcing?

15. Product/Service • Addresses a current customer pain • Should clear state what the product or service does and what the customer value is • Refer to competition and state how this product/service is superior to the competition • Think indirect substitutes where there are no direct substitutes • Stage of product development (or details of prototype)

16. Product/Service • Should answer the following: • What are the identified customer needs that the product/service will address • What value does the product/service bring the customer? • Strengths/Weaknesses of product/service to competitive set • Type of service/maintenance program planned • What is the nature of the innovation? • What is the current status of technical development?

17. Management Team • Most important section!!! • Success of a venture depends on ability of management team. • Even if it is a sole-proprietor, he will be relying on people to execute • Team should have • Common vision • Complimentary skills, attributes, strengths • Ability to get along with one another • Team should be lean & resilient

18. Management Team • Detail responsibility split • Info on qualifications/experiences • Answers questions such as: • Who are the team members & what are their roles? • What distinguishes them (experience, education etc)? • What experiences do they have that will help implement venture? • What experiences/skills are lacking? How gap will be fill

19. Market & Competition • Should demonstrate understanding of market & competitive landscape • Understand/Discuss wider industry and dynamics driving the industry • Include reliable expectations of market growth • Supported by data – Graphic/Business & Financial Times, Statistics, Budget statement, ‘State of Ghanaian Economy

20. Market & Competition • How is the industry developing? • What are the key success factors in the industry? • How would you segment the market? • What volume & value would each segment bring? • What volumes do you estimate over next few years? • How profitable are the competitors

21. Market & Competition • What are your competitors' key strengths/weaknesses • What new developments do you expect from the competition? • Any barriers to entry? How to overcome these barriers

22. Marketing & Sales • Sets out marketing & sales strategy • Target customers - clearly describe core target/ Give indication of size • Include gatekeepers where relevant • Customer Profile – indicate that target will respond favourably to marketing mix • Focus on 3 of the 4 Ps - Pricing, Promotion, Place (Distribution) • Sales tactics & projections (based on reasonable assumptions)

23. Marketing & Sales • Should answer: • Who are the target customers? What do they 'look' like? • What is the potential size of target market? What % can you reach? • What sales volume? • What price? • What advertising strategy? • What distribution channels? Sales per channel? • What payment policies

24. How to write a Great Business Plan – Sahlman • Bplan is a “snapshot of an event in the future”. Best ones are “like movies of the future – offer plausible coherent story of what lies ahead” • Business Plans rank 2 on a scale of 1 to 10 as a predictor of a new venture's success • Most waste too much time on detailed financial projections • For new company, they are an 'act of imagination' • Entrepreneurial ventures face too many unknowns to predict revenues, let alone profits. • Too optimistic – padding of figures & discounting of #s by investors

25. Article (Cont'd) • Not enough time spent on the information that matter (The Four interdependencies critical to every new venture): • The People • The Opportunity • The Context • The Possibilities for both risk & reward • He is not saying Bplan should not include #s • There should be some showing you have thought through key drivers of a venture's success or failure

26. Article (Cont'd) • Examples of key drivers • Manufacturing – yield on a production process • Magazine publishing – anticipated renewal rate • Software – impact of various distribution channel • Should also address the break even question • At what level of sales does the business begin to make a profit? • When does cashflow turn positive? • Thinks finanacial questions deserve a few pages “near the back”

27. The People • Define as 'the men & women starting and running the venture as well as the outside parties providing key services or important resources for it (lawyers, accountants, suppliers)' • What do they know? • Experience & Insights • Knowledge of product, production process, market, customers, comopetitors • Whom do they know? • How familiar are there with industry players & dynamics • Have team worked together before? • How well are they known?

28. The Opportunity • Profile of business itself • What it will sell and to whom • Whether the business can grow and how fast • What its economics are • Who and What stand in the way of success • Ask Two Questions: • Is the market for the venture's product or service large or rapidly growing? Total Size & Growth • Is the industry structurally attractive? • Do companies in the industry make money (cost structures, acquisition costs, conversion time, capital etc)

29. The Context • The big Picture – factors that change but cannot be controlled by the entrepreneur • Regulatory Environment • Interest Rates • Demographic Trends • Inflation • Competitor behaviour • Should also understand how you will react when that context changes

30. Risks & Reward • “Look unflinchingly at the risks....giving... a realistic idea of what magnitude of reward they can expect and when they can expect it” • Risk • Assessment of everything that could go wrong and right • How would you respond to? • Reward – the end of the process • How do I get my money out • Is it IPOable? • Investors like different options – sales, alliances

31. The Deal & Beyond • From whom you raise capital is more important than the terms

32. Elevator Pitch • Is a simple concise description of your business and the opportunity that anyone can understand. • Goal is to get someone sufficiently interested so they can follow up. Not to sell. • It is NOT a conversation. But the start of one. • Assume you are in the elevator and have one or two minutes maximum

33. Elevator Pitch (cont’d) • Should answer the question ‘Why should I be interested in your business?’ • Focus on the opportunity – The Pain and how you plan on solving the pain • Focus on why yours is a superior solution to the competitive set • Talk about the team of people who are going to make it happen • Throw in some numbers $$$