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FOUNDATIONS OF ENTREPRENEURSHIP

FOUNDATIONS OF ENTREPRENEURSHIP. CLASS SEVEN: BUILD OR BUY? & IDEA GENERATION. Elikem Nutifafa Kuenyehia. Class Agenda. Mid-term assignment Recap of last class Build or Buy? Idea Generation Guest Speaker: Shirley Frimpong-Manso, Managing Director, Sparrow Productions.

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FOUNDATIONS OF ENTREPRENEURSHIP

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  1. FOUNDATIONS OF ENTREPRENEURSHIP CLASS SEVEN: BUILD OR BUY? & IDEA GENERATION Elikem Nutifafa Kuenyehia

  2. Class Agenda • Mid-term assignment • Recap of last class • Build or Buy? • Idea Generation • Guest Speaker: Shirley Frimpong-Manso, Managing Director, Sparrow Productions

  3. Mid-term Assignment • Questions and issues

  4. Recap of last class • What did you learn from legal and regulatory considerations? • What did you learn from the Stellar Group’s acquisition story?

  5. Build or Buy? • A key decision entrepreneurs may have to make early is whether to build or buy? • Build – start a business from scratch • Buy – buy an existing business • Need to carefully evaluate options available before making a decision • Most people become entrepreneurs by starting enterprises from scratch with only a small number buying existing enterprises

  6. Buying an existing enterprise • Assets purchase • Share purchase • Purchase a share in a partnership • What is included in an acquisition? – Real Estate – Staff – Technology – Customers and contracts – Suppliers – Branding and intellectual property

  7. Pros of buying vs. starting from scratch • ‘Easier’ route to entrepreneurship • A history of success • Predictability of income stream • Experience of the previous owner • Lower risk • Easier to find finance • Eliminate competitor(s) • Eliminate barriers to entry

  8. Difficulties of buying vs. starting own enterprise • Legacy issues • Culture/Employee related issues • Difficulty to get an enterprise that suits the entrepreneur’s idea • Customer and supplier relationships may not be inherited • Obsolete technology and/or inventory • Special talent by owner • Enterprise may be overpriced • Valuation difficulties • Lack of choice

  9. Due diligence guidelines • Ask Questions • When you hear an answer, make sure you also see the answer • Use the Colombo method • When co-investing, do your own due diligence • Painstakingly review information about all aspects of the company

  10. The buying stages • Identification of opportunities • Screening opportunities • Evaluating • Valuation • Negotiation • Heads of terms or term sheet or letter of intent • Acquisition/purchasing

  11. Idea Generation From idea to profit? IDEA OPPORTUNITY CONCEPT INSIGHT GENERATION ENTERPRISE?

  12. What is an idea? • An idea is a conception or plan formed by mental effort • Every entrepreneurial venture rests on at least one fundamental business idea • It is an entrepreneur’s initial dream & mental picture for his enterprise

  13. Nature of ideas • Need not be outstanding/complicated • Need not be original • Search & Spin • Though some entrepreneur are inventors • To form the basis of a business, must provide a solution to a customer need • Customer Pain (Gari Soakings) • An unmet need • Existing enterprises may fall short unless • Using additional features & benefits

  14. Sources of ideas • Opportunity & Environment Scanning • Keeping eyes wide open/alert to opportunities • Various changes: • Social • Economic • Technological • Changing customer tastes & preferences • Media • In all forms • NB: what you might not typical pay attention to

  15. Sources of ideas (cont’d) • Reading • Travel • Government • Personal Experience and Frustration • Skill Set • Franchises • Conferences, Workshops, Exhibitions • Brainstorming

  16. IdeaQuest • Be very observant • Keep your eyes open for inspiration: use a notebook • Interest: what you like doing • Take a critical look at your major irritations • Skills – what are you good at? (irrespective of whether you like doing them) • Personality/Work Styles • What product or service will make my life easier?

  17. Which comes first? IDEA THE DESIRE TO START A BUSINESS?

  18. Ideas vs. Opportunity • A good idea is not enough • It must be underpinned by an opportunity • An idea may be underpinned by opportunity through: • Patent Opportunity • Tacit Discovery

  19. Ideas vs. Opportunity For an idea to be considered an opportunity it must: • Meet a customer need • Create value for the customers • Create value for stakeholders – depends on: • Number of potential buyers • Purchasing power of potential buyers • Return on investment • Be the right fit • Reflect values, interests, aspirations • Match resources & skills • Pass the realistic/sense check

  20. Concept Development • What is the customer pain that the enterprise will remove? • How is the pain dealt with at present (competitor products/substitutes)? • How it will remove the pain (customer value proposition and how different is it from the competition)? • Description of target market • Distribution – how will you distribute the product? • Production – how you will make the product? • Idea of cost of set up/production and key resources required • Idea of pricing ?

  21. Guest Speaker • Shirley Frimpong-Manso, Managing Director, Sparrow Productions

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