Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
30/03/17
INTRODUCTORY INFORMATION
INNOVATIVE ENTREPRENEURSHIP
E-mail:
[email protected] Office hours (B-4, 3.28): • Mondays 9-11 • Thursdays 11-13
dr inż. Mateusz Molasy
WRITTEN TEST: 20.06.2017, results in „JSOS/Edukacja.CL” max. one week later On the test there will be 4 open questions, each answer can be assessed 0-1 p. The final grade:
• • • • •
4 p. = grade 5,0 3,5 p. = grade 4,5 3 p. = grade 4,0 2,5 p. = grade 3,5 2 p. = grade 3,0
PRIMARY LITERATURE
SECONDARY LITERATURE
1. Bessant J., Tidd J., Managing Innovation, 5th Edition, Wiley, 2013
1. Aulet B., Disciplined Entrepreneurship: 24 Steps to a Successful Startup, Wiley, 2013
2. Bessant J., Tidd J., Innovation And Entrepreneurship, 3rd Edition, Wiley, 2015 3. Bygrave W., Zacharakis A., Entrepreneurship, 3rd Edition, Wiley, 2014 4. Drucker P.F., Innovation And Entrepreneurship, HarperBusiness, 1993 5. Westhead P., Wright M., McElwee G., Entrepreneurship. Perspectives And Cases, Pearson Education Limited, 2011
DOING THINGS BETTER THAN THE COMPETITORS BEING REWARDED FOR THE SUCCESS
ENTREPRENEURSHIP
dr inż. Mateusz Molasy
3. Bridge R., You Can Do It Too: The 20 Essential Things Every Budding Entrepreneur Should Know, Kogan Page, 2010 4. Gerber M.E., Awakening the Entrepreneur Within: How Ordinary People Can Create Extraordinary Companies, HarperBusiness, 2009
FACTS ABOUT ENTREPRENEURSHIP
ENTREPRENEURSHIP
CREATING UNIQUE VALUE FOR THE CUSTOMER
2. Johnson K.D., The Entrepreneur Mind: 100 Essential Beliefs, Characteristics, and Habits of Elite Entrepreneurs, Johnson Media Inc., 2013
•
Every hour of every working more than 1,500 new businesses just in the U.S. are born
•
Half small businesses are part-time and half are full-time
•
81% businesses survive at least 1 year, 65% for 2 years, 40% for 5 years, 25% for 10 years
•
40% of small businesses are in service industries, 20% in retail, 12% in construction, 8% in wholesale, 8% in finance, 6% in manufacturing, 4% in transport and communications, 2% in agricultural services
The essence of free enterprise because the birth of new businesses gives a market economy its vitality
1
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
30/03/17
CAUSES OF THE ENTREPRENEURIAL REVOLUTION IN THE USA
ENTREPRENEURIAL REVOLUTION IN POLAND
Cultural and social norms: young Americans less concerned about their job security and better educated
1988 - Wilczek’s law: „Undertaking economic activity is free and permitted to everyone”
Government: paying more attention to startups with high potential, stimulating the venture capital industry, minimizing anticompetitive behavior, activating Small Business Innovation Research program
1990 - The Balcerowicz Plan:
R&D transfer: new law helped commercializing high technologies Physical infrastructure: the Internet, outsourcing services Human infrastructure: numerous entrepreneurship experts help people who are starting or growing companies
• Step 1. Fast privatization of and private sector development • Step 2. Unpopular but efficient reforms • Step 3. Anti-inflation measures were taken • Step 4. Law on foreign investments • Step 5. Reduction of withholding rate • Step 6. Reasonable allocation of money
Education & training: readily available Financial: the amount of venture capital & business angels grown
ENTREPRENEUR Entrepreneur is a person who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw materials. [Shumpeter, 1934] An entrepreneur is someone who perceives an opportunity and creates an organization to pursue it. [Bygrave, Zacharakis, 2014]
ENTREPRENEURSHIP – SOCIAL STATISTICS
THE ENTREPRENEURIAL PROCESS
Gender: 50% more men than women are entrepreneurially active Education: 57% of entrepreneurs have a postsecondary education Financing: equity or debt Job creation: 70% early-stage entrepreneurs expects some job creation
Source: Bygrave, Zacharakis, 2014
dr inż. Mateusz Molasy
2
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
30/03/17 56
CHAPTER 2
The Entrepreneurial Process
Evaluating Opportunities for New Busin CHARACTERISTICS OF A SUCCESSFUL ENTREPRENEUR: “10 DS”
Dream
Decisiveness
Doers
Determination
Dedication
Devotion
Details
Destiny
Dollars
Distribute
SURVIVAL RATES OF NEW BUSINESSES 1 business in 10 will ever reach its 10th birthday The chance that the full-time incorporated business will survive at least eight years is 1/4 Eight-year survival rate for incorporated startups is about 50%, but with change of the owner A startup company funded by venture capitals has 4/5 chance of surviving five years
THE OPPORTUNITY New idea doesn’t have to be unique
Share your ideas to evaluate it
dr inż. Mateusz Molasy
Let’s assume you believe that you have found a great oppor How should you evaluate its prospects? Or, perhaps more im THE ENTREPRENEURIAL person such as a potential investor or a banker rate your succeeding appear to be stacked against you because, acc PROCESS only 1 business in 10 will ever reach its 10th birthday. Th estimated 3 million businesses that are started every year g in a severe recession, the number of businesses filing for ba never surpassed 100,000 in any year. In an average year, the 2008, when small businesses were hit hard by a severe rece was less than 45,000.16 So what happens to the vast major 10 years? Most just fade away: They are started as part-tim to become full-time businesses. Some are sold. Others are million are legally registered as corporations or partnershi remaining 2.3 million never intended to grow because, in to the bother and expense of registering a new venture a is expected to become a full-time business with employee business will survive may not be as long as they first appea full-time, incorporated business, the odds that the business w Bygrave, Zacharakis, 2014 you as theSource: owner are better than one in four, and the odds with a new owner are another one in four. So the eight-y startups is about 50%.17 But survival may not spell success. Too many entrepr earn a satisfactory living in their businesses nor get out of much of their personal assets tied up in them. The happiest day doors are opened for business. For unsuccessful entrep be the day the business is sold—especially if most personal Shaw said about a love affair is also apt for a busin THREE DRIVING Bernard takes a genius to end one successfully. How can you stack the odds in y FORCES is a success? Professional investors, talent for picking winners. True, they Uncertainty pany funded by venture capital has of surviving five years—better odds Opportunity Entrepreneur companies as a whole. Very few bu one in a thousand—will ever be su from professional venture capitalists Fits & Gaps learn a lot by following the evalua Business Plan investors. Uncertainty Uncertainty There are three crucial compon the opportunity, the entrepreneur (a high-potential venture), and the reso Resources and make it grow. These are show the basic Timmons framework. At Source: Bygrave, Zacharakis, 2011 F i g u r e 2.3 business plan, the result of integratin complete strategic plan for the new b Three driving forces (Based on Jeffry well. It’s no good having a first-rate Timmons’ framework)18 a second-rate management team. N good without the appropriate resour
THE CUSTOMER There is no market unless customers have a real need for the product
Developing the idea, implementing it and building a successful business
Most entrepreneurial ideas are for existing products with improved performance, price, distribution, quality, service Customers must perceive that the new business will be giving them better value for their money than existing businesses
3
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
30/03/17
DETERMINING RESOURCE NEEDS
THE TIMING In some industries there is a window of opportunity that opens only once, in other markets there is a steady demand that does not change much from year to year Some markets opens wider during recovering or booming economy
Assess what resources are crucial for the company’s success in the marketplace Sometimes it is more effective to subcontract the work instead of doing it with its own employees
Many best companies started with very little capital
INGREDIENTS FOR A SUCCESSFUL NEW BUSINESS Founders
Focused
Fast
Flexible
Forever -innovating
Flat
Frugal
Friendly
Fun
FINDING THE PASSION
Is this idea big enough to make a successful business?
How do I come up with a good business idea?
IDEA MULTIPLICATION PROCESS
• Think long-term • Think deeply about all the things that give you joy – there are always many ancillary businesses around that activity • Talk to the people in your “sphere of influence”: ask parents, friends, teachers and former work associates
Gather stimuli
Multiply stimuli
Create customer concepts
Optimize practicality
• Learn about the new business, even if it makes countless sacrifices • Avoid becoming a “cocktail-party entrepreneur”
dr inż. Mateusz Molasy
• All good ideas start with the customer • Observe and ask questions, but beware the leading questions
4
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
IDEA MULTIPLICATION PROCESS
Gather stimuli
Create customer concepts
Multiply stimuli
30/03/17
IDEA MULTIPLICATION PROCESS
Optimize practicality
Gather stimuli
Multiply stimuli
• Brainstorming on the concept how to improve upon the solution • Generate as many diverse ideas as possible • Use brain-writing technique
IDEA MULTIPLICATION PROCESS
Gather stimuli
Create customer concepts
Multiply stimuli
Create customer concepts
Optimize practicality
Build a simple mock-up of what the product will look like
THE OPPORTUNITY SPACE
Optimize practicality
Identify those features that are unnecessary, impractical, too expensive Source: Bygrave, Zacharakis, 2014
THE CUSTOMER Primary target audience (PTA)
Secondary target audience (STA)
THE CUSTOMER Tertiary target audience (TTA)
Focus most of your attention on the Primary target audience Collect information about income, demographics, personality traits, values...
dr inż. Mateusz Molasy
Primary target audience (PTA)
Secondary target audience (STA)
Tertiary target audience (TTA)
Less frequent customers, but also deserves attention May be part of growth strategy
5
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
COMMON DEMOGRAPHICS AND PSYCHOGRAPHICS CATEGORIES
THE CUSTOMER Primary target audience (PTA)
Secondary target audience (STA)
30/03/17
Tertiary target audience (TTA)
Requires attention in the future and only a little during the launch stage
Source: Bygrave, Zacharakis, 2014
TRENDS
HOW BIG IS THE MARKET?
• Entrepreneurs need to spot trends that are influencing buying behaviors of customers because they aren’t static groups that remain the same over time
• Larger goals = more important market-demand forecasts
• Trends create new product and service categories or emerging markets
• Start at the larger macro market and funnel demand down to your segment and your geographic location • Know how big the market will be in the future – attractive opportunities open up in growing markets
• Trends that occur in smaller market segments may be precursors to larger macro trends
S-CURVE
FREQUENCY AND PRICE How often average customer buys product or service how much is willing to pay? ELASTIC DEMAND
INELASTIC DEMAND
The quantity demanded will go down if the price goes up and vice versa
Whether price increase or decrease, the demand for the product stays stable
In reality there is almost always elasticity in customer demand and the price is a function of elasticity Source: Bygrave, Zacharakis, 2014
dr inż. Mateusz Molasy
6
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
LOW PRICE PRODUCTS PROBLEMS
INHERENT VALUE
PURCHASES
30/03/17
• Low price may exceed ability to supply, resulting in stockouts
EARNING
OPTIMAL PRICE
• Customers may resist when trying to recapture value by raising prices in the future • Building a business around customers always searching for the lowest price – they will easily leave when a competitor finds a way to offer a lower price • “Cost-plus pricing”: adding a set percentage on the top of cost to produce a unit of the product – there is a change that the price would be set lower or higher than the underlying value of the product or service Assess market price for competing products (price that reflects the new process plus a premium for the added value)
GROSS MARGINS
THE COMPETITION
Gross margins of 40% are good benchmark that distinguishes more attractive from less attractive opportunities
• Identify direct competitors, indirect competitors and substitutes
It is important to have higher gross margins early in the venture’s life because:
• Competitors can lower prices to a point that makes it difficult for new ventures to compete, spend more on their advertising campaign and other marketing expenditures, increase their visibility due to greater resource reserves or easier access to capital.
• operating costs during the early years are disproportionately high due to learning curve effects • new venture will incur costs prior to generating sales associated with those costs • entrepreneurial companies have more difficulties with distribution It usually takes 3–5 years to stabilize operating costs
HOW TO IDENTIFY ‘STEALTH’ COMPETITION?
• Emerging markets are characterized by ‘stealth’ competitors – it is difficult to learn about competition that isn’t yet in the marketplace
INDIRECT COMPETITORS, SUBSTITUTES • Identify where the customer spends money
Ask suppliers: competition may use similar inputs
Professional equity capital can help determining competitors
• Identify strengths of each competitor: gauge how well your competitors are doing by tracking their revenues, gross margins, net income margins, and net profits • Focusing on a few competitors in depth will help devise a successful strategy
Scan available databases
dr inż. Mateusz Molasy
7
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
30/03/17
“4 PS” OF MARKETING CREATING THE OFFER
Marketing - an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
PRODUCT
PRICE
PROMOTION
PLACE
Source: The American Marketing Association
TELLING THE MARKET ABOUT THE OFFER
ENTREPRENEURIAL MARKETING Many entrepreneurs rely on creativity rather than cash to achieve a compelling image in a noisy marketplace
ENTREPRENEURIAL MARKETING ENTREPRENEURIAL MARKETING
ACQUIRING MARKET INFORMATION Marketing research is the collection and analysis of any reliable information that improves managerial decisions
MARKETING DONE BY ESTABLISHED COMPANIES
Companies typically have limited resources – financial, managerial
Corporations can spend a lot on conducting extensive marketing research, testing their strategies, designing marketing campaigns
Little share or no market share, a confined geographic market presence, restricted access to distributors
Huge market share, established relations with distributors
Not well established bonds with investors, customers, employees, and business partners – entrepreneurs must be both customer oriented and relationship oriented
Established bonds with investors, customers, employees, and business partners – company can be more customer oriented
It’s important to build brand awareness – the company’s product or service values should be clear to the customer Companies focused on growth must be able to switch marketing gears quickly and attract new and different customer segments
TAKING THE OFFER TO THE MARKET
BASIC TYPES OF MARKETING DATA SECONDARY DATA
Questions that marketing research can answer:
• marketers gather from already published sources like an industry association study or census reports • requires LESS time and money
What product attributes are important to customers? How is customers’ willingness to buy influenced by product design, pricing, and communications? Where do customers buy this kind of product? How is the market likely to change in the future?
dr inż. Mateusz Molasy
PRIMARY DATA
• marketers collect specifically for a particular purpose through focus groups, surveys, or experiments • requires MORE time and money
8
We also look at how certain marketing skills serve to support a new company’s growth.
Acquiring Market Information An entrepreneur needs to do research to identify and assess an opportunity. Intuition, personal expertise, and passion can take you only so far. Some studies show that good pre-venture market analysis could reduce venture failure rates by as much as 60%.2 But many entrepreneurs tend to ignore negative market information because of a strong commitment to their idea. Whereas Chapter 2 defined what an opportunity is and Chapter 3 presented a checklist for assessing how attractive your opportunity might be, this chapter provides a drill-down on how you collect data to validate your initial impressions of the opportunity. We define marketing research as the collection and analysis of any reliable information that improves managerial decisions. Questions that marketing research can answer include the following: What product attributes are important to customers? How is customers’ willingness to buy influenced by product design, pricing, and communications? Where do customers buy this kind of product? How is the market likely to change in the future? There are two basic types of market data: secondary data, which marketers gather from already published sources like an industry association study or census reports, and primary data, which marketers collect specifically for a particular purpose through focus groups, surveys, or experiments. You can find a great deal of market information in secondary resources. Secondary research requires less time and money than primary research, and it should be your first avenue. Entrepreneurs sometimes use databases at college libraries to collect baseline information about product and geographic markets (Figure 7.5 in Chapter 7 lists some common databases). Some types of primary data are easy to collect, for instance, with personal interviews or focus groups, but keep in mind the limitations of such data, such as lack of statistical
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
COLLECTING PRIMARY DATA BY FOCUS GROUPS
Stage
Examples of Effective Questions
Introduction
•
Think of the last time you purchased Product X. What prompted or triggered this activity?
•
How often do you use X?
•
What are some of the reasons for so many products in this industry?
•
Here is a new idea about this market. In what ways is this idea different from what you see in the marketplace?
•
What features are missing from this new product?
•
What would you need to know about this idea in order to accept it?
•
Is this focus group discussion what you expected?
Rapport Building In-Depth Investigation
Closure
F i g u r e 5.1
Source: Bygrave, Zacharakis, 2011
Focus group
170
CHAPTER 5
Entrepreneurial Marketing
30/03/17
significance (because the samples are small). To ensure that they o some entrepreneurs hire marketing research firms to perform resea alternatives do exist: For example, a business school professor migh project to a student research team. In choosing a research approach, b time constraints with the possible cost savings. The appendix at the end of this chapter provides a list of possible customer research interview. You can structure such an interview as a THE CUSTOMER or as a focus group. In focus groups, a discussion leader encourages 5 their views about the company’s p CHOICE PROCESS focus group has distinct stages, a specific questions to get good-qu Provider Customer the group participants. Figure 5.1 provides some example questions Create and Capture Awareness a focus group. Value Customer acceptance of an - Product/service features Perceptions proof that the opportunity is w - Price preneurs must understand the cu Preferences process and how to influence Deliver and Communicate Such customer understanding e Value Choice develop the right products at the - Availability capture value) and then market - Advertising Satisfaction/loyalty - Sales force right customers in the right pl - Public relations deliver value). Further, such kn - Guerrilla marketing Source: Bygrave, Zacharakis, 2011 behavior at each stage of the d helps entrepreneurs to be effectiv F i g u r e 5.2 communication strategy to reac Figure 5.2 provides an illustra marketing tools play in the custom Understanding the customer choice process
Marketing Strategy for Entrepreneurs SEGMENTATION, TARGETING, POSITIONING Segment – a group of customers defined by certain common bases or characteristics that may be: • demographic (age, education, gender, income) • psychographic / lifestyle (descriptors like active, individualistic, risk taking, and time pressured) • behavioral (consumer traits such as brand loyalty and willingness to adopt new products)
SEGMENTATION, TARGETING, A company’s marketing strategy must closely align with its reso companies with limited resources have little room POSITIONING Entrepreneurial Segmentation, targeting, and positioning are key marketing dimensio
framework. We begin this section by discussing these three activities an
strategy. Then and we examine the widely studied marketing elements k Targeting – compares the defined segments then selects the most attractive one, which Primary mix:becomes product,the price, distribution (place), and communications (prom Target Audience (PTA); should also reflect your company’s specific capabilities and longer-term goals
Segmentation, Targeting, and Positioning
Segmentation targeting are the processes marketers use to identify t Positioning – relates to competitors and toand customers’ company’s products and services. In Chapter 3, we talked about t perceptions of the product; their usually describes a company’s offering relative tunity to certain product attributes would initially target, what we call the primary target audien – the ones customers care about Such attributes beyondmost. opportunity recognition into implementation of a marketing st often include price, quality, our andinitial convenience, all of which conceptions and refine what that PTA segment really mean can be scaled from high to low
of customers defined by certain common bases or characteristics tha psychographic (commonly called lifestyle characteristics), or behaviora teristics include age, education, gender, and income; lifestyle character like active, individualistic, risk taking, and time pressured. Behaviora consumer traits such as brand loyalty and willingness to adopt new pr
“4 PS” OF MARKETING
PRODUCT STRATEGY CORE PRODUCT
PRODUCT
PRICE
• The essential good or service
PROMOTION
dr inż. Mateusz Molasy
AUGMENTED PRODUCT • The set of attributes incidentally related to it
PLACE
9
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
PRODUCT STRATEGY VALUE PROPOSITION
PRODUCT STRATEGY
Developing any new product the company must ensure that there is a real customer value position (CVP)
PRODUCT DIFFERENTIATION
Customer value is the difference between total customer benefits and total customer costs
PRODUCT LIFE CYCLE PRODUCT DIFFUSION THEORY
30/03/17
Has 4 elements: target group and need, brand, concept and point of difference
QUALITY
VALUE PROPOSITION PRODUCT DIFFERENTIATION
Attributes that make product unique PRODUCT LIFE CYCLE PRODUCT DIFFUSION THEORY
QUALITY
PRODUCT STRATEGY
PRODUCT STRATEGY
VALUE PROPOSITION
VALUE PROPOSITION
PRODUCT DIFFERENTIATION
PRODUCT DIFFERENTIATION
PRODUCT LIFE CYCLE PRODUCT DIFFUSION THEORY
• • • •
PRODUCT LIFE CYCLE
Introduction Growth Maturity Decline
PRODUCT DIFFUSION THEORY
QUALITY
Entrepreneurs must make different kinds of risk-return trade-offs: pioneering products are risky investments and incremental products are less risky, but also produce less return
QUALITY
PRODUCT DIFFUSION CURVE
PRODUCT STRATEGY VALUE PROPOSITION PRODUCT DIFFERENTIATION PRODUCT LIFE CYCLE PRODUCT DIFFUSION THEORY
Source: Bygrave, Zacharakis, 2011
dr inż. Mateusz Molasy
QUALITY
Serves a powerful differentiator and is needed to gain the recommendation of customers Positive word-of-mouth recommendations are essential because most customers are not yet familiar with the company Employees are more enthusiastic about and proud to be selling high-quality products
10
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
“4 PS” OF MARKETING
PRODUCT
PRICE
PROMOTION
PLACE
30/03/17
PRICING STRATEGY
PRICING TOO LOW CAN HURT THE LONG-TERM PROFITABILITY OF THE VENTURE Source: Bygrave, Zacharakis, 2011
PRICING STRATEGY
PRICING STRATEGY PRICE POINTS (PRICE LEVELS) • Standardizes or fixed prices
PRICE SKIMMING • sets high margins • limited market share might be gained because of high price • good for innovative products
PRICE PROMOTIONS • A tool to achieve specific goals (increase sales, reward distributors, clear excess inventory) • Short-term and use regular price levels as a base to discount from • Have to be organized in order to stay competitive
PENETRATION PRICING • gaining high market share with lower margins and lower prices
“4 PS” OF MARKETING
PRODUCT
PRICE
PROMOTION
PLACE
PRICE DISCRIMINATION
COUPONING
• Charging different prices to different customer segments
• Rewarding customers who care about receiving a discount
TRADITIONAL DISTRIBUTION CHANNELS
Source: Bygrave, Zacharakis, 2011
dr inż. Mateusz Molasy
11
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
DISTRIBUTION STRATEGY
30/03/17
CHANNEL COVERAGE
Distribution decisions for a service company: location decisions – effective distribution is the availability and accessibility of a service to its target customers Interdependency in a distribution channel: each channel member has a particular function to perform, and each relies on the others In business-to-business channels, entrepreneurs often outsource their selling efforts to sales brokers, but then it’s hard to control the quality, the information flow between company and your customer is interrupted
DISTRIBUTION STRATEGY
INTENSIVE • Works for consumer goods and other fastmoving products
SELECTIVE • Brings the product to specific distributors, often limiting selection geographically by establishing a dealer network • Can protect dealers and retailers from competition, while helping manufacturers maintain prices by thwarting price competition
EXCLUSIVE • used for luxury products
“4 PS” OF MARKETING
CHANNEL PARTNERSHIP: entrepreneurs must carefully manage their relationships with channel partners and monitor them over time; partnership can speed a young company’s growth, preserve resources, and transfer risk
PRODUCT
PRICE
PROMOTION
PLACE
CHANNEL CONFLICT: refers to situations where differing objectives and turf overlap lead to true disharmony in the channel MULTICHANNEL DISTRIBUTION: gives a company the ability to reach multiple segments, gain marketing synergies, provide flexibility for customers, save on customer acquisition costs, and build a robust database of purchase information
THE COMMUNICATIONS MIX
COMMUNICATIONS STRATEGIES
A PUSH STRATEGY Push a product through the channel using tools: trade promotions, trade shows, personal selling to distributors, personal selling to other channel members
A PULL STRATEGY Create end-user demand and rely on that demand to pull the product through the channel Include advertising and consumer sales promotions, such as in-store specials
Source: Bygrave, Zacharakis, 2011
dr inż. Mateusz Molasy
12
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
ADVERTISING APPROPRIATE
AFFORDABLE
MEASURABLE / POSSIBLE TO EVALUATE
30/03/17
ADVERTISING
• MULTIPLE METHODS IN COMBINATION • THE MESSAGE AND THE BRAND IMAGE SHOULD BE STRICTLY CONSISTENT
ADVERTISING
REACH
FREQUENCY
The percentage of a company’s target market that is exposed to an ad campaign within a specific period of time
The number of times a member of your target market is exposed during that time period
ADVERTISING
Source: Bygrave, Zacharakis, 2011
Source: Bygrave, Zacharakis, 2011
SALES PROMOTION
DIRECT MARKETING
CONSUMER PROMOTIONS
TRADE PROMOTIONS
SALES FORCE PROMOTIONS
Deals offered directly to consumers to support a pull strategy
Deals offered to a company’s trade or channel partners to support a traditional push strategy
Motivate and reward the company’s own sales force or its distributors’ sales forces (price promotions, non-price promotions)
dr inż. Mateusz Molasy
Methods: direct mail, catalogs, telemarketing, infomercials, and permission e-mail Direct media is easy to measure, and ideal for building a database that can be used for future marketing and analysis Company can address a customer on an individual level, factoring in that customer’s previous purchasing behavior and other kinds of information, and then respond accordingly
13
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
GUERRILLA MARKETING WORD-OFMOUTH MARKETING
BUZZ MARKETING
VIRAL MARKETING
Using high-profile entertainment or news to get people to talk about your brand
Creating entertaining or informative messages that are designed to be passed along in an exponential fashion, often electronically or by e-mail
Giving people a reason to talk about products and services and making it easier for that conversation to take place
30/03/17
TEAMS BENEFITS A team enables the entrepreneur to do more than she could accomplish alone The size of the organization is directly correlated to the amount of revenue the business can derive - in the early years, it is critical to be focused on revenue-generating employees Teams have a higher chance of success due to an increased skill set, an improved capacity for innovation, and a higher social level of support, among other factors Having a team around provides moral support
Makes people talk about the product and the company, effectively making them ‘‘missionaries’’ for the brand
Team multiplies the size of a network of relationships Team rounds out the skill set needed to launch a business
Creates drama and interest and positive affect, or emotion
UNDERSTANDING PERSONAL LIMITS Updating/building resume: doing an honest and complete assessment of demonstrated skills
• • • •
Questions to be answered: What do you really like to do and what do you dislike? Do you see pa5erns in your resume that suggest some underlying strengths? Can you leverage these strengths as you try to launch a startup? Can you sell, or are you be5er suited to another role?
SELF-AWARENESS TYPES OF PEOPLE Overly conscious of their own weaknesses
Oblivious to their own weaknesses
Those may be reluctant to pursue a venture because their fear of their own shortcomings will lead to failure
They are also more likely to fail once they do so because they won’t seek help or recognize that they need help
CONDUCTING FEEDBACK ANALYSIS Every time you make a major decision or take a significant action, record what you expect to happen
Several months later, after an outcome has occurred, compare it to what you originally recorded
• Are your expectations and your actual results similar? • What’s different, and why is it different?
A STAFFING PLAN Helps to anticipate where the company is going and to plan for those needs
Source: Bygrave, Zacharakis, 2010
Ideal combination – team members coming from different disciplines
dr inż. Mateusz Molasy
14
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
BUILDING A POWERFUL TEAM
30/03/17
WHAT DOES NEW VENTURE CAN OFFER?
Identifying individuals to fill the gaps: • tap personal network and the network of advisors • search college’s databases
Opportunities to grow into higher management positions
• check with investors, accountant, lawyer • check with family, friends…
Owning some of the new venture
Define decision and reporting responsibilities. Clearly state expectations, tasks, and objectives
BEING AN EMPLOYER AND AN ENTREPRENEUR When staying at current job and working on the new venture part-time at night and on weekends: • focus on those duties that help the employer succeed • don’t use employer’s resources • don’t expropriate intellectual property from the current employer to use in the new venture • don’t solicit employer’s customers
MANAGING PERSONAL FINANCES BY HIRING • Plan ahead • It is easy for a part-time worker to become disengaged from the startup • People who are already working on the startup full-time may resent that the other person, hired half-time, isn’t heavily involved • Until person signs up a full-time contract she is at greater risk of walking away
A full time job + setting up an entrepreneurial venture: dual-job strategy works only during the planning stages
COMPENSATION
EQUITY
SALARY
dr inż. Mateusz Molasy
• New companies often can’t pay market rates for salary and wages • It aligns the employee’s interests with those of the company • The sense of ownership boosts morale
OTHERS
WAYS OF DISTRIBUTING EQUITY FOUNDER SHARES
OPTION POOL
Equity earned by founders of the company at the time it is officially established or when the first outside equity capital is invested 1. Remember that granting shares to new parties dilutes your personal ownership 2. Keep this group small 3. Don’t distribute shares evenly
15
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
WAYS OF DISTRIBUTING EQUITY FOUNDER SHARES
30/03/17
COMPENSATION
OPTION POOL EQUITY
• Equity set aside for future distribution • Give the holder the right to buy a share in the company at a below-market rate • If options lose their value, they stop to be an incentive tool
OTHERS
EXTERNAL TEAM MEMBERS
SALARY
Experience & wisdom
OUTSIDE INVESTORS
Experienced co-founder with a long record of success
A younger, less experienced co-founder
LAWYERS LOWER SALARY
HIGHER SALARY
SALARY
Adjusted by: • Previous work experience of an employee • The Industry • Other factors specific to the individual • Other factors specific to the company
ACCOUNTANTS BOARD OF ADVISORS BOARD OF DIRECTORS
PAYING THE MARKET RATE IS IMPOSSIBLE FOR A STARTUP
EXTERNAL TEAM MEMBERS OUTSIDE INVESTORS
OUTSIDE INVESTORS
LAWYERS ACCOUNTANTS BOARD OF ADVISORS BOARD OF DIRECTORS
dr inż. Mateusz Molasy
EXTERNAL TEAM MEMBERS
LAWYERS
Hire someone whom you like, who shows an appreciation for and interest in your company, who has deep knowledge of your industry
ACCOUNTANTS BOARD OF ADVISORS BOARD OF DIRECTORS
An accountant can fill tax forms, help analyzing the strengths and weaknesses of company’s financial performance, find ways to improve cash flow, strengthen margins, identify tax benefits
16
Innova&ve Entrepreneurship 2016/2017, Handouts for students, Part 1
EXTERNAL TEAM MEMBERS OUTSIDE INVESTORS LAWYERS ACCOUNTANTS
30/03/17
EXTERNAL TEAM MEMBERS
The goal is to offer a source of expert supervision and feedback to the lead entrepreneur; this can be professors, current and former entrepreneurs, professional investors suppliers, individuals that have insight into target customers
BOARD OF ADVISORS
OUTSIDE INVESTORS LAWYERS ACCOUNTANTS BOARD OF ADVISORS
BOARD OF DIRECTORS
BOARD OF DIRECTORS
PROBLEMS WITH THE TEAM
SOLUTIONS FOR BURNOUTS
BURNOUTS
FAMILY PRESSURE
INTERPERSONAL CONFLICTS
The board is in charge of governance and represents the shareholders
• Have a daily face-to-face communication with every team member • Listen to each of them • Present with regular updates the overall progress of the venture • Offer stress-relieving activities
There is a risk of losing a critical team member if stress level in the team is high and balance between personal and professional life is not proper
• Offer soft drinks, coffee, snacks
PROBLEMS WITH THE TEAM BURNOUTS
FAMILY PRESSURE
PROBLEMS WITH THE TEAM INTERPERSONAL CONFLICTS
• Stress at home can negatively affect performance and increase the risk of turnover • Advise team members to set the expectations of their families before they join your team • Organize company picnics or include families in other stress-relieving events
dr inż. Mateusz Molasy
BURNOUTS
FAMILY PRESSURE
INTERPERSONAL CONFLICTS
• Resolved the conflicts as quickly as possible by mediating between the parties, not favoring either one • Sometimes it needs firing one of the team member
17
