YEDP Start Up Manual 2017

This Project is co-financed by the European Union
and the Republic of Turkey
YOUNG ENTREPRENEURSHIP DEVELOPMENT

PROGRAMME
Entrepreneurship Skills for Start-up
Succeed in Establishing and

Developing your Innovative
Start-up
A Practical Start-up Manual for Start-up Business Development
Process
This Project is co-financed by the European
Innovative Start-ups for Young Entrepreneurs
Congratulations! By picking up this manual, you are taking a very important first
towards developing a Start-up. It could change your life style.
This is a uniqe manual for potential and young existing entrepreneurs. It provides an
introduction to entrepreneurship and business development process which is a basic
condition for new Start-up.
Evidence tells us that in Turkey around 36% of new established Start-ups fail in their
first year. Another 30% fail in their second year. This suggests that while many
people are motivated to start a new business, motivation alone is not enough. It must
be coupled with a strong passion, a solid, unique and innovative business idea which
follows marketing need and helps you define a proper business model, an
entrepreneurial team, a development of »know-how« approach for your technology,
good practical selling techniques and effective business plan which will attract
potential investors and support implementation.
This manual is providing you with a practical guide to the entrepreneurial process
helping you to successfuly launch and build your Start-up. Because of its importance,
we place a special emphasis on the beginnings of the entrepreneurial process,
particularly how to recognise a good business and market oriented opportunity, how
to get your creative and innovative product or service onto the market and how to
manage the finances you will need for Start-up. This manual is designed as a “step-
by-step” introduction to the issues every new business must face. Our primary goal is
to help you develop an “entrepreneurial way of thinking” that will help you plan, start,
and successfully manage your scalable business.
Entrepreneurship is seen as a way to increase economic growth, competitiveness

and to create new jobs. Micro, small and medium-sized enterprises are the backbone
of the Turkish economy.
In the coming years, we hope to see a stronger spirit of entrepreneurship in Turkey

with big number of young Start-ups who develop innovative technologies and
services for better future.
Become unique, different and innovative in all levels! Remember, you can only be
successful in life if you are doing what you enjoy most! Be passionate of your
innovative idea!
Good luck with your business and never, never give up!
Jordan Berginc PhD

Training expert
j.berginc@idi.ie
For more information, please visit www.girisimci.ankaraka.org.tr
The views of expressed in this Manual are those of the author alone and cannot be taken to
represent official policy of the European Union.
Contents
Introduction………..
Contents, Figures, Tables …………
Part one »Entrepreneurship & Entrepreneurial process«

»Pre-Start-up phase«
Part two The Start-up process»From idea to Business opportunity«

»Developing Business Idea«
»Challenging innovative technologies«
Part three »Business Planning«

»Guidelines for Writing your own Business Plan«
Part four »Marketing Analyses and Marketing Strategy«

»Understanding and assesing market«
»Marketing and sales plan preparation«
Part five »SWOT Analyses and Operational Plan for Your

Company«
Part six »Finance for Entrepreneurs«

»Types of financng options«
Part seven »Entrepreneurial Skills and Attitudes«

»Presentation of Your Business Plan«
References ……………..
Glossary ……………….
Tables:
Table 1: Main factors used to define the term »entrepreneur«

Table 2: Factors that influence the decision for or against an
entrepreneurial career
Table 3: Basic types of entrepreneurs
Table 4: Visionary process
Table 5: Creating Vision, Mission and Values process
Table 6: Types of companies
Table 7: Entrepreneurial process
Table 8: Window of opportunity
Table 9: The Value Proposition triad
Table 10: The Opportunity Recognition Process
Table 11: Exercise - Business idea generation
Table 12: Left vs Right side of the brain
Table 13: The creative thinking process
Table 15: Elements of industry
Table 16: Determine Industry attractiveness by using 5 forces model
Table 17: Types of Competitors New venture face
Table 18: Analysis of competitors
Table 19: Sources of Competitiveness
Table 20: How to define your target group
Table 21: Action plan for sales- and marketing activities, 2010
Table 22: SWOT Analysis
Table 23: Company Life Cycle scheme
Table 24: Primary financial objectives of entrepreneurial company
Table 25: Start-up Budget
Table 26: Income Statement
Table 27: Income Statement for 3 years period
Table 28: Cash Flow Statement
Table 29: Four stages process of financial management
Table 30: Start- up business development phases
Preface
How can this manual benefit you?
This manual is a guide for young potential or pre-Start-up entrepreneurs who wish to
turn their own business ideas or technologies into successful Start-up. The manual
systematically focuses on developing entrepreneurial skills and knowledge needed to
succeesfuly develop business process. Entrepreneurial thinking will enpower you to
cope with uncertanty and behave with greater flexibility in your personal and potential
profesional life.
What was the purpose in writing this manual?

This manual has been written specifically to accompany the Young Entrepreneurship
Development Programme - YEDP trainings which are funded by EU Delgation in
Turkey and the Republic of Turkey. The project is working with several hundred
young people wishing to develop own Start-ups. We hope YEDP will help many other
potential entrepreneurs. It has been written with a strong emphasis on
entrepreneurship, early stage growth processes, innovation processes, business
modelling and business planning. We encourage young individuals and teams for
new Start-ups.
How will you learn from this manual?

This manual is a practical guide that will be useful for those interested in learning how
to take an entrepreneurial approach to the market, define marketing need, reduce
risks, to be more innovative and how to start and prepare your business for early
stage of growth. The manual contains many relevant excercises and activities for
individual study or »to do's« list, short definitions, questionnaires and short case
studies to enhance both explicit and tacit learning.
How is this manual organized and what are the special features of each part?
This manual is organized into seven major parts. Part 1 provides the basics of
entrepreneurship and the entrepreneurial process. This part presents an overview of
entrepreneurship and its links to the entrepreneurial process and important
characteristics of successful entrepreneurs and visionary process. Part 2 defines the
process of moving from a business idea to a scalable market opportunity by defining
a marketing need. This part places special emphasis on distinguishing between a
basic idea and a genuine or innovative business opportunity.
Part 3 considers the business planning process and provides detailed guidance on
writing and presenting a winning business plan for your new business.
In Part 4 we consider how to analyse the market that your business is competing in
and how to plan an effective marketing strategy, sales plan for the new business.
Part 5 offer an approach to analysing and planning your company. In this part
everyone can get a clear marketing picture, what are advantages and disadvantages
of own business product. Operational plan of the company is helping the young
entrepreneur define and managing needed resources for successful start up.
In Part 6 we consider how to finance your new business and some of the basic
knowledege you need to understand accounting, business taxation and the basics of
business law. Here you will learn how to calculate the profitability, planning a positive
cash-flow of the business and how to ensure that you stay in business for growth
stage.
Part 7 deals with professional entrepreneurial skills and attitudes as well as

presentation techniques for your business plan. In the end is added useful glossary
of important entrepreneurship factors.
We hope that this manual will help you to develop neecessary entrepreneurial skills
and attitudes to make you more passionate and operational by acquiring necessary
knowledge to successful launch and develop your Start-up. In this way, you can
become more entrepreneurial and innovative in your personal and professional life.
Welcome to the new entrepreneurial journey!

Just make it happen!
Part one »Entrepreneurship & Entrepreneurial process«
What you can learn from this chapter:

 the basic definition of entrepreneurship and types entrepreneurs and
entrepreneurship
 the entrepreneurial process, the definition of »vision« and »mission« statements
and business objectives
 the principles of creative and innovative thinking and some basic problem- solving
techniques.
 clarify which entrepreneurial characteristics, qualities and attributes should be
developed for his/her own career
 distinguish between different types of entrepreneurship and choose the right
option for own career: manager or owner-manger; profit vs. not-for-profit
orientation
 define best options to raise necessary resources within entrepreneurial process
 identify different types of business start – ups, founder and founders combinations
 stimulate team members for creativity and innovation
Why Become an Entrepreneur?

»If at first you don't succeed, try and try again!«
There are many primary reasons, why people become entrepreneurs and start their
business. They are:
(1) to be independent, a desire that can be satisfied by owning

their own business and being their own boss,
(2) people who are by nature high achievers tend not to get along
well in large organizations. They want rewards based upon
accomplishment, and working for themselves,
(3) to make continuous improvement on their business idea, being
creative and innovative and able to differentiate theirself from
competition,
(4) to build business relationships and network,
(5) personal financial gain - learning how to value and earning
money and managing finance,
(6) to make good use of their time inspiring others for their idea
and business,
(7) to value your own skills and strenghts to raise confidency,

(8) joy of winning – entrepreneurs are ultimate achievers,
(9) to realize your realistic dreams, vison and ispire others for it,
and develop your leadership abilities,
(10) to create a wealth for others, yourself and to be happy.
To become an entrepreneur is really a long journey in the land of personal

development and experiences. It is not just about the product or services you offer,
but it is about you and your own aspirations, images and vision.
Before the start of the new venture, try to answer the following questions:
1. Is this your first venture?

2. Do you think that you are really an entrepreneur?
3. Does your business venture involve something you understand really well at
the moment? How much information do you have about your product?
4. Can your parents or friends understand the business idea behind what you
intend to do?
5. What do you hope will be the future for your business? For example, in five
years from now?
6. Do you imagine that starting a company will be hard and uncertain for you?
7. Are you going to work with a partner or solo?
8. Would you refuse a well-paying job to do set up this new business?
9. Can you raise the appropriate financing and needed resources?
10. Are you a long term runner?
If you can give clear and positive answers to the majority of these questions you
should be encouraged. You have a strong basis to take the next steps in creating
your new business.
In entrepreneurship is important to make a meaning
To take a strong life decision for entrepreneurial career is not an easy task. Besides,
you should answer yourself to some basic questions:
- Are you ready to work hard for your business idea?

- Are you prepared to work long and hard for small payment?
- Can you deal with rejection after rejection?
- Can you manage pesimism among your customers?
- Can you manage all of responibility for your team members?
- Do you think you have what it takes to become different from the average,
someone who can offer something new or different on the market that people
will want to buy?
The truth is that you can not answer to all of this questions until you try it! You don't
know actually what is mean to become entrepreneur, until you become one of them.
The important question is: »Do I want to make meaning?«
Meaning is not about money, power, position or prestige. Important meanings are:
- To fulfill your dreams with your idea,

- To make a market a better place with your product,
- To increase the quality of life,
- To make your success story,
- To realize your vision,
- To make people (customers) happiest.
If you want to succeed in your business you need:

Preparation, experience, hard work, intelligence and some good luck!
What is Entrepreneurship?
A famous economist once argued that entrepreneurs develop new products and
technologies that over time make current products and technologies obsolete. He
called this process creative destruction, which actually stimulates economic activity.
The word »entrepreneur« derives from the French word entre, meaning »between«,
and prendre »to take«. Inventors and entrepreneurs differ from each other. An
inventor creates something new. An entrepreneur assembles and then
integrates all the resources needed–the money, the people, the business
model, the strategy and the risk-bearing ability- to transform the invention into
viable business.
"Entrepreneurship is the process of identifying, developing, and bringing a vision to

life. The vision may be an innovative idea, an opportunity, or simply a better way to
do something. The end result of this process is the creation of a new venture, formed
under conditions of risk and considerable uncertainty."
“Entrepreneurship refers to an individual’s ability to turn ideas into action. It includes

passion of idea, creativity, innovation and risk taking, as well as the ability to plan,
manage and lead all needed activities to achieve objectives on the market and fulfill
vision. This makes team members more aware of their brand and context of their
design thinking to be able to scale innovative product, and provides a foundation for
entrepreneurs to run fast growing company” (Berginc, 2004).
Entrepreneurship is…
 Creating something of value by recognising opportunities
 Opportunity assesment and
 Opportunity capitalization,
 A way of thinking and acting and an attitude towards working.
Entrepreneurs earns their living through their entrepreneurial skills and attitudes and
their approaches to work. Usually they work in their own Start-up. Entrepreneurship
is an interesting choice of earning one's living and many professions rely on the work
of entrepreneurs.
Types of entrepreneurship:
The terms entrepreneur and entrepreneurship can be applied to a surprisingly

wide range of business enterprises as the following list suggests:
• Salary-substitute companies
• Start ups
• Lyfe style companies
• Youth entrepreneurship
• Corporate entrepreneurship
• Hi-Tech entrepreneurship
• E-(virtual)entrepreneurship
• Home-based business (self-employment)
• Women entrepreneurship
• Social entrepreneurship / cooperatives
• Family business
• Franchising (refer to glossary)
“Entrepreneurs are dreamers who do” or

“Entrepreneurs are doers who get results”.
An entrepreneur is someone:
- Who learns continually in order to recognize opportunities with potential for
innovation;
- Who makes innovations that add value;
- Who is able to recognize opportunities for development;
- Who conceives and implements visions with elements of differentiation;
- Who is able to conceive an organizational project or enterprise based on the
recognition and development of a risky opportunity with potential for innovation
- Who uses resources economically in order to design innovative products or
services
- Who is focused on the recognition of risky opportunities with a potential for
innovation in order to fulfill a social or market need (Filion, 2004).
Table 1: Main factors used to define the term »entrepreneur«
Any definition of entrepreneurs and entrepreneurship should include at least these

six elements.
Table 2: Factors that influence the decision for or against an

entrepreneurial career
There are key personal characteristics that make people succeed as

entrepreneurs:
“Research turns money into knowledge. Innovation turns knowledge into money.”
- Bayer Corporation, Germany
Vision: The successful entrepreneur has a clear and communicable vision of the
opportunity his or her business will create or exploit and is completely dedicated to
making this vision a reality, even when it means taking risks.
Determination: The successful entrepreneur must be completely determined to
succeed, even in the face of doubts of family, close friends and associates. This
determination must fuel the tireless effort to make it happen.
Motivation: An entrepreneur lets very little get in the way of making the vision into
reality.
Focus: The entrepreneur must keep his or her eye on the ball at all times, never
allowing precious time, energy and other resources to be distracted from the project.
Commitment: Entrepreneurs must be completely devoted to the project, enjoy
working on the project and deeply committed to the ideas and beliefs on which the
project is founded.
Skills: The entrepreneur must have a skill set to either develop the product or
service or the skills to take an idea and figure how to make it work.
Passion: An entrepreneur must really love what he/she is doing in such a way that
it does not appear to be hard work, but rather something they enjoy and want to do.
Adaptability: An entrepreneur must be able to adapt personally and ensure that
the organization has the ability to adapt to new challenges. Allow people to provide
their point of view and identify issues and opportunities.
Self-awareness: An entrepreneur must be able to recognize their own strengths
and weaknesses and develop their missing skills within their team.
Creative Thinking: The entrepreneur has to be able to think through the
innovative idea and deal with the many variables facing the business – global market,
technological change and diverse work force etc.
Successful entrepreneurs are able to identify potential business opportunities
better than most people. They focus on opportunities – not problems – and try to
learn from failure.
Successful entrepreneurs are action-oriented. This comes from a sense of
urgency. They have a high need for achievement, which motivates them to turn their
ideas into action.
Successful entrepreneurs have a detailed knowledge of the key factors needed
for success and have the physical energy needed to put their lives into their work.
Successful entrepreneurs seek outside help to supplement their skills, knowledge

and ability.
Through their enthusiasm, they are able to attract key investors, partners,
creditors and employees.
What are characteristics of young entrepreneurs?
“You need to believe in yourself and your business idea 100 per cent and remember that not
everyone will be supportive; never let this affect you or your business. You need an
unbelievable amount of determination; never let problems deter you either. Even on a bad
day, try and remind yourself why you are doing it and how much fun you can have running
the company.”
- Natasha Marshall
- Young entrepreneurs often show an inclination for new venture creation in

early age, even when the surrounding culture is non-supportive;
- Family members or friends who run their own business are the main source
encouragement for young entrepreneurs;
- Young people are often creative in financing their fledging business,
commonly working without compensation for a year or more and using many
sources (in small amounts) to get started;
- Young entrepreneurs offer work opportunities that attract other like-minded
and talented individuals.
Key characteristics of young entrepreneurs:
A recent survey in the US suggest that young people often have:
1. A sense of integrity for customers and team members;

2. An ability to apply common sense in business decision making;
3. An intuitive understanding of what makes a good innovative product and
resilience and creativity to turn this into a reality;
4. A sense of humour and good mood in the working environment;
5. Motivation from the challenge of creating something and being in control of
their own destiny, not by the desire for large profits;
6. An abaility to take a long term view or vision of the business idea.
Among major obstacles faced by young entrepreneurs in Turkey is the lack of

entrepreneurship education & trainings for skills in public schools.
Young Entrepreneurs Needs

Young entrepreneurs have some needs similar to those of adult entrepreneurs. They
need space to be creative. They need help creating a business plan around their
idea. They are not likely to be proficient in all three of the primary functions of
business: production, management and marketing. There are some important
differences as well. Youth have limited real world experience to lean on. Typically,
students are not well connected to adults in economic development roles and so they
may not know where to go for help. They may also find it difficult to get adults to take
them seriously. Perhaps most importantly, adults want to protect youth from failure. If
their ideas seem unrealistic, teachers and parents may try to discourage them from
even trying. But, when we ask adult entrepreneurs if they learned more from their
failures or their successes, we often get a smile with the reply, “From my failures.”
So, what do young entrepreneurs expect? They want to be taken seriously and to
have the opportunity to develop and test their ideas. They would like to learn from
adults with the experience to help them and want regular and continuing
encouragement – even if they fail on their first, second or third attempt. They want
the freedom to be creative.
There are many advantages when you starting the business when you are young.
Concerning financial commitments, you can make some mistakes on the cheap or
learn quickly. Further on, you have a chance to learn quickly about yourself and
finally, you can rely on your energy and passion of business idea.
Table 3: Basic types of entrepreneurs
Types of Entrepreneurs
ADAPTIVE CATALYTIC
 ANALYTICAL INVENTIVE 
“Doing things better” “Doing things differently”
More quickly New
Cheaper Risky
Improved Breakthrough
Left-brain thinking Right-brain thinking
Entrepreneurs found at the right hand side of the graph are strong in making
»breakthoughs«. They are the inventors, the mould-breakers who can find ways to do
things in a totally new way or who can identify products that no one knew that they
needed. They are likely to be risk-takers if they want to be suceesful. They are
catalysts in the sense that they are capable of »making things happen« rather like a
catalyst in a chemical reaction.
At the other extreme we have the adapters, people who can analyse the strengths
and weaknesses of an exisiting product or service and then adapt those existing
solutions to improve what already exists, to make them cheaper, more versatile,
more user-friendly or whatever.
Of course most entrepreneurs (or entrepreneurial teams) need a mix of these

qualities and indeed the majority will be somewhere in the middle of the graph, using
a mix of creative thinking and analytical rational though processes, (which has
become popularly known as »left brain« and »right brain« thinking.)
The differences between “innovators,” “entrepreneurs” and “managers”
Entrepreneurs and managers are two sides of a coin in the business world. They are
all needed in the evolution of a healthy organization, but at different times, and rarely
does an individual possess more than one of the three skills.
Innovators are the dreamers: They create the prototypes, new models, new
technologies. They tend to do the best, which is inventing more prototypes. They are
rarely concerned, ultimately, with the financial viability of what they do and with the
commercialization of their invention.
Entrepreneurs are the builders: They are visionary thinker. Entrepreneurs are often
thought to be creative, independent, risk-takers. They turn prototypes into going
concerns and commercialize it. For them, financial viability is the single most
important aspect of what they do. Entrepreneurs create lot of employment in the
society. He is the one who undertakes the organization and management of an
enterprise involving independence and risk as well as the opportunity for profit.
Managers are the trustees: a manager is a person responsible for planning and
directing the work of a group or individuals, mentoring their work and taking
corrective action when necessary.
Management characterizes the process of leading and directing all or part of an
organization, often a business, through the deployment and manipulation of
resources.
The entrepreneur’s vision and the manager’s pragmatism creates the synthesis from
which all great works are born.
What is a vision?
Realistic dreams - a dreaming picture or projection of your idea or company in the
future. It consists of core values and beliefs, purpose and mission. It’s an outstanding
belief and energy!
The Vision, Mission and Values statements identify what the business is and what it
stands for, how it wants to be seen, and how it wants to go forward.
Table 4: Visionary process

Vision is at the top of the pyramid is the most general statement – as you work your
way down the statements get more and more specific until the objectives explain
what the enterprise will actually do. Values encompass the whole enterprise –
whatever it does will always be guided by values.
Vision Statement question - "What is our preferred future?"
Here is the example of Microsoft:
“A personal computer in every home, running Microsoft software.”
These simple but powerful phrases have the potential to remind people (insiders,
outsiders) what it is the organisation is working towards.
A vision is a statement about what your organization wants to become. All

members of the organization should be able to identify with it and it should help them
feel proud, excited, and part of something much bigger than themselves. A vision
gives shape and direction to the organization’s future.
Visions range in length from a couple of words to several pages; the shorter it is, the
easier it is to remember. Effective vision statements are clear, concise, catchy and
memorable.
Mission Statement - "What business are we in?"

When properly constructed, a mission statement should provide a clear, concise
description of an organization's overall purpose. A mission statement should answer
three questions:
· What do we do?
· How do we do it?
· For whom do we do it?
This can enable large groups of individuals to work in a unified direction toward a
common cause. A good mission statement is compelling, passionate, and
energizing. It should be risky and challenging, but also achievable.
Mission statements samples:

- Google ‘to organize the world’s information and make it universally accessible
and useful’.
- Starbucks’ “Establish Starbucks as the premier purveyor of the finest coffee in
the world while maintaining our uncompromising principles while we grow.”
- Wal-Mart "To give ordinary folk the chance to buy the same thing as rich
people."
- 3M "To solve unsolved problems innovatively"
- Walt Disney "To make people happy."
- Loreal "To give unlimited opportunity to women."
- eBay’s “provide a global trading platform where practically anyone can trade
practically anything.“
- UBER “Transportation as reliable as running water, everywhere, for everyone.”
" Values Statement - "What do we stand for?"

Your VALUES define what your business stands for — they are your core rules. They
provide the bounds or limits of how the employees will conduct their activities while
carrying out the vision and mission. They are statements about how the organization
will value customers, suppliers, and the internal community. Once defined, the values
that are important to your organization should be reflected in everything you do.
Value statements samples:

 “Respect - we believe that all people should be treated with consideration and
dignity. We cherish diversity”.
 “Teamwork – we are committed to effective partnerships between volunteers
and staff, and we seek opportunities to form alliances with others.”
 “Integrity – we are committed to act in an ethical, honest manner.” (Collins,
2002)
Mistakes to avoid
Be careful in describing your business:
· Don't make it boring.

· Don't make it the length of a thesis.
· If you don't believe it, don't include it.
· Use only language common within your business.
· Don't lie or claim to be something you aren't.
· Don't forget to get the input of everyone on your team.
Action exercises to raise your inner vision:

There are many things you can do to improve your ability to develop a vision for your
new business:
1. Exercise your senses (vizualization – a technique involving focusing

on positive mental images in order to achieve a postive mental
goal)
2. Form mental images
3. Improve your recall abilities (concentration)
4. Listen & learn
5. Watch your TV with eyes closed
6. Write your thoughts down on the paper
7. Learn to draw what you imagine.
Table 5: Creating Vision, Mission and Values process
Mission, Vision &

Values
Mission (2)
“Why our company exists, its
direction and purpose”
Vision (1) Values (3)

“The perception of the “What our company believes in, our
company in the future” policies, standards and behaviours
that reflect our values of product”
Strategy (4)
“How are we going to realise our
Mission, Vision and Values”
Copyright by Vox Medii L.t.d., JB-
JB-
2008
Tips for you, before you start a new venture creation:
 It will be hard work, you will work long hours – but you will work for yourself
 You will need to learn new things non-stop
 You must learn to delegate and outsource
 You can’t do it all and you will make mistakes
 Your launch will take 2‐3 times longer than you forecasted
 A dream is not a goal
 You need a “unique selling proposition”, something that makes you different
 You will need more cash than you think
 Your business will take longer than you think to generate cash
 New customers will take longer to acquire than you planned
 You will need other people around you, direct or a strong local and regional
network
 You need to learn to say “No”
 People will disappoint you
 Customers will not pay you
 Your kids may not want to be involved in your business
 You will have difficulty taking vacations
 You will be busy, more and more busy
 It may place a strain on your relationship with your children
 You won’t get an order if you do not ask for the sale
 You will have to plan your taxes
 You will need a relationship with a local banker
 You must take time for your health
 You will be stressed
 It’s about marketing not just selling
 You will have enemies, who try to take you out
 At some point, you will need to hire those more skilled in specific profession
than you are
 You may fail
 You should repeat to yourself: “Never give up!”
Self-employment as a career option
“If you know yourself, you can grow yourself!”

Questions to be answered:
 Why do I want to be self-employed?
 What I am expecting from the self-employment?
 How high is my motivation to stay self-employed?
Self-employment is sometimes the only option if you wish to pursue a specific career
path. There are many reasons why people choose to work for themselves. For many
people, starting a business is the best employment option available. Perhaps you
have a business idea that no-one else has thought of and want to market it, or you
have become
disillusioned with employment and want to have more control of your working life?
Even if you have not initially considered self-employment as an option, it may be
something which you choose to do later on in your career.
It is known, that people with a sense of entrepreneurial self-efficiency may be drawn

to self-employment’s desirable opportunities and benefits, compared to the
availability of these benefits obtained through working for others. If they also can
accept the intrinsic risk of self-employment, they are likely to act on these perceptions
by forming intentions and goals for self-employment.
For many people across the world, it is a self-employment choice achievable by:
 Start-up a business, either on a full-time basis or alongside a part-time job;

 working as a freelancer or sub-contractor;
 becoming representative of one international company or buying into an
international franchise.
Reasons why people choose self-employment may also include:
 The desire to sell their skills, attitudes, knowledge and expertise;

 The desire to prove an idea;
 Because they are encouraged by the idea of business challenge;
 Needing to generate a second income;
 Reaction to a poor first career decision;
 Pressure from family or friends;
 A feeling that there are no other options.
Self-employment has its benefits and risks:

1. The benefits
 Being your own boss and work independently
 The possibility of earning more money in the long run
 Working for oneself
 Higher level of independence
 Variety and choosing work which you enjoy
2. The risks
The more ambitious aspirations attached to self-employment take years of hard work
and commitment to achieve. It is this realization that provides the biggest shock to
most people who decide to work for themselves. This may provide some of the
reason why only one in two business Start-ups in Turkey succeed in the first two
years of business.
Thus, in the early stage or pre-start up phase you may need to consider the following:
 You may need to do everything yourself and will be responsible for the day-to-
day running of the business. You will rarely have the resources at your
disposal that are available to an established business owner. This may mean
doing tasks that you don’t like.
 Big salaries or income are rare in the early days, months. You will need a
personal financial investment in the business,
 Strong competition may appear, economic fluctuations may take you off-
course, and changes in consumer markets may force you to change direction.
 It is not unusual for newly self-employed people to have a second job to help
provide a guaranteed source of income for day-to-day living costs.
 You need to offer a product/technology or service for which there is a demand
and you should know exactly where. This may depend on projecting a certain
image, perfecting a technique or making a product unique and innovative.
 Working from home is most effective when you have the space and facilities to
do so. If you work out of other premises, you will have to pay rent and other
overheads costs.
 It is impossible to escape some pressures, especially those that come from
clients and customers, who will often dictate your working hours.
 Setbacks may impact on your confidence and profits. Be realistic and learn
from your mistakes.
 You will have to make your own tax, arrangements and other insurance
issues.
Types of New firms
We usually talk of three new venture creation types of firms:
1. Salary-substitute firms,
2. Lifestyle firms,
3. Entrepreneurial firms.
Table 6: Types of new venture creation
Salary-substitute firms Lifestyle firms Enrepreneurial firms

Firms that basically provide Firms that provide their Firms that bring new
their owner a similar level owner the opportunity to products and services to
of income to what they pursue a particular the market by creating and
would be able to earn in lifestyle and make a living seizing opportunities
conventional job at it. regardless of the
(For example Taxi service, (For example family resources they currently
or Property agency. owned restaurant in city control.
area) (For example Lydiana.com
from Istanbul)
Entrepreneurial Process
“Think BIG, start small.”
The entrepreneurial process involves all the functions, activities, and actions
associated with perceiving opportunities and creating organizations to pursue them.
The key factors in the Timmons model (see below) are:

• the entrepreneur and the founding team,
• the opportunity, and
• the resources that are mustered to start the new organization,
• fit and balance among forces,
• integrated and holistic.
The key ingredient of the model is the entrepreneur. If the entrepreneur has the
right idea, he or she will deliberately search for an opportunity, and upon finding it,
shape it so that is has the potential to be a commercial success, or a high-
potential venture. The entrepreneur then gathers the resources that are
necessary to start a business to capitalize on his or her opportunity.
Entrepreneur and the provider of finance will be rewarded with profits, and that
both are commensurate with the risk and effort involved in starting, financing, and
building the business. The entrepreneur usually risks career, personal cash-flow,
and some or all of his or her net worth.
Table 7: Entrepreneurial process (by Timmons)

Basic conclusion of the model:

Entrepreneurship means:
creation and realization of value;

not just owners, but all participants and stakeholders are important for
success;
creation and recognition of opportunities;
will and initiative to seize them;
willingness to take calculated risk – personal and financial.
Discussion Questions
1. Define entrepreneurship in your own way, what is most important to
succeed?
2. Which are the most important characteristics of successful
entrepreneurs?
3. Think of an successful entrepreneur that you know, maybe some form
your family or local area. What do you think are the ingredients of their
success? Can you add some characteristics to those we have
discussed in this chapter?
4. Why are vision and mission statements so important to any company?
5. Which are three main factor of entrepreneurial process?
6. Define the most important types of new firms?
Part two »From idea to Business opportunity«

»Implementing Business Idea«
 understanding the process from idea to business opportunity

 how to begin to investigate the market and attract first customers for your
business idea
 how to match and adjust your business opportunity to the prevailing market
conditions
 sources of marketing data for your business plan
 the concept of “market need”
 the principles of creative business decision making
 the economic significance of entrepreneurial companies
 the key tools and techniques for creative business thinking
 the concepts of “added value” and “core competence” of the company
 the process that takes a business idea through to a business opportunity
 how to collect necessary market data to support business plan
 how present their own your business idea in a simple and logical manner
 how to identify the core competence of your intended business
 how to relate the concept of “value-added” to your business idea
 how to undertake a simple evaluation of a business idea, identifying its strengths
and weaknesses in terms of profitability
 how to use “brain-storming” techniques for generating new business ideas
 the awareness and skills necessary to solve problems creatively
"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma
— which is living with the results of other people's thinking. Don't let the noise of others'
opinions drown out your own inner voice. And most important, have the courage to follow
your heart and intuition. Everything else is secondary.”
- Steve Jobs, Apple
What do we mean by a “business idea”?
1. Successful entrepreneurs are constantly thinking about ideas - looking for the next
big idea. They look at everything in terms of "how could it be done differently or how
could it be done better and innovative way?" They come up with many ideas from just
questioning how a lot of things are done.
2. Once an entrepreneur has an idea that they want to develop further - they start to
dream. Successful entrepreneurs tend to be fanatics (very enthusiastic, excited)
about their ideas. They wake-up at night with new ideas and more development of
existing ideas.
3. The vision of the entrepreneur comes as he/she develops the idea further through
lots of thinking and dreaming. A vision is when you can see in your mind the idea and
dream in great detail. It should be a realistic picture. You can see how it starts to
work. You will find that if you give an idea to a number of people and ask them to
think of the potential of the idea, that you will get many different responses.
4. A business concept is really just a summary of the idea and how you envision the
business will work. Many banks and investors think in terms of a “business concept”
as the early stages of developing the business. The “business concept” is usually
used as a term to suggest that you have thought it through to an early stage but it is
not yet a reality. You are not selling a product or service yet.
Entrepreneurs recognize an opportunity and turn it into a successful business. An

opportunity is a favourable set of circumstances that creates a need for a new
product, service or business. Successful entrepreneurs recognize problems and
opportunities and create a business to fill it. In opportunity recognition, entrepreneur
must rely to on instinct followed by purposeful action.
An opportunity has four essential qualities:
1. It should be attractive,
2. It should last a long time,
3. It should be timely, trendy,
4. Its service should creates or adds value for its buyer or end user.
For an entrepreneur to capitalize on an opportunity, its window of opportunity must

be open.
Market need - understanding market needs requires the ability to see the world from
your customers’ points of view.
Most successful marketing strategies for creating product demand require the use of
some sort of customer feedback to assess just how well a product actually
impacts on market needs. The success of some products relies heavily on factors
that are difficult to define, such as impulse buying, stylistic preferences,
and market trends. However, the essence of most product marketing is finding ways
to satisfy actual, functional customer needs (fashion business). Successful
product marketing is as much about developing products that provide solutions to
real customer problems, which address necessary tasks, or fulfil needs, as it is about
communicating product benefits.
Table 8: Window of opportunity
Window of opportunity
Size of
market What is the reason for your added value?
Offer
Demand
Window of opportunity
5 10 15 Time (years)
The term “window of opportunity” is a metaphor describing the time period in which a
firm can realistically enter a new market. Once the market for a new product is
established, its window of opportunity is opened. As the market grows, firms enter
and try to establish a profitable position. At some point the market matures, and the
window of opportunity closes, (for example, people have tired of your product, or
have new spending opportunities or more and more suppliers have saturated the
market)
It is important to understand that there is a difference between an idea and an

opportunity. An idea it may not meet the criteria of opportunity.
One way to observe and identify opportunity is to observe trends in:

1. Economic factors (e.g changes in spending habits)
2. Social factors (e.g. changes in demography that open up new markets)
3. Technological advances (e.g.new products that may require new services to
support them)
4. Political and legal situation (e.g. new laws and regulations).
Value added: in economics, the difference between the sale price of a product and
the cost of materials to produce it is the value added.
Value added examples:

As an example, value-added products can derive from fruit or vegetables that are
transformed into gourmet food items. Typical value-added products include jams,
jellies, preserves, fruit sauces and spreads, pickles, preserved vegetables, hot chili
sauces, herb-flavoured olive oils and vinegars, and salsa sauces. Other examples of
value added products include flowers which are converted into dried flower
arrangements, wreaths and wall swatches; garden produce made into braided garlic,
painted gourds, dried herbs, sachets, soaps made from home-grown herbs, and
herbs grown and sold for medicinal properties.
Value proposition: - The unique value a business offers to its customers. It is why
your customers will want to do business with you. Knowing your value proposition is
key to many steps you will take while you are establishing the business, in your day-
to-day activities and when it comes time to expand your business or borrow money.
The Value Proposition is sometimes refer to as “unique value”.
Table 9: The Value Proposition triad
The Value Triad

3 Basic Elements of a Value
Proposition
Customer
Value
Proposition
Product Application
Value triad example of value proposition:

Customer: Consumer in their own kitchen
Product: A €2.00 mechanical eggbeater

Application: Bake a family birthday cake
Value Proposition: A mechanical eggbeater can save you time and energy
over using a spoon or fork to mix a single cake.
Core competence:
A unique skill or capability that transcends products or markets, makes a significant
contribution to the customer’s perceived benefit, is difficult to imitate and serves as a
source of a firm’s competitive advantage over its rivals. Core competencies
become one of the hallmarks of the organization. They are the driving forces of its
competitive strategy and competitive advantage.
Core competence examples:

- Sony- customer benefit is pocket ability and core competence is miniaturization.
- Federal Express- benefit is on time parcel delivery and core competence is logistics
management.
Table 10: The Opportunity Recognition Process
The “Opportunity recognition process” involves matching an unfulfilled market need and
a solution that satisfies that need. Entrepreneurs perceive new opportunities for the
creation of value, and construct a market around those opportunities. An
entrepreneur recognizes a problem or an opportunity gap and creates a business to
fill it. Recognition of opportunity is part art, part science. An entrepreneur must rely on
instinct, which makes it an art and on purposeful action and analytical techniques
which makes it a science.
In the business opportunity recognition process, there is a strong connection

between an awareness of emerging business trends and the personal
entrepreneurial characteristics; the two facets of opportunity recognition are
interdependent. For example, an entrepreneur with a well-established social network
may be in a better position to recognize emerging technological trends than an
entrepreneur with a poorly established social network.
Implementing ideas
“A lot of people have ideas, but there are few who decide to do something about them now.
Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.”
- Nolan Bushnell
In general entrepreneurs implement more ideas than opportunities, because it is

easier to generate ideas to find better solutions than it is to implement them. The
successful implementation of new ideas helps maintain an effective company and
sustain competitive advantage in the market. New ideas are not accepted
automatically – they are often resisted.
New ideas can sometimes be resisted by customers, some of whom may feel
threatened by new ideas or fear that they will not be able to cope with a change in
working patterns that is demanded of them or that they will not understand how to
use new technology. Or more simply they may just imagine that they will not enjoy
the new experience your business is offering.
It is important therefore to consider how you will introduce your new ideas to the
market. Successful entrepreneurs, who introduce new ideas, models, product to
market, often use the following 4 stage communication approach:
1. Attracting attention, (the potential customer becomes aware of your

new product or service)
2. Maintaining interest, (they become interested in what it could do for
them)
3. Arousing desire, (they begin to consider the idea of purchasing the
product or service)
4. Getting action, (they purchase!).
You can sometimes notice well-trained sales people using this approach. They will
not try to make the sale straight-away but start by generating attention (“Have you
seen our new range of……” ) and then move to gain your interest (“Just look at the
advantages”) and your desire (“Wouldn’t this look good in your home….”) before they
finally attempt the sale.
How to put your idea into practice – basic rules:
“Having great ideas is one thing…getting people motivated to participate in making them real
is something else altogether.”
 Get people to accept ideas.

 Try to anticipate the obstacles you might encounter and consider how you
might overcome them
 Plan and manage time in an effective manner.
 Create the enthusiasm and motivation to follow through ideas.
 Create an awareness of problems that exist and encourage recognition of the
need for change and a need to adopt the idea that is being put forward.
 Stress the benefits of change to the individuals involved since they will only be
motivated to accept and to adopt new ideas when they perceive and
acknowledge that it is in their own best interest to do so.
Most ideas, no matter how brilliant, are worthless without a concrete implementation.
That's because ideas are easy but implementing them is hard. Become better in
execution skills - at seeing through an idea to the end. The man who was arguably
the greatest inventor in history, Thomas Edison said: "Genius is 1% inspiration and
99% perspiration".
Steve Jobs (Apple) had introduced new i-Pad tablet as revolutionary innovation product
Business idea generation
»The greatest thing you can do in life is to keep your mind young and innovative!«
Remember: Think of lots of ideas – don’t try to judge them – that comes later. If you
do, try to decide whether the idea is any good at this stage you’ll start to close your
mind. Thinking then becomes like driving the breaks on. Let ideas flow!
Table 11: Exercise - Business idea generation
In this exercise we have an idea “Unwanted used clothes” in the centre of the
diagram. Use the prompt questions around the circle to think of as many ideas as you
can and write these in the circles. What can you do with unwanted used clothes to
create a business idea?
You can do this exercise with your team members or by yourself. Generate as many
ideas as possible, how to use unwanted clothes for different purposes, as its seen on
table for about 20 minutes. You will be surprised with the number of useful ideas, and
by how many of them you could turn into a new business.
Exercise: Idea “Selling” – the 30 second message

When you make a decision to contact a company to sell your creative product, you
need to have four items ready: (1) be prepared to highlight the business opportunity,
(2) have a working prototype, (3) and give a short but effective opening presentation,
(4) be organized and completely engaged in idea presentation.
This is the so called “elevator pitch”. (Imagine you are travelling in an elevator with
a potential client or investor. What could you tell them about your business before
you reach your destination?)
Why 30 second:
- The attention span of the average person is roughly 30 seconds,
- Doctors listen their patients for an average of only 19 seconds before they
start making a diagnosis,
- TV commercials do a good job of getting their message across in 10 seconds.
- The elevator ride will last just 30 seconds!
What is creativity?
“Creativity is the art of taking a fresh look at old knowledge.”
Creativity is the ability to see what other people don’t see or don’t want to see!
Creativity often involves recombining or making connections between things that may
appear to be unconnected.
What else is creativity:

- “Ability to create something new!”
- Creativity deals with synthesizing and innovation
- Recognizing the uniquenesses in the unipressive
- A human activity that produces original ideas or knowledge
- Artistic or intellectual inventiveness
- Creativity in business is a way of life, an ongoing process.
- Creativity should thrive at all levels and all phases of business but is
sometimes hidden.
- Everyone in business can be creative.
Creative person – main characteristics:

Openess to experiences
Observation – seeing things in unusual ways
Curiosity
Tolerance of ambiguity
Independence in judgement
Autonomy
Self-reliance
Persistence
Sensitivity to problems
Flexibility, originality
Responsiveness to feelings
Motivation
Freedom from a fear of failure
The ability to concentrate
Vizualization
Anticonformism.
Exercise: Your Creative Thought Process

Try some of these activities from time-to-time:
Every day pick any part of your business process, concentrate and write it down – for
example a package of your product; then create a flow chart for generating ideas for
new design and materials of your product package and see where the flow takes you
Think of your product you sell. How could it have been re-invented in a
different way but produce higher selling result? Add some new value, for example of
direct marketing to your clients!
After a while, by doing these exercises you’ll find that your mind approaches
ideas in new creative ways. Invent and invent! There is always a room for
improvements!
Left and Right side of the brain
“Reason can answer questions, but imagination has to ask them!”
The left brain hemisphere helps the person analyze, verbalize, and use rational
approaches to problem solving.
The right brain hemisphere helps an individual understand analogies, imagine
things, and synthesize information.
In Chinese philosophy Yin & Yang are complementary opposites within a greater
whole.
Table 12: Left vs Right side of the brain
Left vs Right side of the brain

LEFT RIGHT
Logical, factual Change oriented
Quantitative analytical Strategic artistic visual
Critical realistic academic Playful holistic Risk taking
Mathematical authoritarian Imaginative conceptual spacial
Rational financial technical Simultaneous Big picture context
Dominant organized tactical Emotional symbolic teaching

Conservative risk-avoiding Sensitive intuitive musical
Administrative scheduled Expressive reaching-out
Procedural sequential Supportive spiritual
Reliable detailed Interpersonal
R. Sperry once discovered that the human brain has two very different ways of
thinking. The left brain is verbal and processes information in an analytical and
sequential way, looking first at the pieces then putting them together to get the whole.
The right brain is visual and processes information in an intuitive and simultaneous
way, looking first at the whole picture then the details.
Thinking process:
Convergent and divergent thinking process:
- Convergent thinking means that thoughts are going toward one solution. It
generally means the ability to give the correct answer to standard questions
that do not require significant creativity, for instance in most tasks in school
and on standardized multiple-choice. This kind of thinking is particularly
appropriate in science, maths and technology.
- Divergent thinking means spreading thoughts toward different solutions (i.e.
search for the new name of the company, new uses for an old product).
Divergent thinking is using in open-ended tests, such as the "Uses of Objects"

test.
- Vertical thinking system goes step by step approach (one final solution).
Vertical thinking is usually familiar among music composers, it is the way that
most of them listen to the music, analyze, and compose it.
- Lateral thinking system goes everywhere before conclusion is making (more
final solutions).
Exercise: Lateral thinking dots
. . .
. . .
. . .
One of the classic lateral thinking puzzles involves nine dots, as in the example above. The
challenge is to connect them all dots in four straight lines, without lifting the pen or pencil
from the page. When you figure this one out you will have a new appreciation for the
expression "thinking outside of the box." Lateral thinking puzzles like this help you increase
your brain power by getting you out of habitual ways of thinking.
Ways to unleash creativity:

 Read odd stuff – look anywhere for ideas.
 Ask dumb questions. The computer mouse came as a result of
someone asking, “How come computer commands all come from
keyboards?”
 Look everywhere you go and listen to everyone for potential ideas;
ideas come from anywhere.
 Clear your mind – To make your mind receptive to different ideas,
facts, or perspectives, you need the mental equivalent of a blank
piece of paper – go to a quiet room, take a walk, listen to quiet
music – to empty your mind.
 Try to forecast the potential possibilities in situation- requires
openness, sense of gratitude and appreciation, a willingness to ask
new questions.
 Regain your curiosity. If you can’t remember how, spend a day with
a two-year old and learn from them.
 Eliminate “Yes but…” from your vocabulary replacing it with “Yes

and…” and watch your creativity grow.
 Allow time for incubation. Pose your problem in your mind and then
let it go. Then listen to the solutions that come to you – while
relaxing, taking a walk, while driving your car, etc.
 Shush the inner critic – that little voice that undermines your
creativity. Replace “weed thoughts” with “seed thoughts”.
 Laugh often, everyday. Children laugh about 400 times a day!
 Simply start doing. Immerse yourself in a variety of creative task, i.e.
gardening, cooking, reading about creative people, playing music,
practicing being an artist, writing, etc.
Exercise: Ask Questions about your business idea

When stuck on the problem of trying to be creative, ask a series of questions to gain
a new perspective of your product or idea:
- What can I substitute?
- What can I add to it to make it a little better?
- What is not needed?
- What is the opposite of this?
- Where did this come from?
- How has something like this been used before?
- What else can this be used for?
- Can you add any service?
Creative thinking-rules
“Change that creates a new dimension of performance!”Is this a definition of innovation. If so
it needs to be made clear.
-Peter Drucker
Creative Thinking in teams involves generating new ideas by getting the minds of
participants to integrate two or more already existing, but previosly unnconected
concepts or ideas. For example, the “snowboard” was a new idea that might have
been formed from the concepts “skiing” and “snow”.
To launch a creative thinking activity, begin with one idea, and position another
stimulative idea next to it. The team members have to consider both simultaneously
and force their minds to synthesize the two into one, using “what if..” questions. For
example, new product designer might begin with their current model of something
and then position a human sensory or intellectual capability next to it asking: What if
our product could see? What if the product could hear? What if our product could
taste ot touch or smell..? In each case answers might yield new products ideas that
would offer high value to current or new customers.
Table 13: The creative thinking process
The Creative Thinking Process
Incubation
Knowledge Creative
Ideas
Accumulation Process
Evaluation
and
Implementation
Creative thinking process is the way to bring ideas into reality. It starts on a very
fundamental level of knowledge accumulation of idea, evaluation process, selecting
of best idea and finally incubation process. Ultimately, the idea may be turned into a
product, assuming that funding can be secured and that the idea is commercially
viable.
Example: Creative vs Ordinary person

Creative person: “I like to make pancakes with lots of vegetables and fuit!”
Ordinary person: “Don’t improvise, make it on classic way!”
Creative person: "I like to put water in my orange juice so it's less sweet."
Ordinary person: "You're silly, you know?"
Ordinary person: "What are you doing?"
Creative person: "We're painting our front window."
Ordinary person: "Why do you want make it different?"
Ordinary person: "Why are you going this way? It's longer."
Creative person: "Because I like the drive and get inspiration."
Creative person: “Let’s decorate our living room with coloured balloons!”
Ordinary person: “No, it doesn’t make sense, because of nice furniture!”
Problem Solving Process
“Where the telescope ends, the microscope begins. Which of the two has the grander view?”
- Victor Hugo
People generally have distinct preferences in their approaches to problem solving.

Schools emphasize the teaching of analytical problem solving and give less attention
to approaches based on creative thinking.
A “problem” is the undesirable gap between the desired condition and the actual
condition of something important. Problems come in many shapes and sizes. For
example, it can be:
 Something did not work as it should and you don't know how or why.
 Something you need is unavailable.
 The market is not buying. What do you do to survive?
 Customers are complaining. How do you handle their complaints?
Where do problems come from? Problems arise from every facet of human and
mechanical functions as well as from nature. Problems are a natural, occurrence of
life, and we must learn how to deal with them in a creative, rational and logical way.
If we accept the fact that problems will arise on a regular basis, for a variety of
reasons, and from a variety of sources, we can:
- learn to approach problems from an objective point of view;

- learn how to anticipate some of them and
- prevent some of them from becoming larger problems.
What is the »problem«?

- “A problem is an imbalance between what should be and actually is.”
- “Problems cannot be solved by thinking within the framework in which the
problems were created.”
- A problem is a well-defined situation that is capable of resolution
- Identifying a problem in the mess is the first step in the creative problem
solving process
- Statement of the form “In what ways might…?”
- Focuses attention on problem definition
- Approach taken to resolve “problem” differs by form of problem statement
- Take any problem definition as tentative
- Prepare to alter definition if evidence suggests a different statement would
be more effective.
For most problems, there are direct causes, which are near in time and distance to
the problems they produce. Problems can be evaluated based on:
- Their level of importance
- The complexity of their solutions.
To accomplish this, you need to learn the process of problem solving.
In addition, some problems are so complex that they require the additional help of
experts in the field, so be prepared to accept the fact that some problems are beyond
one person's ability, skill, and desire to succeed.
A “solution” involves taking corrective actions to close the problem gap by

eliminating or mitigating the causes of the problem. Hence in order to achieve an
enduring solution, it is necessary to identify all of the problem’s causes.
A problem is the difference between your current state and your goal state!
Problem solving process in your team: a team get involved in problem solving
when the importance of the problem is sufficiently high to justify their attention and
when it is clear that one person alone can neither develop nor implement a
satisfactory solution. When teams are asked to make decisions, they seek to create a
consensus which means, that each of the participants can “live with” the selected
final option.
Exercise: Replacing the Negatives with Positives

This is probably one of the more important ones to do. Whenever you want to do
something but your mind tells you that you can’t or it’s too risky, write that thought
down and then next to it write down 2 or 3 reasons why you can. Do this quickly and
often! Soon you will notice that you have trained your mind to automatically react with
a positive thought whenever you think of a negative one.
Problem solving process involves goal-directed thinking and action in situations for
which no routine solutions exist. The problem solver has a more or less well defined
goal, but it is not immediately obvious how to reach it. The understanding of the
problem situation and its step-by-step transformation based on planning and
reasoning, constitute the process of problem solving.
There are 7 important steps in problem solving process discussion:
1. State what actually is the problem;

2. Gather facts, feelings,
3. Restate the problem from different point
4. Identification of alternative solutions
5. Evaluation the best of them
6. Implementation of chosen decision
7. Evaluation of results.
Crucial to the success of a business faced with problems is your understanding of

just what the problems are, defining them, finding solutions, and selecting the best
solutions for the situations.
Problem solving techniques:
“Creative behaviour is that which demonstrates uniqueness and value in its product.
Creativity is thus a function of knowledge, imagination and evaluation. Without knowledge
there obviously can be no productive creativity.”
-Sidney Parnes
Problem solving techniques are essentially systematic structured tools design to

facilitate the gaining of insights into the problem.
Problem solving techniques stimulates teams in the following ways:
1. Focus thinking with explicit “Focus Questions” that get at WHAT, WHERE, WHO,
HOW and WHY.
2. Use highly visual tools, involving meaningful colors and shapes, to energize
reinforce and organize ideas.
3. Capture and build a comprehensive group memory
4. Generate decisions and commitments.
5. Facilitate communication and follow-up.
Focus questions – what? when? where? who? how? and why?
1. Brainstorming: This thinking method technique is based on a free, non-

threatening, anything-goes atmosphere. You can brainstorm alone or with a group of
people. Most often a group of people from diverse backgrounds is preferable. The
process works like this: The problem is explained to the group and each member is
encouraged to throw out as many ideas for solutions as he or she can think of no
matter how ridiculous or far-fetched they may sound. All the ideas are discussed
among the group, revised, expanded, etc. based on the group's analysis of them.
Based on the group's grasp of the effectiveness of each idea, the best ones are
selected for closer review. For example, the group of people might throw out for
consideration any thoughts they might have on how to increase sales or improve
profits.
Brainstorming technique is the foundation for many other techniques and the basis
for creative problem-solving. In brainstorming, people in the group freely exchange
ideas and generate lists in response to an open-ended question.
1. Generate as many solutions as possible; quantity counts.

2. Wild ideas are welcome-be as creative as you can be.
3. “Hitchiking” is encouraged-build on the ideas of others.
4. No criticism is allowed. Defer judgement until the final evaluation phase.
Participants try to generate as many ideas as possible, often building or

piggybacking on a comment or idea from another participant. This supports
creativity and leads to expanded possibilities. This is a fast way of getting ideas
on the table (or flip chart) in a short period of time.
How to conduct Brainstorming activities:
1. Clearly frame an open-ended question of the problem

1. Do not censure or make judgments about any ideas

2. List all ideas generated on a flip chart
3. Tell participants to build on other ideas that are suggested
4. The more ideas the better chance of generating creative, useful ideas
5. Often the best, most creative ideas come at the end of the brainstorming
session.
6. Allow the group to be silent for a moment. Most of the time additional ideas will
begin flowing and this will generate the eventual solution to the question.
Brainstorming diagram example for a new product

“New model of Smart skates”
2. Focus group technique – you gather between 5-10 people who are selected
because of their relationship to the issue being discussed. Although focus groups are
used for a variety of purposes, they can be used to help generate new business
ideas.
At first you should define a focus group system, design questions, recruit and prepare
for participants, conduct the Focus Group and finally analyze the data.
For example a coffee bar might conduct a focus group consisting of 5-10 frequent
customers and ask the group:”What is that you don’t like about our coffee bar?” In
this way, we can collect plenty of ideas: how can we improve service and quality of
the products we are selling to customers. Then the moderator could ask lots of
questions and discuss assumptions, (for example under which conditions would
customers spend more money for coffee etc.)
There are three types of questions:

1. Engagement questions: introduce participants to and make
them comfortable with the topic of discussion,
2. Exploration questions: get to the meat of the discussion
3. Exit question: check to see if anything was missed in the discussion.
Source: http://www.bizmove.com/skills/m8d.htm
3. Checklists
This is the use of questions as spurs to generating ideas. The simplest set of
questions are as follows: for example - Preparing a company promotion event for
new service:
1. Why is it necessary? 4. Who should do it?

2. Where should be done? 5. What should be done?
3. When should it be done? 6. How should it be done?
Example:
How to create a friendly atmosphere at work?
Define: why, where, when, who, what, how!
Example: A desk in your office!
1. Adapt it for more tasks, purposes? 5. Minimise/eliminate?

2. Modify? 6. Rearrange, add some new
3. Substitute with similar wooden combinations?
elements? 7. Reverse?
4. Magnify/maximise? 8. Combine and design new office and
meeting room.
4. Attribute listing
Attribute listing is very useful technique for quality improvement of complicated
products. Attribute listing involves breaking the problem down into smaller bits and
seeing what can be discovered as a result.
Example:
Let’s say that your business is producing torches. You have a strong competition.
How to improve your torch?
Feature Attribute Ideas

Casing Plastic Metal
Switch On/off On/off/low beam
Battery Consumable Rechargeable
Bulb Glass Plastic
Weight Heavy Light
5. Brain-writing
Brain-writing is used by individuals or a group to put ideas in writing. Each person
writes their ideas down on index cards, self-adhesive notes or slips of paper. Large
groups find it helpful because everyone got express their ideas completely and
quickly. Individuals can write their ideas down in a private, quiet place and share
them later. To use it by oneself is easy:
1. Get a stack of index cards, self-adhesive notes or slips of paper.

2. Pick or be asked a question that requires a new, fresh answer.
3. Sit down, relax and write down every idea on a separate card and initial it. One
uses the rules of brainstorming and the skills needed to make them work.
(Proctor, 1999)
Exercise: Brain-Writing 6-3-5

The name “Brain-writing 6-3-5” comes from the process of having 6 people write 3 ideas in 5
minutes. Each person has a blank 6-3-5 worksheet (below)
Problem Statement: How to sell more jogging sport shoes in Ankara
Idea 1 Idea 2 Idea 3
Everyone writes the problem statement at the top of their worksheet (word for word from an
agreed problem definition). They then write 3 ideas on the top row of the worksheet in 5
minutes in a complete and concise sentence (6-10 words). At the end of 5 minutes (or when
everyone has finished writing) pass the worksheet to the person on your right. You then add
three more ideas. The process continues until the worksheet is completed.
There will now be a total of 108 ideas on the 6 worksheets on how to sell more jogging sport
shoes in Ankara. These can be in the end assessed.
6. Synectics
Synectics, from the Greek means the joining together of different and apparently
irrelevant elements.
Synectics is a creativity stimulation program whose title is taken from Greek word
joining together different and apparently irrelevant elements. Synectics is guided by
two princples:
1. Make the strange familiar (use the metaphor and analogy)

2. Make the familiar strange (take something commonplace and find new ways of
viewing in through analogy)
There is generally more use of emotions to generate ideas and there is greater
external directions of ideas. Four types of analogy:
1. Personal analogy, in which individual imagines himself to be the object with

which he is working
2. Direct analogy in which facts, knowledge or technology from one domain are
used in another.
3. Symbolic analogy, in which images are used to describe the problem
4. Fantasy analogy in which the individual expresses his wishes for ideal, though
fantastic, solutions to the problem.
Example of a Synectics model

Phase 1: Describe what we have before us---the present condition.
Phase 2: Suggest direct analogies to the present condition and describe it further.
Phase 3: Let's become the analogy we have selected in Phase 2.
Phase 4: From our discussion in Phases 2 and 3 let us suggest several compressed
conflicts and choose one.
Phase 5: Allow the compressed conflict to inspire yet another analogy.
Phase 6: Move back to the original task or problem and use the last analogy or the
entire experience to proceed with a new mindset.
Synectic thinking is like a mental “pinball game.” Stimulus input bounced against the
scoring numbers (the Trigger Questions) is transformed. Ordinary perceptions are
turned into extraordinary ones.
Example: the team leader says the goal is to build a better toaster and the keyword
is "food". The leader may choose the topic "music" and asks the group for analogies
and examples of how "food" and "music" are alike.
Initially, the group ignores the goal of the discussion and takes a journey away from
the problem. The focus is on examples produced by the "analogy" step. Members of
the group work individually and note down any associations they have with the
examples about the unrelated topic.
The group is now asked to work in pairs and use these associations to come up with
an idea that address the original problem from the "define" stage. This idea will likely
be impossible, impractical, absurd or silly.
After a presentation of the ideas to the group, the group takes the absurd ideas from
the previous step and combines and refines them to make them more practical and
applicable to the goal. This step often produces some surprising and creative
solutions to the original problem.
The Synectics approach is mostly done with "brainstorming"-type teams and uses
several methods:
- Problem owner: Only one person in the group owns the problem; others only help.
- Springboarding: Using "I wish..." and other wording to trigger thoughts in other
people.
- Headlining: Giving ideas up-front with no prior explanation.
- Excursions: Doing side-exercises to stimulate new creative thinking when ideas
run out (for instance, the use of metaphors).
- Itemised response: Plusses-and-minuses approach to solution evaluation.
http://www.rediff.com/money/2007/mar/20brain.htm
Innovation and Innovation process
“Want is the mistress of innovation!”
Innovative urban-bicycle for parents with small kids!
Innovation is the way of transforming the resources of an enterprise through the

creativity of people into new resources and wealth. Innovation is the lifeblood of any
organization. It is therefore important that we have a good working definition of

innovation. Innovation can apply to many things. It is usually the term applied to a
new product, but it can also be used to describe new processes, methods or
inventions. The three stages in the process of planning innovation:
1. Design and Invention,

2. Development and
3. Realization and Commercialization.
In the innovation process the product should be designed, plans have to be drawn up
for the manufacturing process, the layout of the factory, shop or office, the distribution
process, the sale and sometimes even for a whole production and sales organization.
Product design is part of a comprehensive process called the product innovation
process (or product development process). In the Development stage, the product is
designed; this is the stage called the product design process. In short, product
innovation is the development of a new business activity around a new product. In
the product planning stage, a product policy is formulated, and new product ideas are
generated for further inventions. In product development, the product-market strategy
is one of the main strategies (commercialization). The company is going to determine
to which markets it is going to address innovation. In the Realisation and
Commercialisation stage, the product is manufactured, distributed to the market.
Innovation is the ability to deliver New Value to a customer. After all, it is not
innovation until the customer says it is. While most of us have traditionally associated
innovation with advances in technology, in a free market innovation can be as simple
as a new way of doing things or a new way to create customer satisfaction.
Business opportunities for Entrepreneurs

(some examples)
The best ideas are inner, intuitive ones. We need to invent and recognize them, to develop
them into real entrepreneurial opportunities using characteristics, competencies, talents and
resources. Each individual develops his own way to success, most successfuly in
combination with others – work in teams. Do it with passion!
Business opportunities for entrepreneurs are all around. Thousands of entrepreneurs

are considering starting low-cost companies, many of them as home-based
businesses. On average, young people today can expect to have two and three
careers during their work life. Those leaving one career often think about their second
or third career move being linked to their own home. The good news: Starting a low-
cost business is within the reach of almost anyone who wants to take a small risk and
work hard.
Some examples of global known brand-names
Discussion Questions:
1. What is the basic difference between a business idea and a business
opportunity?
2. Explain the difference between added value, value proposition and core
competence?
3. Why is creativity and innovation process so important in entrepreneurship?
4. How can we help ourselves with problem solving techniques to find better
ideas and become better problem solver in our company?
5. Discuss steps of brainstorming problem-solving technique?
Part three »Business Planning« for Start-ups

»Guidelines for Writing your own Business Plan«

 the basic rules/guidelines for writing a business plan
 the systematic stages required to develop a business plan
 the contents of a typical business plan
 the value and purpose to the entrepreneur of a well-constructed
business plan
 the resources necessary to produce a business plan for a new
enterprise
 the sources of financial resources available to you and your business.
Contents of Business plan (sample)
»ENTREPRENEURSHIP SKILLS FOR ................................... BError! Bookmark not defined.

NEW VENTURE CREATION«......................................................Error! Bookmark not defined.
A Guide for Young Entrepreneurs ......................................................................................... 1
1. The benefits ....................................................................................................... 26
2. The risks ............................................................................................................ 26
 the concept of “market need”........................................................................................ 30
 the principles of creative business decision making.............................................. 30
 the economic significance of entrepreneurial companies ................................... 30
 the key tools and techniques for creative business thinking ............................... 30
 the concepts of “added value” and “core competence” of the company......... 30
 how to collect necessary market data to support business plan ....................... 30
 how present their own your business idea in a simple and logical manner ... 30
 how to identify the core competence of your intended business ....................... 30
 how to relate the concept of “value-added” to your business idea .................... 30
 how to undertake a simple evaluation of a business idea, identifying its strengths and
weaknesses in terms of profitability ............................................................................ 30
 how to use “brain-storming” techniques for generating new business ideas 30
 the awareness and skills necessary to solve problems creatively ..................... 30
 the basic rules/guidelines for writing a business plan ........................................... 58
 How to identify your market and your target customers ....................................... 72
 the concept of marketing, marketing analyses, strategies and marketing plans72
 the factors which will influence the competitiveness and profitability of your business
................................................................................................................................................ 72
 how to undertake an analysis of strengths, weaknesses, opportunities and threats of a
business .............................................................................................................................. 93
 how to undertake a basic SWOT analysis of a business plan and propose

improvements based upon that analysis ................................................................... 93
“The purpose of business plan is to create and keep a customer!”

- Peter F. Drucker
Do I really need a business plan? Yes, all serious businesses need a business
plan. If you are investing large amounts of your time and financial resources, you
need a plan. All new businesses benefit from the kind of analysis a business plan
requires.
Who will use the plan? If you don’t need to raise capital, your plan is internal and
less formal. If you need capital from an outside sources, the plan also serves as a
“selling document” with added emphasis on professional presentation. For either
purpose, a good plan is important.
What is a business plan? The business plan is a written document about an

opportunity and how a business is going to create and retain value! If the plan is
prepared properly it should have a number of features such as:
 It should be an entrepreneurial plan to get your new venture up and running.

 It should be an internal document that helps you to communicate the business
model and to reach your business goals.
 It should act as an important »road map« for you, the entrepreneur, and the
employees of your firm.
 It can be used as a »selling document« for your company (investors, bankers,
suppliers, buyers, job candidates, friends, relatives, business angels, venture
capitalists…).
 It should demonstrate that you are professional and serious enough to do formal
planning.
 It will establish your business goals/objectives and help you to achieve your long
term vision
 It will enable you to checking all aspects of the planned Start-up (starting capital,
break even point, profits, assessment of future cash-flows and so on).
 It will ensure that you collect all important information about your markets.
 It will help you to consider the possible problems you may face when
implementing the idea.
 It should stimulate you to the search for new profitable business directions.
First questions your business plan must address?
1. Where is the company now?

2. What is the business idea, what is unique, how is it protected?
3. How the product is offered (additional services)?
4. What are the target customers, the target segments?
5. What is the market volume and what are the growth rates?
6. What is the targeted market share?
7. What are the predicted sales and turnover, and the profit within the next
years?
8. What is the competitors’ situation?
9. What is the market (entry) strategy?
10. What are the qualities and competencies of the management?
11. Cooperation or partnership?
12. What research and development steps are needed, if any?
13. How high is the investment needed and under which conditions?
14. Define long term targets and how can they be reached?
15. What are the main chances and risks?
16. Why do you belief in the success?
Rules for writing business plans

The way a business plan is written and presented is crucial for business success,
especially if the business plan is for external use. Before you write the business plan
here are some rules to keep in mind:
1. Be short and precise. Maximum of 20-25 pages, as much as needed, as less

as possible use of technical / special terms.
2. Differentiate between reality and plans.
3. Be interesting and show creativity. The reader will read the entire content only
if it is not boring. Creativity makes it interesting on one side and underlines the
uniqueness on the other.
4. Bind the plan properly to show the seriousness of the proposal.
5. First page is the title page. Include names and addresses of the responsible
persons.
6. Include a contents page. It is useful for the reader that he can find necessary
information quick.
7. Additional documents belong to an appendix. Documents such as your CV,
Flyers, analysis, references etc. should be placed in the appendix.
8. The content should be structured.
To develop a good business plan will involve writing and re-writing. Get someone to
help by reading for accuracy, understanding, consistency, and so on.
General contents of a business plan

1. Executive Summary
2. Company and Industry (aims)
3. Idea / Products and Services
4. Markets/Market Analysis
5. Competitors/Competitors analysis
6. Marketing
7. Operating plan
8. Organization & Management plan and Milestones
9. Financial plans
10. Risk analysis
11. Appendices and Exhibits (technical documentation)
1. The Executive Summary (1,5 page)

The executive summary is the most important part of the business plan. It
summarizes the key elements of the entire business plan. It should be readable
within 5 minutes (1-2 pages) and after that the reader should be fascinated by the
idea and know the most important details. It is the first part which is read but will also
be the last if it is not convincing. The executive summary appears first, but should be
written last. As an overview, the executive summary should contain:
 A description of the idea, including products and/or services as well as

benefits for customer or user
 Mission statement
 Markets, customer & competitors
 Marketing and sales
 Business’s management, competencies
 Business’s operations
 Capital needs
 Main financial projections and plans as well as rate of return
Tips for Writing the Executive Summary

• No longer then 1-2 pages – use the “elevator pitch” (See glossary). Explain your
idea and the entire concept within 5 minutes. Give as much detail as needed but as
little as possible. It should contain only facts and no new concepts or statements.
• Be short and precise and include necessary information for the target group (avoid
time wasting). Don’t despair. Short and precise language is often more difficult and
takes more time then longer explanations. With a factual and logical explanation it
can be shown that you understand your business.
- Arguments should be strong and positive. Don’t let any of your doubts become
part of your summary. Avoid “might”, “should” and “could”. Be positive and use
“will” and “can”.
- Read the summary aloud and check whether it flows or not. A third person
should read it and improve it where it is unclear, or not understandable or
where information is missed. Ask someone you trust to read it and give you
comments.
• What is the business idea, what is unique, how is it protected?

• How the product is offered (additional services)?
• What are the target customers, the target segments?
• What is the market volume and what are the growth rates?
• What is the targeted market share?
• What are the predicted sales and turnover, and the profit with in the next
years?
• What is the competitor’s situation?
• What is the market (entry) strategy?
• What are the qualities and competencies of the management?
• Cooperation or partnership?
• What research and development steps are needed, if any?
• How high is the investment needed and under which conditions?
• What are the long-term targets and how can they be reached?
• What are the main chances and risks?
• Why do you believe the business will be a successful?
Don’t worry if some of these terms above and those to follow are unfamiliar to you.
We will be looking at them in some details later in the manual and you will quickly
learn the “vocabulary of business”. Many of the words are contained in the glossary
at the end of the Manual.
Structure of Business Plan
1.1 Mission and Vision Statement (1/2 page)

In the mission statement the business concept of the firm is defined. Objectives of the
firm are stated in broad strategic terms. The Mission statement should make clear the
purpose of the firm at a current time (at start-up), especially what market is served
and what customer benefits are offered. The Vision statement should clearly state the
view of the firm's future direction and business makeup.
1.2 Objectives
Key business goals are set, such as market share objectives, sales objectives, and
profit objectives. Objectives need to be concrete and measurable.
1.3 Business Opportunity and Keys to Success (1 page)

A description of the attractiveness of a business opportunity and how well the firm will
match the opportunity in terms of products/services, strategies, resources and
management team capabilities. What are the three or four key tasks (factors and
priorities) that will be accomplished by the firm in order to successfully achieve the
business goals?
This section of your business plan is intended to paint a picture of the "unfulfilled
need your venture will satisfy. Take the time to give factual as well as educated
estimates of the market size and growth today and in the future.
Give a brief description of your target customer; their purchasing habits and ways in
which you plan to capitalize on those in order to bring the venture to profitable and
sustainable fruition. Describe the present market and future opportunities. If the
product or service is new, market research probably will be required to put
meaningful dimensions on the initial and future market.
Questions to be answered:
 Who are the customers?
 What is the historic and predicted rate of growth for each market
segment?
 Where are the present and future markets? Are they regional, national, or
international?
 How does each market segment purchase the product?
 What are the critical product/service characteristics? Consider
 Performance, reliability, durability, availability, price and service.
 What substitutes are available for this product? Or what are
 Prospective customers doing now to fill this need?

 Does the market have any special characteristics, such as seasonal?
 Cyclical or other important factors?
2. Company Description (1/2 page)

A brief introduction of the business in terms of where it will be established, what type
of legal status will it have, who will be owners, and what will be their shares of the
business.
2.1 Company Ownership

A description of the legal status of the firm and the ownership structure.
2.2 Start-up Plan (or Prior Company Continuation Plan) (1/2 page)
The Start-up plan includes a listing of details of start-up expenses, start-up assets,
and financing requirements (loans and investments), as well as explanation of the
assumptions of the start-up plan. If the firm has a prior history, then past performance
serves as a starting point to develop a continuation plan.
2.3 Company Locations and Facilities

A description of all facilities and their locations that are relevant for producing and/or
providing products and/or services. Each facility should be described in terms of its
nature, function, total area, lease arrangements, etc. An explanation should be given
on the selection of location (advantages, efficiency – customer/transportation/supplier
proximity, tax issues). (As with most aspects of the business plan some of these
entries for a new start up business will be very simple. You may have just one work
space for example but a potential investor will still need to know what your starting
point is going to be.)
3. Product or Service (1 page)

A summary list of products and/or services of the firm should be provided along with
a description in terms of how they will address customer needs, their most important
features and customer benefits, and their comparison to other products/services that
address the same need.
3.1 Product (or Service) Description

A detailed list of all products and/or services of the firm and their description. Which
“customer needs” does each of them address? What are the most important features
and customer benefits of each product/service? How are they different or similar
relative to other products/services that address the same need (pricing, technology,
manufacturing cost, distribution, packaging, customer characteristics and reasons to
buy the product/service)? In addition, a list of any existing promotional literature of

the firm and its products/services. Such literature can be included in the appendices
of the business plan.
3.2 Competitive Comparison (1 page)

Analyze the competition's products and services in terms of features, value, and
targets. How do your competitor's sell their products? How do they market them?
Customer satisfaction? How will customers see your offering in contrast to those of
the competition?
It's likewise important to include information on how competitors distribute and
advertise their products.
3.3 Production Process (2 pages)

A description of activities for converting the raw materials or products/services into
finished goods or services. A graphical representation of this process can be helpful).
A description of sources of materials or products/services and their costs and
suppliers.
3.4 Technology
A description of current and new technologies which are relevant for production of
goods or services in the new venture.
3.5 Future Products (or Services)

Description of future products/services and their relationship to current
products/services in terms of market segments, customer needs, market demand,
technologies, and product/service development.
4. Market Analysis (3 pages)

Marketing is a crucial element of a business plan, and its importance is often
underestimated. It defines strategy and charts the marketing direction for the staff.
This section of the business plan should give prospective investors confidence that
you can convert your ideas and assets into a strong brand and marketing position.
Investors want reassurance that the business will generate increasing profits.
A brief summary of your market analysis. A general description of target customer
groups, the bases for their selection, current market growth and future growth
estimates.
4.1 Market Segmentation

A general description of potential customer groups with their size (for example you
might estimate between 1000-2000 customers for your hair dressing service for first
year) number of individuals and total value of potential purchases) and growth rate
per year, (basic explanation of customer needs, product type they need, buying
patterns, life style, age, gender, approximately income, geography, etc.).
4.2 Target Market Segment Strategy

An explanation of the strategic bases for market segmentation and choice of target
markets (reasons for focusing on the chosen specific market groups and not other
groups).
4.2.1 Market Needs

A description of underlying customer needs for each market segment. For example,
define from your basic observation, what is your unique contribution of service or
product to your customers? Do they need your type of service? Why is that so?
4.2.2 Market Trends

A description of trends that can change the market or the business, if you are familiar
with some of those ideas. For example, fast food is becoming more “trendy” in
Kosovo. Do you follow this trend?
4.2.3 Market Growth

Estimated projections of market growth based on own or market research firms'
market research, opinions of experts, trade associations, and/or other credible
sources, such as important journals.
4.3 Industry Analysis

A brief summary of the topics of industry analysis, industry Characteristics, an
explanation of the nature of industry.
4.3.1 Branding
One of the most significant issues in the new economy is the need for a start-up to
“brand” itself. In today’s constantly changing markets, you must have a recognizable
name and “identity”. You must decide what the company’s name means and what it
will stand for. You must decide how you intend to build a brand name, how customers
will recognise the brand and how you can maintain its strength for years to come.
4.3.2 Channels of distribution

A distribution channel is a way of getting a product to its
consumer. Distribution channels are part of a company's marketing mix. A marketing
mix refers to each business' unique combination of product, price, promotion and
place. A distribution channel may be an on-site store, a virtual store, a retailer,
a wholesaler, an representative, a telemarketer or direct mail. Direct
mail distribution channels often work well on a large scale.
4.3.3 Competition and Buying Patterns

Identify competitors in the business plan and note the strengths, weaknesses and
market share of each. Be realistic about the analysis and address all the negatives to
show that the venture is prepared to meet the competition. The business plan should
also indicate the market share you expect to capture in the first three years. Spell out
your rationale for these forecasts. From which competitors do you expect to draw
customers, and why? Define the niche in the market and summarize the strategy to
gain market share.
Cite the principal competitive factors in the marketplace: product performance,

reliability, durability, styling, delivery, service, aggressive merchandising, price, and
other factors. Identify trends and explain how you plan to react to them. A prospective
investor will also want to know how competitors are likely to react to entry in to the
market and how you plan to respond.
4.4 Main Competitors and Key Success Factors (1 page)

A list of specific competitors, including their strengths and weaknesses. What are the
key factors for success in the industry? A description of other competitive forces and
their potential impact on the industry (suppliers, buyers, potential entrants,
substitutes, government).
5. Sales and marketing strategy (2 pages)

An explanation of key strategies (diversification strategies and especially business
strategies), tactics for their accomplishment and specific business activities
(programs) within each tactic.
What is the value of the product/service for the customers (estimate benefits minus
costs)? Where does the firm competitive advantage come from? How is the firm
different and in what is it better than other firms?
5.1 Marketing Strategy (1-2 pages)
A summary description of target groups of customers market focus (product/service)

and other marketing mix elements (price, promotion, distribution).
5.1.1 Positioning Statement

A statement including a strategic focus on the most important elements: target

market, market need, congruence of the product/service with the market need,
distinguishable features of the product/service in comparison with specific key
competitors.
5.1.2 Pricing Strategy

A detailed product/service pricing and its relationship to strategy.
5.1.3 Promotion Strategy (1/2 page)

How will the information about the company and its products/services reach
customers? Which promotional tools will be used (advertising, public relations,
events, direct mail, seminars, leaflets, fairs, social media, different platforms, forums
etc.) and what is their cost (absolute – total per category, and relative – cost per
potential customer).
5.1.4 Distribution Strategy

Which specific distribution channel, area or means will be used and what is the
advantage, relative to competition, of using the selected ones?
5.2 Sales Strategy (1 page)

A summary of sales approaches designed to close the deals (sales approaches,
sales database management and order processing, negotiation issues regarding
price, delivery, and other conditions).
5.3 Sales Forecast (1 page)

A detailed projected sales breakdown by each product/service for the first three years
(the first year listed by month), including totals. The sales forecast table needs to
include also a detailed projected cost of sales breakdown. Like many of the aspects
of the business plan this will be difficult to do. But it is important you take the time to
try and reach some realistic judgements.
5.3.1 Sales Programs

A detailed list of specific sales activities, which need to be carried out in order to
achieve sales goals, including deadlines, responsible persons, and budgets.
5.4 Milestones (1/2 page)

A detailed list of all programs and measurable activities including start dates,
deadlines, responsible persons, and budgets.
6. Management (1-2 pages)

A summary statement on who will execute the plan (by names and position within the
company).
6.1 Organizational Structure

A brief description of the organizational structure and its future changes (including a
graphic representation). Again, for a start-up this may be simple: one person, two
people do not require a complex structure! But think 2 or 3 years ahead. Maybe you
will need to hire additional people or take on a new partner?
6.2 Management Team

No matter what stage the venture is in, you must develop a strong management
framework. Again, list the most important members of the management team,
including their functions within the firm and brief resumes of their backgrounds and
experience.
Human resources question to be answered:

1. What will be your team members needs for the first, second and third year?
2. What skills will your team members need?
3. How will your employees be paid (hourly, salary, commission)?
4. What benefits will you provide?
5. What are the costs associated with these benefits?
6. Will employees need special training? If so, is training readily available and at
what cost?
7. What is the average salary of similar employees in the area?
7. Financial Plan (4-5 pages)

A brief summary of financial issues. A discussion of important assumptions about the
business and how they affected the financial projections.
7.1 Start-up budget

Before you begin your new business you will need to determine a start-up budget.
The basic process of planning a start-up budget involves listing the business's fixed
and variable costs (a cost of labour, material or overhead that changes according to
the change in the volume of production units.
Combined with fixed costs, variable costs make up the total cost of production. While
the total variable cost changes with increased production, the total fixed costs
stays the same) on a monthly basis and then deciding on an allocation of funds to
reflect the business's goals. You need to plan fixed and variable costs. A Start-up
budget should define the expenses required to start the business, before it can begin
to generate income through the products or services sold. This budget needs to
cover essential items such as office equipment, legal fees, product development
costs, rent or purchase of manufacturing equipment, initial marketing cost and so on.
7.2 Projected Balance Sheet

Projected balance sheet for the first three year period, including the opening balance
sheet (the first year listed by month).
7.3 Projected Profit and Loss

Projected profit and loss statement for the first three years (the first year listed by
month).
7.4 Projected Cash Flow
Projected cash flow table for the first three years (the first year listed by month).
7.5 Break-even Point Analysis

An explanation of the break-even analysis assumptions - Break even point is the
level of sales at which profit is zero. According to this definition, at break even
point sales are equal to fixed cost plus variable cost. This concept is further explained
by the following equation:
[Break even sales = fixed cost + variable cost]
7.5 Key Financial Indicators

A table and a discussion of changes (in the first three years) key financial indicators:
current ratio, total sales, gross margin, net profit rate, operating expenses, inventory
turnover, days receivables, return on investment, return on assets.
7.6 Risk Assessment

It is important to analyze your business opportunity with respect to five areas of risk:
product, market, business, finance and execution risk.
Prepare a table (1/2 page) with the following columns:
Field Risk Preventive measure

Product Not attractive to customers More attention to design,
package, promotion etc.
Market Too many competitors Raise added value,
innovative selling
approaches etc.
Finally, anticipating every possible risk factor is neither possible nor practical. That's
because no matter how smart we are, and no matter how carefully we assess the
market situation, we can't think even predict of everything.
8. Harvest Strategy (not necessary)

A description of plans related to asset transfers, ownership changes, and successor
identification (for more information refer to glossary).
Appendices
Appendices:
“Title”?
“Title”?
(Additional evidence supporting the validity and feasibility of the business plan (e.g.
Curriculum Vitae of you, the entrepreneur (if needed), customer testimonials, patent
& model, licences, references, contracts, market research data, charts, tables, price
lists, financial statement simulations, etc.).)
1. What is a business plan?

2. Why is it so important that each entrepreneur prepares his/her own business
plan?
3. Which are the main parts of business plan?
4. Why are marketing and financial parts of the business plan so important?
5. What are most important sources of information you would need to
successfully complete a viable business plan?
Part four »Marketing Analyses and Marketing Strategy«

»Marketing Plan Preparation«
 How to identify your market and your target customers

 the concept of marketing, marketing analyses, strategies and marketing plans
 the factors which will influence the competitiveness and profitability of your
business
 how to undertake a simple analysis of the market within which your business will
operate
 compile a simple marketing strategy for your business
 write a simple costed marketing plan for your business
 how to ensure your business maintains competitiveness in the future.
 how to define the marketing strategy for the product or service
“Marketing is the management process which identifies, anticipates and supplies customer
requirements efficiently and profitably.”
Industry or sector analysis
Before a new venture is ready for the market an in-depth analysis is in needed to
learn more about the industry the company plans to enter. This analysis helps a
company determine if the niche markets it identified during its research.
When studying an industry, the entrepreneur must answer three key questions:
1. Is it a realistic industry for a new venture to enter?
2. Does the industry contain markets ready for new innovations?
3. Are there any positions within the industry which have to be avoided?
It is useful for a new venture to think about its “position” at both company level and
the product or service level. This “position” will determine how the new venture is
situated relative to its competitors. Each entrepreneur should primarily understand
the country industry level, before he enters the market. (Barringer, 2006).
The importance of Company specific factors versus Industry factors

We should consider that both industry and company’s factors contribute to a

company’s profitability.
Company-level factors include:

- Company assets
- Company’s products
- Company’s culture (Company Culture is the term given to the shared values
and practices of the employees)
- Company’s team
- Company image and reputation.
Five of the most important factors that will affect your profitability and survival
are the following:
1. Threat of substitutes (competition)

2. Threat of new entrants (companies)
3. Rivalry among existing companies
4. Bargaining power of suppliers
5. Bargaining power of buyers.
A new Start-up can use a five factors to assess the overall attractiveness of the
industry it plans to enter and to determine if a favourable position to occupy exists in
that industry.
The Five Competitive Forces that determine Industry Profitability
Each of five forces impact the average rate of return on investment for the company
in an industry. The five competitive forces that determine industry profitability are
described next:
1. Threat of substitutes (competition)

The price that consumers are willing to pay for a product depends in part of the
availability of substitute products on the market. For example, there are few if any
substitutes for prescription medicines, which is one of the reasons that
pharmaceutical industry is so profitable. In contrast, when substitute, similar product
exists, industry profitability is suppressed, because the customer has alternative
options.
2. Threat of a new entrants

If the companies in an industry are highly profitable, the industry will become a
magnet to new entrants. However, there are a number of factors that may make it
difficult for new companies to enter the industry. Let us look at six major sources of
what we can call “barriers to entry”:
Economies of scale occur, for example when some existing manufacturers are so
big that they can make the product at very low costs (for example-many Chinese
cheap products).
- Product differentiation – a good example is toothpaste. It has gone from a
product with superficial advertising to promotions based on differentiation features
that deliver specific benefits, (fresh breath, fighting gum disease, prevention of
plaque etc). For example, at last count Colgate toothpaste has twelve different
products for different consumer needs. It is still an emotional decision, but the
product information has become quite detailed in order to sell differentiated products
to different parts of the market.
Differentiating a product separates you from your competitors so the market will see
you as delivering unique benefits. But you don't want to be too different. If you
present a totally new business concept, it is possible that the market will not be able
to compare you to your competition, which means you won't be considered in the
product evaluation process.
- Capital requirements: In some industries, large amounts of investment are
required even to begin basic manufacture, (e.g. car manufacturing). It is very hard to
find an investment for young company in such a industry (for example for a small
electric vehicle in Croatia) See: http://www.autoevolution.com/news/croatian-
company-seeks-investors-for-high-range-electric-car-18959.html)!
- Cost advantages independent of size, some companies that have been in a
market for a long time may have found ways to make the product cheaply, making it
difficult for new entrants to compete.
- Access to distribution channels: existing companies may have come to
dominate particular outlets (e.g. superstores, kiosks) making it difficult for new
entrants to get their products to the final customer
- Government and legal barriers – this may occur specially in knowledge intensive
industries, like pharmaceuticals, where there are strict rules governing new entries.
3. Rivalry among existing companies
Entrepreneurs should examine the number and balance of close competitors, degree
of differences between products, get statistics of growth rate of an industry and
approximately level of fixed costs in this industry.
4. Bargaining power of suppliers
In any industry it is important to know how suppliers are concentrated and if suppliers
are likely to enter with the same product as a producer. Food processors can buy
agricultural produce from many, weak small and medium farmers. Retail stores can
fill their shelves with many competing products from different producers. The more
concentrated and controlled is the supply, the more power the suppliers have in the
market. In a truly competitive market, no one supplier can set the prices.
5. Bargaining power of buyers
Bargaining power is the ability to influence the setting of prices.
Monopolists buyers will use their power to extract better terms (higher profit margins,
better service standards etc) at the expense of the market. In a truly competitive
market, no one buyer can set the prices. Instead they are set by supply and demand.
In this way, young entrepreneurs should be aware, that bigger competitors will use
bargaining power to eliminate small entrants using different tactics and approaches in
order to eliminate them in negotiating with wholesalers.
Table 15: Elements of industry
Elements of Industry – The Five Forces Model

New
Entrants
Threat of New Entrants
Bargaining Industry Bargaining

Power of Competitors Power of
Suppliers Buyers
Suppliers Buyers
Intensity of
Rivalry
Threat of Substitutes
Substitutes
Table 16: Determine Industry or sector attractiveness by using 5 forces model
Competitive force Threat of Industry Profitability

Low Medium Large
Threat of substitutes
Threat of new entrants
Rivalry among existing
companies
Bargaining power of suppliers
Bargaining power of buyers
Results
Think about the industry or sector you are planning to enter. In this table make a
preliminary assessment of how you think the 5 main forces will operate in that
industry. Tick the box you think is appropriate. Think about what market research you
might be able to do (e.g. what statistics you might collect) in order to improve your
understanding.
Industry types and the opportunities they offer
1. Emerging industry- recent changes in demand or technology, place for new

innovative companies. (for example, e-Bay in internet auctions)
2. Fragmented industry- Industry in which no single firm has large
enough share of the market to be able to influence the industry’s direction.
3. Mature industry- slow increases in demand and limited product innovation.
(for example, Carrefour in retailing in Europe)
4. Declining industry- consistent reduction in industry demand. Entrepreneurs
in declining industry ever fins some marketing niche, which focuses on a
narrow segment with new innovative product or service. (for example, the
textile and shoemaking industries in Europe).
Competitor Analysis
Competitor analysis is a detailed analysis of the competition which your business will
face. It will help you to determine your company’s position and the opportunities that
are available to obtain a greater “competitive advantage” in one or more areas.
At first the entrepreneur should determine which companies actually provide the
competition. The different types of competitors in business are shown in table below.
Table 17: Types of Competitors New firms
Direct Competitors Indirect Competitors Future Competitors

Businesses offering Businesses offering close Businesses that or not yet
identical or similar products substitute products (i.e. direct or indirect
(i.e. Coca Cola and Pepsi McDonald’s and Pizza Hut) competitors but could be at
Cola) any time (i.e. Microsoft and
Google)
Main tasks for analyzing your competitors:

 Identify your closest direct competitors (between 3 to 5 of them).
 Identify the groups of customers which they target.
 Estimate their percentage of the market.
 Compare between your and their operations: differences, similarities?
 Is there possibility for you to improve?
 Estimate if you can the growth rate of your competition.
 Which marketing strategy do your competitors pursue?
 How could those competitors react to your business start-up?
For a simple business operating in a very local market such analysis may be quite
easy. For a more complex business operating, say, in a national market the analysis
may need to be more detailed and may require rather more formal research. In both
cases the analysis of your competitors should be an ongoing practice. If you know
your competition, you will become more motivated to succeed, effective and efficient
in the market.
Comparison of the product /service

Determine what are the advantages and disadvantages in comparison to the already
existing supply in the market, and what will make your product or service unique.
Table 18: Analysis of competitors
Name of the Advantages Weaknesses

company
Competitor no.1
Competitor no.2
Competitor no.3
Your company
How will you

compete with them?
Try to undertake this exercise now. When you have done so think of what extra
information you would need to collect to make your analysis more accurate.
Table 19: Sources of Competitiveness
New Start-up should pay attention to the table’s list of competitive factors. All of them
are very important in to reach a proper level of competitiveness in every sector or
industry. Entrepreneur should learn very quick from main competitors by attending
some conferences, fairs, by reading some of professional magazines, by talking to
customers, researching web sites and getting different offers from suppliers and
customers.
Identifying the market
“The best brands never start out with the intent of building a great brand. They focus on
building an innovative-and profitable-product or service and an excellent organization that
can sustain it!”
Market research
It is very important to have the best knowledge of your target market,
because if there is no demand or desire for your service or product you will not have
any customers. In this research, you have to provide an analysis of who are your
customers, how they purchase such products/services, and so on.
Researching your market:
Marketing research can help find the problem and identify a solution.
Your market research of your product should include the following information:
 Your customers' demographic characteristics, including age group, gender,
income, education, and interests
 The average expenditure per customer
 If you are planning to open a retail location, the amount of daily visit of your
customers to wherever your business will be located.
 The estimated size of your market, including how many customers there are,
how much they spend in your market sector, and how fast the market has
been growing, and will grow, in the future
 The percentage (both in euros and people) of that market which you anticipate
being able to capture
 The rate at which you anticipate your market share will grow over time.
The two basic types of marketing research are quantitative and qualitative.
Quantitative research answers questions that start with "how many" or "how much."
Qualitative research addresses issues that deal with "why" or "how." Quantitative
research usually involves surveys, while qualitative studies rely on observation or
unstructured conversations with customers.
For example: "The purpose of this marketing research is to identify why local
residents in Cankaya (Ankara) prefer to shop in another community e.g why would
they go to Taurus shopping mall rather than shopping in their home community or in
the centre of the city."
The purpose of a marketing research relates to the specific problem, decision or

question that necessitated the research. You should be prepared to identify specific
objectives for the research and use them in the research design. A general research
might have the following objectives:
1. Identify where potential customers go to purchase the goods or service.

2. Why do they choose to go there?
3. What is the size of the local market?
4. How does the business compare with competitors'?
5. What impact does the business's promotion have on customers? What types of
products or services do potential customers desire?
How to collect your basic data
If you need to collect primary data, you need to think about how you will collect the
data. In most cases this consists of a questionnaire. Usually a questionnaire
consists of three sections. The first is generally a request for cooperation. Next
comes the main body of questions. This constitutes the major portion of the
questionnaire. Keep to the objective of the research.
The final section of the questionnaire usually contains classification questions. These
questions ascertain information on the characteristics of the respondent, such as
age, sex, income, education, marital status and
any other information that may be of interest to the small business.
A sample: Speedy Photo Survey Questionnaire
Dear customer!
In order for us to serve our customers better, we would like to find out what you think of us.
Please take a few minutes to answer the following questions while your photographs are
being printed. Your honest opinions, comments and suggestions are extremely important to
us.
Thank you, Speedy Photo
1. Do you live/work in the area (circle one or both)

Yes No
2. Why did you choose Speedy Photo (circle all that apply)
- Close to home
- Close to work
- Convenient
- Good service
- Quality
- Full-service photography shop
- Other
3. How did you learn about us? (circle one)

- newspaper
- flyer/coupon
- passing by recommended by someone
- facebook,
- other
4. How frequently do you have digital photos printed?

______ times per month
______ other
5. Which aspect of our photography shop do you think needs improvement?

6. Our operating hours are from 8 am to 5:30 pm weekdays and Saturdays. We are closed
on Sundays and public holidays. What changes in our operating hours would be better for
you?
7. Your age (circle one)
- under 25
- 26-39
- 40-59
- over 60
8. Other comments:
http://www.womensenterprise.ca/resources/downloads/research-questionnaires.pdf
Table 20: How to define your target group
A target market group for a business might be defined in many possible ways. Let us
consider the factors which could be used to describe the potential customers for a
new clothes boutique:
Age 35-50
Gender Couples, though the female is
the primary decision maker
Occupation Middle class and high class
professions with a university
degree
Income Over TL 30.000 per year as a
family income
Employment status Employed, high proportion of

graduate degrees
Marital status Married
Family status Traditional families with children
Location Ankara and suburbs
Ethnicity Not relevant
Physical characteristics Not relevant
Others The buyers of Fashion
magazines
Consider your own business idea. Try to use the different characteristics in the table
(age, gender, occupation etc) to define the target market you think you should aim to
reach.
Market Analysis
Following the review of your personal characteristics, the concept of your business
offer and target customers, the market analysis is the next most critical component to
improve your market chances. The results of your marketing analysis will show the
extent to which your business risks are reasonable and whether or not your business
idea is financially viable and can support you economically.
The following areas belong in the market analysis:

1. Needs analysis
2. Location analysis
3. Competitive situation analysis
1. Needs analysis
An observation of the general industry in which you want to enter with your new
business is the critical first step. A closer understanding can be achieved through a
daily review of newspapers, statistical data, economic news reports and trade and
exhibition information.
Some possible questions for the marketing needs analysis:

 Which of your planned products/services are already being purchased in the
marketplace?
 How often are they purchased or required?
 How much money on average is paid or invested for the product/service?
 How important is the quality of the offered products?
 What is missing in the current market offer of products?
 What are customers demanding from your competitors?
A review of the results should provide an indication of the viability of the business
idea and ensures that the planned offer is plausible, in the given market and
customer situation.
Brand preference:
A brand is a set of attributes-(both positive and negative), that people associate with
a company or a product or service. Positive attributes for example might be:
trustworthy, innovative, dependable, ethical, bio-eco or easy to deal with. Some
negative ones might be: cheap, unreliable, arrogant, or difficult to deal with. Owners
of successful brands usually develop a special brand management program” to
protect the image and value of company’s brand in consumers mind. In the case of a
small start-up business trying to establish a brand you will need to think carefully how
to improve awareness of your brand and how to prevent it having “negative”
impressions in the mind of potential customers. You can take an example of Kosovo
small pickles producers. How can customer decide among the similar offer of the
pickles made by different local brands? Because of strong competition, some of
producers should decide for different brand position and prepare a “brand strategy”
by examining all mentioned factors. To raise the brand image of the small company,
may last many years.
Brand preference is determine by the customer’s perception of which competing

products are more appealing.
2. Location analysis
The following factors need to be addressed:
- Neighborhood profile
− Age
− Income
− Level of education
− Interest target groups
 Business profile
− Size of business
− Area of business
 Area
− Industrial or trade area
 Access (Cars, Buses, bicycles).
This information is especially important for your business plan, where you describe
location advantages!
Identifying the market strategy
“In marketing, always promote quality and Demonstrate Excellence!”
Marketing strategy
Written plan (usually a part of the overall company and business plan) which
combines product development, promotion, distribution, and pricing approach,
identifies the firm's marketing goals, and explains how they will be achieved within a
stated timeframe. Marketing strategy determines the choice of target
market segment, positioning, marketing mix, and allocation of resources.
Marketing is one of the most misunderstood aspects of business. To many,

marketing is simply “sales and promotion”. Sales and promotion are important
elements of marketing, but marketing is a broader concept. It includes the design and
packaging of a product, the price and discounting strategies for the business and the
intimate knowledge of the current and future needs and wants of the target market.
To create a balanced approach your strategy you should research all elements of
marketing, not just advertising, sales and promotion.
After you have identified what your market is and who your customers are, you will
need to develop your strategy to reach the market and to distribute your service or
product. Developing a clear strategy is also important if you are looking for possible
investors. Investors will want to know if there is a way for you to reach the market (i.e.
your target customers) at a realistic price with prospect of success.
Here it could be very helpful to analyze the marketing strategies of your potential
competitors. If their marketing strategy is working well, consider to adopt similar
strategic aspects.
After you have identified the way to reach your market, you can go ahead to design
and to define the strategy for delivering your service or product to your customers.
You should try to exchange with local business experts the following issues:
 The most suitable channels for the delivering and distribution (direct, resellers,
etc.),
 What are the relative costs of these ways of delivering the service/product?
 Can you monitor or track your distribution ways, so that you can improve your
delivery channel with your product?
Promotion and Advertising Plan

Essentially the Advertising and Promotion section of the marketing plan describes
how to deliver the Unique Selling Proposition to the prospective customers. The main
message one wants to tell to customers should be developed and then the promotion
possibilities should be evaluated.
Here a list of some promotional possibilities:
 Social media
 Local media
 Trade shows, Fairs
 TV, Radio
 Promotional materials, leaflets, Print
 Web communication, direct mail
 Telephone sales, one-on-one sales
 Public relations*
*Public relations (PR) includes the functions of communication, community
relations, customer relations, employee relations, industry relations, investor
relations, media relations, publicity, speech-writing, and visitor relations. Public
Relations Plan - include media sources you plan to use to promote your business.
Finally, one idea should be emphasized in the marketing plan:
Advertising - The best approach to advertising is to think of it in terms of media and

which local media will be most effective in reaching your target customers. Then a
decision about how much of your annual advertising budget should be spent on each
media.
What percentage of the annual advertising budget will be invested in each of the
following:
• The Internet through social media

• Local television?
• Radio?
• Newspapers?
• Magazines?
• Telephone books/directories?
• Billboards?
• Bench/bus/ads?
• Direct mail/on-line?
Sales Promotion - If it is appropriate to the business, you may want to incorporate

sales promotion activities into the advertising and promotion plan, such as:
• offering free samples

• coupons
• point of purchase displays
• product demonstrations
Marketing Materials - Every business will need to include some of these in their
promotion plans. The most common marketing material are business cards,
brochures; leaflets, information flyers or service sheets.
Publicity – A description of how to generate publicity is part of this section. While

press releases spring to mind, they are only one way to get people spreading the
word about your business. Consider also the following:
 product launches where you present your new product to the public in order to
generate publicity
 special events, including community involvement
 writing articles for the local newspaper
 getting and using testimonials from people who have used your product or
service
Your Business Web Site - If the business has or will have a Web site, a description
of how the Web site fits into the advertising and promotion plan should be described
in the business plan. Further on, you should describe your Internet strategy by
considering what you could use the Internet for. Examples include:
– This includes the information provided to the consumer

about your business, products and services.
– This includes more specific forms of two-way communication
such as customer service and feedback mechanisms.
Entertainment – This is the multimedia aspect approach to your site. This includes
animation, sound clips and video clips.
– This is the ability to actually order and pay for products over the
internet.
Tradeshows - Tradeshows can be effective promotion and sales opportunities in

different ways.
Other Promotional Activities

Promotion activities do not have limits. Other activities such as teaching a course,
sponsoring a community event, or conducting an email campaign, are also possible.
The goal is to plan and carry out a sequence of focused promotion activities that will
communicate with potential customers. Effective promotion does not need to must be
expensive!
4 Ps in marketing
Marketing your business is about how you “position*” it to satisfy
*Marketing position means ranking of a brand, product, or firm, in terms of its sales
volume relative to the sales volume of its competitors in the same market or industry.
your market’s needs. There are four critical elements in marketing your products and
business. They are the four P’s of marketing.
1. Product. The right product to satisfy the needs of your target customer.
2. Price. Offering that product at the right price.
3. Place. (Location) The right product at the right price available
in the right place to be bought by customers.
4. Promotion. Informing potential customers of the
availability of the product or service, its price and its place.
Each of the four P’s is a variable you can control in creating the marketing mix that
will attract customers to your business. Your marketing mix should be something you
pay careful attention to because the success of your business depends on it. As a
company manager, you determine how to use these variables to achieve your profit
potential. The next section introduces the four P’s of marketing and includes simple
worksheet that will help you determine the most effective marketing mix for your
company and business.
A good way to understand the 4 Ps is by the questions that you need to ask to define
you marketing mix. Here are some questions that will help you understand and define
each of the four elements:
1. Product/Service
What does the customer want from the product/service? What needs does it satisfy?
What features does it have to meet these needs?
Are there any features you've missed out?
Are you including costly features that the customer won't actually use?
How and where will the customer use it?
What does it look like? How will customers experience it?
What size(s), colour(s), and so on, should it be?
What is it to be called?
How is it differentiated versus your competitors?
What is the most it can cost to provide, and still be sold sufficiently profitably? (See
also Price, below).
2. Place/location
Where do buyers look for your product or service?
If they look in a store, what kind? A specialist boutique or in a supermarket, or both?
Or online? Or direct, via a catalogue, web site?
How can you access the right distribution channels?
Do you need to use sales people? Or make online submissions? Or send samples to
catalogue companies, visit them?
What do you competitors do, and how can you learn from that?
3. Price
What is the value of the product or service to the buyer?
Are there established price points for products or services in this area?
Is the customer price sensitive? Will a small decrease in price gain you extra market
share? Or will a small increase be indiscernible, and so gain you extra profit margin?
What discounts should be offered to trade customers, or to other specific segments
of your market?
How will your price compare with your competitors?
4. Promotion
Where and when can you get across your marketing messages to your target
customers?
Will you reach your audience by advertising in the press, or on local TV, or radio, or
on billboards? By using direct marketing mailing? Through PR? On the Internet?
When is the best time to promote? Is there seasonality in the market? Are there any
wider environmental issues that suggest or dictate the timing of your market launch?
How do your competitors do their promotions? And how will that influence your own
choice of promotional activity?
The four P’s—product, price, place, and promotion—should

work together in your marketing mix. Often decisions on one
element will influence the choices available in others. (for example setting the price at
a high level may limit where the product can be sold and how it should be promoted).
Selecting an effective mix for your market will take time and effort, but these will pay
off as you satisfy customers and create a profitable business.
Once you have a good marketing mix—the right product at the right price, offered in
the right place and promoted in the right way—you will need to continue to stay on
top of market changes and adopt your marketing mix as necessary.
Marketing is a part of your venture that will never end.
http://www.mindtools.com/pages/article/newSTR_94.htm
Exercise:
The worksheets that follow will help you construct your marketing plans for first P -
product. Case “Your restaurant!”
Name _________________ Period _____________ Date_______
Restaurant Products
(Note: Category examples: bread, meals, drinks, etc.)
Category: _____________
Product names: Product prices:

_______________ ____________
_______________ ____________
_______________ ____________
Category: _____________

_______________ ____________
_______________ ____________
_______________ ____________
Category: _____________

_______________ ____________
_______________ ____________
_______________ ____________
Similarly, you prepare worksheet for Price, Place and Promotion category.
Marketing plan
A marketing plan is a tool that helps – and forces you to think in a structured way
about how you will market and sell your products and services. When you write down
your plans they tend to be more real and fit for use.
Marketing plan consists of:

1. Action plan for sales and marketing activities. In this template you must write
how you will manage the marketing in your business month by month. You might
have an underlying description of the activities on another sheet of paper. When all
the months are filled in you will have a good view of how you can promote your
business.
2. Calendar that shows when each of the activities will take place
This template focuses on what you intend to do and when you will do it. It always
helps to put target dates on the activities if you want to get them done. When filled-
out you can review whether or not you have the resources to execute your plans.
If your marketing plan is not too complex, you might make do with just the Action plan
and omit the Calendar.
A complete marketing plan should be structured as follows:
- Product Description - Statistics

- Market size - Imports
- Location - Sales system, distributors
- Comparison with competitors - Similar markets abroad
- Major clients - Market share
- Sales prices - Sales forecast
- Total Demand - Marketing mix
- Client survey - Promotion measures
- Competitors - Marketing budget
Table 21: Action plan for sales-and marketing activities, 2017

– Example from a business in decorative art products
Month Activity to be implemented Deadline

Responsible
Jan - Web site offer – social media 31/1 Arzu
Feb - opening shop event 28/2 Ufuk
Mar - Newsletter activities 31/3 Vira
Apr - PR articles, door to door promotion 30/4 Busra
May - exhibition show 31/5 Ridvan
Jun - web catalogue 30/6 Oguz
July - New year gifts catalogue 31/7 Emran
Aug - update web site 31/8 Melek
Sept - direct mailing, door to door promotion 30/9 Murat
Oct - PR activities 31/10 Oya

Nov - go through database 30/11 Cagri
Dec - preparing catalogue for 2018 15/12 Usan
1. Which industry/sector factors may influence your level of business
competitiveness?
2. Which are important steps to make a marketing analysis?
3. What the market research should include?
4. What is meant by the 4 P’s in marketing?
5. Think what kind of market research would help you launch your business?
Produce a list of the quantitative information and a list of qualitative
information you might need. Next imagine each piece of information would
cost you TL50 and you can only afford TL1,500 in total for market research.
Now which information will you prioritize?
Part five “SWOT analysis and managing risks«

»Operational plan for your company«
 How to undertake an analysis of strengths, weaknesses, opportunities and threats

of a business?
 How to undertake a basic SWOT analysis of a business plan and propose
improvements based upon that analysis?
“The successful person makes a habit of doing what the failing person doesn't like to do."
-- Thomas Edison
SWOT analysis
SWOT analysis is an acronym for four English words: Strengths, Weaknesses,
Opportunities and Threats. SWOT analysis has become a popular device for forming
an overview of an enterprise and as a basis for developing business strategies. The
first two concepts (strengths and weaknesses) are internal to the business; the last
two (opportunities and threats) relate to the external environment in which the
enterprise operates. SWOT analysis is a formal framework of identifying and framing
organizational growth opportunities.
SWOT analysis is a general technique which can be applied across diverse functions
and activities for the company, but it is particularly appropriate to the early stages of
planning. Performing SWOT analysis involves generating and recording the
strengths, weaknesses, opportunities, and threats relating to a given task.
SWOT analysis can provide:
- A framework for identifying and analysing strengths, weaknesses, opportunities and

threats.
- The impetus to analyse a situation and develop suitable strategies and tactics.
- A basis for assessing core capabilities and competences.
- The evidence for, and company’s cultural key to, change.
- A stimulus to team participation.
- Action checklist for future development of the company.
Some rules for generating a successful SWOT analysis:

 Short and simple – the main point should be seen easily, no grey areas! (Is it
not the case that there will always be grey areas..one man’s “opportunity” is
another man’s “threat”? Surely SWOT analysis provides a framework within
which the grey can be dealt with creatively. )
 Realistic and objective as much as possible – the outcome should give hints
for improvement which then can turn to chances!
 Distinguish correctly – situation today and wish of tomorrow are different
aspects!
 Comparison in relation to competitors – the objective situation of SWOT is
then more realistic and help to avoid overestimation!
SWOT Analysis Template State what you are assessing in table below. Note that
these criteria examples relate to assessing a new business venture. Many listed
criteria can apply to other quadrants, and the examples are not exhaustive. You
should identify and use any other criteria that are appropriate to your situation.
Table 22: SWOT Analysis
criteria examples Strengths Weaknesses criteria examples

Advantages of proposition? Disadvantages of proposition?
Capabilities? Gaps in capabilities?
Competitive advantages? Lack of competitive strength?
USP's (unique selling points)? Reputation, presence and
Resources, Assets, People? reach?
Experience, knowledge, data? Financials?
Financial reserves, likely Own known vulnerabilities?
returns? Timescales, deadlines and
Marketing - reach, distribution, pressures?
awareness? Cash-flow, start-up cash-drain?
Innovative aspects? Continuity, supply chain
Location and geographical? robustness?
Price, value, quality? Effects on core activities,
Accreditations, qualifications, distraction?
certifications? Reliability of data, plan
Processes, systems, IT, predictability?
communications? Morale, commitment,
Cultural, attitudinal, leadership?
behavioral? Accreditations, etc?
Management cover, Processes and systems, etc?
succession Management cover,
succession?
criteria examples Opportunities Threats criteria examples
Market developments? Political effects?
Competitors' vulnerabilities? Legislative effects?
Industry or lifestyle trends? Environmental effects?
Technology development and IT developments?
innovation? Competitor intentions -
Global influences? various?
New markets, vertical, Market demand?
horizontal? New technologies, services,
Niche target markets? ideas?
Geographical, export, import? Vital contracts and partners?
Tactics: e.g., surprise, major Sustaining internal
contracts? capabilities?
Business and product Obstacles faced?

development? Insurmountable weaknesses?
Information and research? Loss of key staff?
Partnerships, agencies, Sustainable financial backing?
distribution? Economy - home, abroad?
Volumes, production, Seasonality, weather effects?
economies?
Seasonal, weather, fashion
influences?
SWOT analysis template – a free resource from www.businessballs.com.
The local Motel

The Comfort Motel is a 12-room, operation in a less frequented part 7 km out of Ankara. The
owner, Mr. Yalnici, firmly believes that there is a need for his style of low-cost family
accommodation amid the luxury and beauty of the area. His rooms are small, family-style
rooms (but there is no television, for example).
Mr Yalnici can serve breakfast to the rooms and provides tea-making facilities. There are
now some of good local restaurants in the area. Mr. Yalnici’s prices are less than half of
what similar motels charge. And he is not all that far away from the Ankara and shopping
area.
The problem is occupancy! He has some regulars who come every holiday period (and have
been doing so for the four years he has owned the property). Overall, occupancy is about
35% year. To cover fixed costs, its occupancy should be more than 60%. Cars pull in, drive
around the parking areas, then drive away.
Currently Mr Yalnici does very little advertising in local district newspapers, mainly because
he really thinks word-of-mouth is the best form of advertising. He is not desperate yet, but he
is getting worried. He thought he would be overrun with guests but that has not happened.
SWOT analysis of the Comfort Motel
Compare the following points with situation in your Start-up:
Strengths: Weaknesses:
 Located on to road to Konya  No television, no internet access

 Large grounds and open (crucial for the family market)
areas  Small rooms
 Breakfast service to rooms  Initial interest by people who
 Good restaurants in near drive in and look but then leave
place  Location poor in relation to other
 Low prices (but this is also a services, attractions, etc.
problem!)  No separate restaurant services
 Regular customers (but not  Low occupancy compared to
very many) other motels
 Property large enough for  Very little and just local

big groups advertising
 Yalnici acknowledges he  Uninspiring motel name
has a problem – the first  Low rates being charged could
step towards solving it! be perceived as unappealing
Opportunities: Threats:
 Install televisions  Potential failure if occupancy
immediately doesn’t improve
 Landscape the grounds and  Potential failure if other
make them more attractive properties begin cutting rates
 Add more outdoor facilities –  Potential problems if other
playground, picnic facilities, properties begin big promotional
perhaps a pool or tennis campaigns
courts depending on  Potential problems if more
finances budget motels are built
 Increase the level of
advertising
 Increase the rates being
charged
 Work in with other
attractions, restaurants, etc
(charge-back facilities with
nearby restaurants, for
example)
 Attend internationals and
tourist group meetings – do
more networking
 Investigate other markets
Mr. Yalnici’s most important action is to raise rates immediately. At less than half the price of
other motels his price is too low which conveys a poor image. This combined with the bare
grounds, may be driving potential customers away. His rates can still be low, but should be
comparable to the rates of competitive properties.
Which are three most important strengths to be advice to Mr. Yalnici?
Which are three biggest weaknesses to be focused at first stage and what is the
perspective of his business?
Business Model for your company
“A business model is quite simple: it is a brief statement of how an idea actually becomes a
business that makes money. It tells who pays, how much and how often. The same product
or service may be brought to market with several business models.”
- Steven Robbins
Business model is a general outline of the transactions needed for your idea to
make a profit. The most basic business model is simply producing a product or
service and selling it directly to customers. The company makes a profit if revenues
are greater than production and business costs. Business model is a company's plan
or diagram for how it competes, uses its resources, structures its relationships,
interfaces with customers and creates value to sustain itself on the basisof the profits
its earns. A business model describes the rationale of how a company, delivers, and
captures value. Today, the type of business models might depend on how technology
is used. For example, entrepreneurs on the internet have also created entirely new
business models that depend entirely on existing or emergent technology. Generally
speaking, anything that has to do with the day to day functionality of the company
can be said to be part of the business model. Business operations, sales and
marketing concerns and forecasts, labour costs, and organizational structure are all
essential components of the business model. Operating with a
comprehensive model helps a company to maintain focus on a mission statement.
Your business model
First, identify your business type. Is it a product, a service or a business? If it’s a

business, is it a service business or a product business? Is it a lifestyle business or a
high growth potential business? A lifestyle business prioritizes lifestyle issues such as
independence, location, and hours. Growth, expansion, and money back to investors
are the main priorities for high growth businesses.
If you have an idea for a product, do you have the means to produce and sell this
product or do you plan to license it to another company? Ask yourself if your team is
capable of getting the product or service to market. These questions become relevant
when you are figuring out how you are going to make money with your venture.
Your business model helps you generically define the product or business that you
are proposing, your customers and the transaction mechanism/s that will allow you to
make money before you begin creating your formal business plan. Your business
plan will describe your model in more detail.
Example: Subscription-based and advertisement-based business models. Two

examples of business models found both on- and off-line are subscription-based and
advertisement-based business models. Many companies combine two or more
business models or create their own unique business model.
For example, in a subscription-based business model, the provider charges a fee

for access to the service. An example of this is Consumer Reports magazine in
majority of countries. Consumer Reports relies solely on its subscription sales. It can
do this because it carries a well-known brand name, and provides high quality print
and online content, for which people are willing to pay.
Operational Plan for your Company
Operational plan explain the daily operation of the company, its location,
equipment, people, processes, and market conditions. This section will vary
depending on the nature of the business but some the more generic items that can
be presented include:
- A description of the operating cycle that describes what the organisation will do to
deliver its service or create and sell its product
- A description of where all the necessary skills and materials will be sourced
- What will be outsourced for subcontracting, what relationships are in place and how
those relationships will be managed
- The cash receipts and cash payment cycle of the business.
Once the company is running, entrepreneur should convert the business plan to an
operating plan. The operating plan helps keep whole team focused on the tasks at
hand. Continuous updates of operational plan should be given top priority in all
entrepreneurial companies. The basic plan should be reviewed quarterly-at minimum,
semi-annually.
It is inevitable that business activities will change as the company achieves full
operation. In some cases, these changes will have only a small effect on operations.
In other cases, they could result in a drastic shift in total company focus. Given the
ultimate entrepreneurial goals, it's apparent that a continuing update of business plan
strategy in the form of an operating plan helps keep everyone within the team
following the same goals of the company.
Example of Operational plan - Local Business Club service

(Main goal - focus on members needs)
I. CHAPTER ANNUAL GOALS

1 Gather data from membership member recruitment and operations.
 Prepare needs assessments and satisfaction surveys
2 Determine why member attendance at monthly meetings has been dropping
 Analyze survey data to identify member satisfaction, and services that are valued by
members
3 Develop major focus areas, key strategies and tasks:
Enhance the quality of monthly programming. Maintain annual seminar.
II. MARKETING & COMMUNICATIONS STRATEGY
Goals Tasks:
1 Update webpage with current information, a. Maintain past, present, and future
products, and services meeting information on webpage
2 Keep membership informed of upcoming b. Advertise National and local events via
events membership email
3 Develop operating/procedure manuals for c. Revise operating manual to reflect
board members changes in board member
responsibilities
III. RECRUITMENT AND RETENTION STRATEGY
Goals Tasks:
1 Increase membership a. Develop a “Bring a Buddy” campaign
b. Create a corporate membership option
c. Obtain list of local National members and
develop membership campaign
2 Reduce number of members that do not d. Follow up with non-renewals by board
renew their membership member phone process
e. Assist members in becoming involved in
activities/volunteering
f. Create a mentoring program
3 Utilize website effectively as a g. Develop a process to keep information
recruitment/retention tool current and easily read
h. Highlight a member each
month/corporate partner
i. Set up online registration system
IV. SUCCESSION PLANNING STRATEGY
Goals Tasks:
1 Integrate leader recruitment across all a. Have current board members actively
functional lines recruit members to committees
b. Host a leadership development night to
showcase learning opportunities,
responsibilities from current/past board
members
2 Identify potential leaders c. Develop formal interview process for
future leaders
3 Involve past presidents d. Use past presidents as leadership

mentors for new board members
Preparing for the challenges of early stage growth
Most new ventures try to grow and develop ability to stay successful. There are many
other reasons for growing, for example one innovative IT company needs to has
sufficient promotional opportunities available to retain high-performing employees, or
big customer demand on the market. In the short run, growth and sales revenue is an
important indicator of entrepreneurial venture’s potential to be successful in the
future. Finding the right growth strategy is tricky. It all depends on the efficiency of
leadership and competitor’s reaction on growth of the company.
A company’s pace of growth is the rate at which it is growing on an annual basis,

measure in percentage.
Company growth stages
Every company goes through different phases of growth. Important challenge for
every entrepreneur who wish to expand the business is to understand the company
life cycle scheme. There are many views on how many phases there are, but there
is elegance in using something easy to remember. We usually divide the
organizational life cycle into the following phases:
 Pre start-up or Seed phase

 Start-up (or Birth)
 Growth. This is sometimes divided into an early growth phase (fast growth)
and maturity phase (slow growth or no growth). However, maturity often leads
to
 Decline. When in decline, an organization will either undergo
 Renewal or
 Death.
Each of these phases present different managerial and leadership challenges that
one must deal with.
Table 23: Company Life Cycle scheme
Company life cycle scheme

3th Phase
1st Phase 2nd Phase 4th Phase 5th phase
Profes sionalization
Harvesting
Death
Dying
Survival
Birth
Functional phase
Managerial Phase Turn- Around

and transformation
Entrepreneurial Phase
Pre-start Phase
Early stage
Development Start Maurity and Dying

and innovation
Growth exspansion
1. Prestart-up Stage: The seed stage of your business life cycle is when your
business is just a thought or an idea. This is the very conception or birth of a new
business.
 Challenge: Most seed stage companies will have to overcome the challenge of
market acceptance and pursue one niche opportunity.
 Focus: At this stage of the business the focus is on matching the business
opportunity with your skills, experience and passions. Other focal points
include: deciding on a business ownership structure, finding professional
advisors, and business planning.
 Money Sources: Early in the business life cycle with no proven market or
customers the business will rely on cash from owners, friends and family.
Other potential sources include suppliers, customers and government grants,
if they exist.
2. Start-Up Stage: Your business is born and now exists legally. Products or
services are in production and you have your first customers.
 Challenge: If your business is in the start-up life cycle stage, it is likely you
have overestimated money needs and the time to market. The main challenge
is not to burn through what little cash you have. You need to learn what
profitable needs your clients have and do a reality check to see if your
business is on the right track.
 Focus: Start-ups requires establishing a customer base and market presence
along with tracking and conserving cash flow.
 Money Sources: Owner, friends, family, suppliers, customers, or grants.
3. Growth Stage: Your business has made it through and it’s in fast growing stage.
Revenues and customers are increasing with many new opportunities and issues.
Profits are strong, but competition is surfacing.
 Challenge: The biggest challenge growth companies face is dealing with the
constant range of issues bidding for more time and money. Effective
management is required and a possible new business plan. Learn how to train
and delegate to conquer this stage of development.
 Focus: Growth life cycle businesses are focused on running the business in a
more formal fashion to deal with the increased sales and customers. Better
accounting and management systems will have to be set-up. New employees
will have to be hired to deal with the influx of business.
 Money Sources: Banks, profits, partnerships, grants and leasing options.
4. Fast growing stage: Your business has now matured into a thriving company with
a place in the market and loyal customers. Sales growth is not explosive but
manageable.
 Challenge: It is far too easy to rest on your laurels during this life stage. You
have worked hard and have earned a rest but the marketplace is relentless
and competitive. Stay focused on the bigger picture.
 Focus: An established life cycle company will be focused on improvement and
productivity. To compete in an established market, you will require better
business practices along with automation and outsourcing to improve
productivity.
 Money Sources: Profits, banks, investors and government tenders.
5. Expansion Stage (recapitalization): This life cycle is characterized by a new

period of growth into new markets (international) and distribution channels. This
stage is often the choice of the small business owner to gain a larger market share
and find new revenue and profit channels.
 Challenge: Moving into new markets requires the planning and research of a
seed or start-up stage business. Focus should be on businesses that
complement your existing experience and capabilities. Moving into unrelated
businesses can be risky.
 Focus: Add new products or services to existing markets or expand existing

business into new markets and customer types.
 Money Sources: Joint ventures, banks, licensing, new foreign investors and
partners.
6. Decline Stage: Changes in the economy (crisis), society, or market conditions can
decrease sales and profits. This may quickly end many small companies.
 Challenge: Businesses in the decline stage of the life cycle will be challenged
with dropping sales, profits, and negative cash flow. The biggest issue is how
long the business can support a negative cash flow. Ask is it time to move on
to the final life cycle stage...exit.
 Focus: Search for new opportunities and business ventures. Cutting costs and
finding ways to sustain cash flow are vital for the declining stage.
 Money Sources: Suppliers, customers, owners.
7. Exit Stage: This is the big opportunity for your business to cash out on all the
effort and years of hard work. Or it can mean shutting down the business –
bankruptcy.
 Challenge: Selling a business requires your realistic valuation. It may have
been years of hard work to build the company, but what is its real value in the
current market place. If you decide to close your business, the challenge is to
deal with the financial and psychological aspects of a business loss.
 Focus: Get a proper valuation on your company. Look at your business
operations, management and competitive barriers to make the company worth
more to the buyer. Set-up legal buy-sell agreements along with a business
transition plan.
 Money Sources: Find a business valuation partner. Consult with your
accountant and financial advisors for the best tax strategy to sell or close-out
down business.
Each stage of the company life cycle may not occur in chronological order. Some
businesses will be "built to flip"; quickly going from start-up to exit. Others will choose
to avoid expansion and stay in the established stage.
Whether your business is a glowing success or a dismal failure depends on your

ability to adapt to its progress through the life cycle. What you focus on and
overcome today will change in the future. Understanding where your business fits on
life cycle will help you foresee upcoming challenges and make the best business
decisions. The final choice is yours!
Table 30: Start-up business development phases
Start-up companies can come in all forms and sizes. Some of the critical tasks are to
build a co-founder team to secure key skills, know-how, financial resources and other
elements to conduct research on the target market. Typically, a start-up will begin by
building a first minimum viable product (MVP), a prototype, proof of concept, to
validate, assess and develop the new ideas or business concepts. In addition, start-
ups founders do research to deepen their understanding of the ideas, technologies or
business concepts and their commercial potential. Successful start-ups are typically
more innovative and scalable than an general established business.
Entrepreneurship ecosystem for Start-ups
The size and growth and maturity of the start-up ecosystem where the start-up is
launched and where it grows have an effect on the volume and success. The start-up
ecosystem consists of the individuals (entrepreneurs, venture capitalists, Angel
investors, mentors, consultants); institutions and organizations (top research
universities and institutes, business schools and entrepreneurship programs
operated by universities, non-profit entrepreneurship support organizations,
government entrepreneurship programs and services, Development agencies,
Chambers of commerce) business (pre)incubators and business accelerators and
top-performing entrepreneurial firms and fast growing start-ups.
1. What is SWOT analysis and why do we need it?
2. Describe company life cycle phases?
3. What is the most important activity in pre-start-up phase of the company?
4. What is the business model of the company?
5. Describe Start-up business development phases?
6. What is entrepreneurship ecosystem?
Part six »Finance for Entrepreneurs«

 some basic economics and business finance terminology
 the financial objectives of a company
 entrepreneurial finance
 how to managing your business finance
 how to prepare your Start-up budget
 the importance of the balance sheet, Income statement, Cash-flow, Break even
point, and liquidity
 how to forecast liability and assets
 the importance of planning the finances of your business
 the types and sources of business financing available to new businesses
 what to include in a basic Investment and Finance plan
 four important stages of financial management of the company
 the importance of having a proper accounting system for your business
 how to understand a financial plan and how to estimate the investment needs for
a new business
"The starting point of great success and achievement has always been the same. It is for
you to dream big dreams. There is nothing more important, and nothing that works faster
than for you to cast off your own limitations than for you to begin dreaming and fantasizing
about the wonderful things that you can become, have, and do. "
-- Brian Tracy
Financial objectives of the company
Most entrepreneurial companies – start-ups as well as those that have been in

business for several years, have four main financial objectives: profitability,
liquidity, efficiency and stability.
1. Profitability
Thus, is the ability of a business to earn a profit. Profit is what remains after
all expenses have been deducted from the revenue of the business. Profit therefore
is the same as “net income”: total earnings less expenses. The opposite of profit is
loss. The majority of start-ups are not profitable during their first one, two or even
three years while they are training employees and building their brands, but a
company must become profitable to remain viable and provide a return to its owners.
2. Liquidity
This is a measure of the extent to which a person or business has (or can quickly
obtain) cash to meet their immediate short-term needs. Even if a company is
profitable, it is often a challenge to keep enough money in the bank to meet its
routine obligations and to be able to pay all its bills on time. A company must keep a
close watch on Accounts Receivable and Inventories. Accounts receivable is money
owed to it by its customers, but which has not yet been paid. Its Inventory is its
merchandise, raw materials and products waiting to be sold. If the company allows
the levels of each of these assets to get too high, it may not be able to keep sufficient
cash on hand to meet its short-term obligations.
3. Efficiency
Efficiency is essentially a comparison of what is actually produced or performed with
what could be achieved with the same consumption of resources (money,
time, labour, etc.). It is an important factor in the determination of productivity. The
ability to make more product with less raw materials or less hours of labour will have
a positive effect on profit and, in some cases, on liquidity.
4. Stability
This relates to the strength and vigor of the company’s overall financial position. For
a company to be stable, it must not only earn a profit and remain liquid but also keep
its debt in check. In case the company continues to borrow from its lenders and its
debt-to-equity ratio.
Debt: Equity* Ratio

A high debt: equity ratio generally means that a company has been aggressive in financing
its growth with debt. This can result in volatile earnings as a result of the additional interest
expense.
If a lot of debt is used to finance increased operations (high debt to equity), the company
could potentially generate more earnings than it would have without this outside financing. If
this were to increase earnings by a greater amount than the debt cost (interest), then the
shareholders benefit as more earnings are being spread among the same amount of
shareholders. However, the cost of this debt financing may outweigh the return that the
company generates on the debt through investment and business activities and become too
much for the company to handle. This can lead to bankruptcy, which would leave
shareholders with nothing.
*Equity- in finance, you can think of equity as ownership in any asset after all debts
associated with that asset are paid off. For example, a car or house with no outstanding debt
is considered the owner's equity because he or she can readily sell the item for cash.
Table 23: Primary financial objectives of entrepreneurial company
Profitability Liquidity Efficiency Stability

A company’s A company’s How productively The overall health
ability to make a ability to meet its a company utilizes of the financial
profit short term its assets structure of the
obligations firm, particularly
as it relates to its
debt-to-equity
ratio
Entrepreneurial finance
When we talk about Entrepreneurial finance we are referring to the process of
making financial decisions for new ventures. Entrepreneurs face very different
finance challenges. The most obvious, which most entrepreneurs are familiar with, is
"financing". To the average entrepreneur, this means simply "finding money". It is
this process of finding new investors to expand your business activities.
Entrepreneurial finance involves the full life-cycle of a company, from identifying

opportunities, gathering the resources to execute the business plan, and harvesting
the venture’s success.
Entrepreneurial finance are designed to help entrepreneurs make better investment

and financing decisions in entrepreneurial settings in different life-cycle of the
company.
When we talk about entrepreneurial finance we usually refer to the process of making
financial decisions for a new start-up company. However, entrepreneurs need to
consider the full life-cycle of their companies, from identifying opportunities, gathering
the resources to execute the business plan, and harvesting their ventures’ success.
In the following section, we will consider some of the tools and techniques which can
help entrepreneurs to make better investment and financing decisions at different
stages of the business life-cycle.
Financial Plan and Investment
Why do you need a financial plan?

When an entrepreneur creates a financial plan for a new business he/she will need to
estimate the financial requirements of the business, its resources and the flows of
money that will be needed to carry out the overall business plan. This is crucial as
without such planning the enterprise could simply run out of money and go out of
business, even though it may still be potentially profitable. Creating the financial plan
provides the opportunity to estimate the growth rate of your business over time,
identifying when and how your business will achieve a positive flow of income and
when it will become profitable.
Potential investors will be able to read in the financial plan how much finance is
needed to make your business an economic success.
Your financial plan will consist of several elements, called financial

statements. Examples of financial statements include a start-up budget, a balance
sheet, an income and expenditure statement, a cash flow statement. A good financial
plan should also contain a set of relevant financial ratios. These financial ratios will
help the investors to compare your financial projections with those from other
companies.
Basics
To start with the financial plan, let us consider some basic concepts and terms:
- When you start a business, you have to make some one-off investments, for
example when you buy a building, equipment, vehicles, etc. These
investments we call fixed assets.
- To run your business, you will also need finance in order to pay your incoming
invoices and to maintain your operations (pay for raw materials, semi-finished
products, office supplies, credits and banks, wages, outstanding customer
invoices, etc.). These are called current assets.
Assets can be financed by 3 different sources of capital.

By Capital we mean the cash or goods used to generate income either
in investing in a business or a different income property. Capital is the remaining
assets of a business after all liabilities have been deducted, means a net worth. Let
us consider the 3 sources:
1. Current debt: a balance sheet item which equals the sum of all money owed by
a company and due within one year. We also called payables or current liabilities.
Again, current debt is a balance sheet item that equals the sum of all money owed
by a company and due within one year. Current debt can also be
called payables or current liabilities.
2. Long-term debt: liabilities such as bank loans, mortgages, etc.
3. Equity: is defining as instrument that shows an ownership position, or equity, in

a corporation, and represents a claim on its proportionate share in the,
corporation's assets and profits. A person holding such an ownership in
the company does not enjoy the highest claim on the company's earnings. In finance,
in general, you can think of equity as ownership in any asset after all debts
associated with that asset are paid off. For example, a car or house with no
outstanding debt is considered the owner's equity because he or she can readily sell
the item for cash.
The assets and liabilities are the most important elements of a balance sheet.
The financial analysis of your business will help you to ensure that it remains solvent
and that you can operate. In other words, you have to achieve a positive cash flow,
(more cash-flow coming in than is flowing out!).
Start-up budget
Business budgeting is one of the most powerful financial tools available to any small-
business owner. A budget is a plan that outlines an organization's financial and
operational goals. So, a budget may be thought of as an action plan; planning a
budget helps a business allocate resources, evaluate performance, and formulate
plans.
Put simply, maintaining a good short- and long-range financial plan enables you to
control your cash flow instead of having it control you.
The most effective financial budget includes both a short-range, month-to-month plan
for at least one calendar year and a long-range, quarter-to-quarter plan. It should be
prepared during the two months preceding the financial year-end to allow ample time
for sufficient information-gathering.
The long-range plan should cover a period of at least three years on a quarterly
basis, or even an annual basis. The long-term budget should be updated when the
short-range plan is prepared.
In the startup phase, you will have to make reasonable assumptions about your
business in establishing your budget. You will need to ask questions such as:
 How much can be sold in year one?

 How much will sales grow in the following month and year?
 How will the products and/or services you are selling be priced?
 How much will it cost to produce your product? How much inventory will you
need?
 What will your operating expenses be?
 How many employees will you need? How much will you pay them? How
much will you pay yourself? What benefits will you offer? What will your payroll
and unemployment taxes be?
 What will the income tax rate be? What will your facilities needs be? What
equipment will be needed to start the business? How much will it cost? Will
there be additional equipment needs?
 What payment terms will your suppliers give you?
 How much will you need to borrow?
Before you begin your new business, you will need to determine a start-up budget.
The basic process of planning a start-up budget involves listing the fixed and
variable costs of the business.
Variable Cost: Variable costs are the total expense changes as volume changes. For
example, think of the costs in a small hotel. Room supplies such as soaps or shampoos
are a common variable cost. The supplies are directly related to the number of rooms
that are filled. For example, if there are 20 guests, they will use 20 soaps.
Fixed Cost are identified as fixed if they do not change as volume changes. For
instance, a late night registration desk in a hotel would be attended by one person,
whether there was one guest or one hundred.
A start-up budget should define the expenses required to start the business, before it
can begin to generate income through the products or services sold. This budget
needs to cover essential items such as office equipment, legal fees, product
development costs, rent or purchase of manufacturing equipment, initial marketing
cost and so on. The following table shows one proposal for a Start-up budget.
Table 24: Start-up Budget
Start-up costs for year 2010

Company Verdana
START UP COSTS COST € EQUIPMENT/START UP COST €

COST
Registrations Start-up capital
Permits Equipment
Licences (if) Computer equipment
Vehicle registration Computer software
More .. Fix/mobile phones
Accountant fee Fax machine
Solicitor fees Security system
Rental/lease costs More..
Electricity, water, others Office equipment
Web design, logo Furniture
Phone connection Shop fit out
Internet connection Tools
Computers Others ..
Wages
Raw materials
Others..
Insurance
Business assets
Office stationary
Marketing & advertising
Others
Total Start-up costs €0 Total equipment/capital costs €0
You may adapt this to develop a suitable template for your Start-up budget.
Many financial budgets provide a plan only for the income statement; however, it is
important to budget both the income statement and balance sheet. This enables
you to consider potential cash-flow needs for your entire operation.
On the balance sheet, break down inventory by category. For instance, a textile
manufacturer has raw materials, work-in-progress and finished goods. For inventory,
accounts receivable and accounts payable, you will figure the total amounts based
on a projected number of days on hand.
For the first year's budget, you need to consider seasonal factors. For example, most
retailers experience bigger sales from October to December. If your business will be
highly seasonal, you will have wide-ranging changes in cash-flow needs. For this
reason, you will want to consider seasonality in the budget rather than take your
annual projected year-one sales level and divide by 12.
As for the process, you need to prepare the income statement budgets first, then
balance sheet, then cash flow. You will need to know the net income figure before
you can prepare a pro forma balance sheet because the profit number must be
plugged into retained earnings. And for the cash-flow projection, you will need both
income statement and balance sheet numbers.
Income statement is a financial statement that measures a company's financial

performance over a specific accounting period. Financial performance is assessed by
giving a summary of how the business incurs its revenues and expenses through
both operating and non-operating activities. It also shows the net profit or loss
incurred over a specific accounting period, typically over a fiscal quarter or year.
Small business owners use these statements to find out what areas of their business
are over budget or under budget. The income statement illustrates just how much
your company makes or loses during the year by subtracting cost of goods and
expenses from revenue to arrive at a net result, which is either a profit or a loss.
The income statement is also known as the "profit and loss statement" or "statement
of revenue and expense".
Balance sheet
A Balance Sheet is a statement of the financial position of a business which states
the assets, liabilities, and owners' equity at a particular point in time. In other words,
the Balance Sheet illustrates your business's net worth.
An asset is anything the business owns that has financial value. Liabilities are the
claims of creditors against the assets of the business. At any given time, assets must
equal liabilities plus owners’ equity.
In the case of a business start-up, Balance Sheet is often the starting balance sheet.
A balance sheet is made up of three parts:
1. Assets: An asset is any right or thing that is owned by a business. Assets

include land, buildings, equipment and anything else a business owns that can
be given a value in money terms for the purpose of financial reporting.
2. Liabilities: Debts a business owes

3. Equity: The owners’ investment and re-investment in the business.
Everything that your business owns (its assets) must be paid for; In this case, we get
the next formula:
Assets = Liabilities + Equity

This is important as it gives the reader of business plan (or potential investor) a
picture of how your business is being financed through the owners’ money (equity) or
through the creditors’ money (liabilities). In a business start-up you should look at the
assets required to get the business started – and then ask yourself how you will
finance that start-up. If you do not have the money to invest into the business, you
will have to borrow the money or release the equity.
A balance sheet statement lists the assets, liabilities and equity of a company at a
specific point in time and is used to calculate the net worth of a business.
A balance sheet helps a small business owner quickly understand the financial
strength and capabilities of the business. Is the business in a position to expand?
Can the business easily handle the normal financial ebbs and flows of revenues and
expenses? Or should the business take immediate steps to improve cash reserves?
The top portion of the balance sheet should list your company's assets in order of
their liquidity. Current assets are cash or those assets that will be used by the
business in a year or less. They include the following:
1. Assets
Assets are subdivided into current and long-term assets to reflect the ease of
liquidating each asset. A further classification other than long-term or current is also
used for assets. A "fixed asset" is an asset which is intended to be of a permanent
nature and which is used by the business to provide the capability to conduct its
trade. Examples of "tangible fixed assets" include plant & machinery, land &
buildings and motor vehicles. "Intangible fixed assets" may include goodwill,
patents, and brands. Investments in other companies which are intended to be held
for the long-term can also be shown under the fixed asset heading.
2. Current assets
• Cash
Money available immediately, such as in checking accounts, is the most liquid of all
short-term assets.
• Accounts receivables
This is money owed to the business for purchases made by customers, suppliers,
and other vendors.
3. Fixed assets
Fixed assets include land, buildings, machinery, and vehicles that are used in
connection with the business.
• Land
Land is considered a fixed asset but, unlike other fixed assets, is not depreciated,
because land is considered an asset that never wears out.
• Buildings
Buildings are categorized as fixed assets and are depreciated over time.
• Office equipment
This includes office equipment such as copiers, fax machines, printers, and
computers used in your business.
• Machinery
This figure represents machines and equipment used in your plant to produce your
product.
• Vehicles
This would include any vehicles used in your business.
• Total fixed assets

This is the total monetary value of all fixed assets in your business, less any
accumulated depreciation*.
*Depriciation - is the reduction in the value of an asset from wear-and-tear or

obsolescence. Depreciation allowance encourages companies to invest in new
equipment. For accountants, it gives a proper match of the cost of using the asset to
the current revenues by periodic allocation of the original cost to expenses over the
life of the asset. Historic cost depreciation is based on the original cost. Replacement
cost depreciation is the actual cost to currently replace the asset. Depreciable cost is
the difference between the original cost and salvage value of the asset. For example
a PC often has a useful life of around three years. For financial management
purposes, we need to show this loss of value in the financial records of the business.
There are several accounting methods that are used in order to do this. Because it is
a non-cash expense, depreciation lowers the company's reported earnings while

increasing cash flow.
4. Total assets
This figure represents the total euro value of both the short-term and long-term
assets of your business.
5. Liabilities and owners’ equity

This includes all debts and obligations owed by the business to outside creditors,
vendors, or banks that are payable within one year, plus the owners’ equity. Often,
this side of the balance sheet is simply referred to as “Liabilities.”
• Accounts payable
This is comprised of all short-term obligations owed by your business to creditors,
suppliers, and other vendors. Accounts payable can include supplies and materials
acquired on credit.
• Total current liabilities

This is the sum total of all current liabilities owed to creditors that must be paid within
a one-year time frame.
• Long-term liabilities
These are any debts or obligations owed by the business that are due more than one
year out from the current date.
• Owners’ equity
Sometimes this is referred to as stockholders’ equity. Owners’ equity is made up of
the initial investment in the business as well as any retained earnings that are
reinvested in the business.
6. Total liabilities and owners’ equity

This comprises all debts and monies that are owed to outside creditors, vendors, or
banks and the remaining monies that are owed to shareholders, including retained
earnings reinvested in the business.
* Source Streetwise Small Business Start-Up

How to prepare a Balance sheet for a Business Start-up
The start-up balance sheet is simple if you know how to make and sort a list. You
need to make two lists to get started.
1. The first list is your list of Current Assets. These are assets (things your business
owns) which will be used up within the first year
of doing business. Typically, they include cash, inventory and pre-paid expenses
(software, insurance etc.). Although Accounts Receivable is another example of a
current asset, there are no accounts receivables in any business start-up.
2. The second list are the Capital Assets (along with buildings and land,
a capital asset can also be any type of equipment that is used in the operation of a
business. Machinery that is used in a manufacturing plant would be considered a
tangible asset. A delivery vehicle also qualifies as a capital asset, since it is used to
transport finished goods to the point of sale..) These are items you purchase with the
intention of keeping them for use in running the business. For example, if you
purchase a vehicle to use in the business, it is a capital asset. If you purchase a
vehicle to re-sell it, however, then that vehicle is inventory.
Forecasting your assets
A: Determine and Budget your Current Assets

Starting Cash (You must have enough to cover your €
start-up expenses)
Starting Inventory €
Pre-Paid Expenses (Usually Insurance) €
Other Current Assets €
Total Current Assets (A) €
B: Determine your Capital Asset needs

Machinery and Equipment €
Office Furnishings, equipment €
Car €
Leasehold Improvements (just an option) €
Computers and Data Processing Equipment €
Tools and other assets valued €
Computer Software €
Other Capital or Assets €
Total Capital Assets (B) €
Your Total Assets are A + B €
Your second step is to determine how you are going to finance this total. What
combination of Debt and Equity will allow you to get your business started?
How to forecast your Liabilities and Assets
At this stage you have an estimate of how much you need to get started. You must
now determine how best to finance your business start-up. There are only two places
this money comes from when you are starting up − loans or investment. Other
sources, such as “Business angels”, are very rare. Most businesses are financed
through three sources: the owners, their suppliers and the bank (or a micro-credit).
Micro credit is the extension of credit to entrepreneurs and microbusinesses too poor
to qualify for conventional bank loans.
Shareholders Loans: This can only happen in a limited company . A loan made to
a company from an individual shareholder or partnership that exchanges money
for interest payments. The loan can be secured by the shares (an equity loan) or
through a debenture (unsecured debt). This type of loan ranks below commercial
loans if it is not secured by collateral, making it subordinated debt.
It is true, that shareholder loan is one of the best strategy for your business start-up.
Investment: This is the equity investment you put into your own company. The other type of
equity is Retained Earnings, which are the profits, after income tax, kept in the business to
ensure its growth. (Keep in mind there is no retained earnings in a start-up company).
A Balance sheet will usually look something like this:
Afrodita Ltd.
Balance Sheet
of December 31, 2015
Assets €
Current Assets
Cash on hand 1,500
Accounts receivable 2,500
Inventory - finished product 5,000
- supplies 8,000
Total Current Assets 17,000

Intermediate Assets
Telecommunication service 3,000
Cooler, equipment 8,000
Car, mini van 15,000
Total Intermediate Assets 26,000
Fixed Assets
Building 22,000
Land 10,000
Total Fixed Assets 32,000
Total Assets 75,000
Liabilities
Current Liabilities
Accounts payable 4,500
Credit cards 2,000
Operating line of credit 3,500
Total Current Liabilities 10,000
Intermediate Liabilities
Loan for machine 5,000
Van loan (bank) 10,000
Total Intermediate
15,000
Liabilities
Long-term Liabilities 15,000
Total long-term Liabilities 15,000
Total Liabilities 40,000
Owner’s Equity
Contributed capital 30,000
Retained earnings 5,000
Total Equity 35,000
Total Liability and Equity 75,000
From this example you can see that the owner's equity is made up of two parts - the
capital they contributed to the business and the earnings (profits) they left in the
business. Most new ventures find it difficult to borrow more money. Thus, retained
earnings are often essential for financing further growth of the business.
Income and expenditure statement
The purpose of the Income Statement is to project the revenues and expenses of
your business over a given period of time – usually over one year.
The income statement is the second important document generated monthly and/or
annually. It reports the earnings of the company by listing all relevant income and all
expenses that have been incurred to generate that income. It is also referred to as a
profit and loss statement.
In addition, the income statement is a simple report on a business' cash-generating
ability. It is a scorecard on the financial performance of your business that reflects
when sales are made and expenses are incurred.
By combining these elements, the income statement illustrates just how much your
company makes or loses during the year by subtracting cost of goods and expenses
from revenue to arrive at a net result, which is either a profit or a loss. It differs from a
cash flow statement because the income statement does not show when revenue is
collected or when expenses are paid. It does, however, show the projected
profitability of the business over the time period covered by the plan. For a business
plan, the income statement should be generated on a monthly basis during the first
year, quarterly for the second and annually for the third.
Your Sales Forecast
Sales forecasting is the process of organizing and analyzing information in a way that
makes it possible to estimate what your sales will be. Sales forecasting is a self-
assessment tool for a company. A sales forecast reports, graphs and analyzes the
pulse of your business. It can make the difference between just surviving and being
highly successful in business. It is a vital factor of a company's budget. The future
direction of the company may rest on the accuracy of your sales forecasting.
Companies that implement accurate sales forecasting processes realize important

benefits such as:
1. Enhanced cash flow

2. Knowing when and how much to buy
3. In-depth knowledge of customers and the products they order
4. The ability to plan for production and capacity
5. The ability to identify the pattern or trend of sales
6. Determine the value of a business above the value of its current assets.
Your income statement lists your financial forecasts in the following manner:
- Income includes all the income generated by the business.
- Cost of goods includes all the costs related to the sale of products in
inventory.
- Gross profit margin is the difference between revenue and cost of goods.
Gross profit margin can be expressed in euros, as a percentage, or both.
- Operating expenses include all overhead and labour expenses associated
with the operations of the business.
- Total expenses are the sum of cost of goods and operating expenses.
- Depreciation reflects the decrease in value of capital assets used to
generate income. It's also used as the basis for a tax deduction and an
indicator of the flow of money into new capital.
- Earnings before interest and taxes shows the capacity of a business to
repay its obligations.
- Interest includes all interest payable for debts, both short-term and long-term.
- Taxes include all taxes on the business.
- Net profit is the difference between gross profit margin and total expenses.
Net profit after taxes shows the company's real success.
Net profit success - for example, if one sells 10 products at €100, and makes a net
profit of €200 on those sales the percentage of net profit to sale is 20%. However, if
you increase the sales to 20 products at the same price and make €300, whilst the
net profit has increased in monetary terms, the percentage has dropped to 15%,
meaning that it is costing more per unit to sell. Therefore it can be seen that
increasing sales does not necessarily lead to an improvement of net profit.
In reality, the way to improve net profit is by maximising the use of your resources.
Businesses have three types of resources, these are:
1. The equipment and production processes,

2. The human resources, (their employees) and
3. Their customers/clients.
In terms of equipment and other resources that impact on the sales, these can be
maximised by conducting an analysis of their capability and then adjusting the output
to achieve the maximum numbers possible in terms of products or services
produced. For example, if you have a machine that is capable of producing 1,000
units per hour, but is only in fact generating 600, then you are not making the
maximum use of it. The fixed costs of that machine are more per unit than they need
to be. If that machine’s output is increased to 600 then the fixed cost per unit will be
reduced by one third. Whilst some of the running costs may increase slightly, there
will still be an improvement in net profit resulting from the fixed costs being spread
over an increased number of units. Employees are another area where
improvements to net profit can be achieved, for example by introducing more efficient
working processes.
Source: http://www.helium.com/items/462760-ways-to-maximize-net-profit
Although the basics of an income statement are the same from business to business,
there are differences between services and manufacturers when it comes to the
accounting of inventory.
For service businesses, inventory includes supplies or spare parts, nothing for
manufacture or resale. Retailers and wholesalers, on the other hand, account for
their resale inventory under cost of goods sold, also known as cost of sales.
When comparing several income statements over time, you can chart trends in your
operating performance. This helps you chart future goals and strategies for sales,
inventory, and operating overhead.
Overhead Expenses
The overheads forecast is an estimate of your expenses for the year. Typical
overhead expenses include:
The next step is to make cost estimates for each area. You may do them monthly, or
annually, however, you will eventually need to know your monthly expenditure in
each area for your cash flow forecast. Some of your forecasts will be a matter of
calling a supplier and asking for a quote. Sometimes, you will have to make a
management (as owners of the company) decision about how much you plan to
spend in order to achieve your revenue objectives.
Expanding overhead - all of the expenses not directly related to making your
product or delivering your service - is a dangerous thing. Here's what you need to
know:
1. Even in the smallest business, it tends to grow, slowly and unnoticed, until
suddenly your costs are out of control.
2. Bloated overhead is one of the major threats to small
business competitiveness. Conversely, low overhead can be one of your best
competitive tools.
Office space is a good example. Do you have more or higher quality space than you
need? Moving to different digs might save you a bundle in overhead costs, but it's
inconvenient so many small businesses don't bother. Keeping overhead under
control is a good reason to stay in a home office or other start-up space as long as
possible.
A Sample of Income Statement
Sole propreiertorship Restaurant “Happy meal”

Income Statement
Year Ending December 31, 2015
Sales € 130.000
Less Costs of Goods 78.000
Gross profit 52.000
Expenses:
Advertising 1.500
Depreciation 5.000
Interest 2.000
Rent 4.000
Travel 1.600
Wages 7.000
Total Expenses 21.100

Net Profit 30.900
The following template for income and expenditure statement could be

modified according with your business:
Table 25: Income Statement
Income statement (by months in first year)
Description J F M A M J J A S O N D Su
m
Income
Turnover (net)
Other income
Total Income
Sub contracted supplies*
Material(delivery)
Repair work
Car insurance/costs
Financial leasing
Costs of advertising
Office supplies
Telephone/mobile, internet
Legal service
Travelling expenses
Insurance costs
Personnel costs
Postal charges/mailings
Related costs of money transfer
Other costs
Total expenses
Profit before Tax
* a subordinate contract under which the supply of materials, services, or labour is let out to
someone who will perform the job. You should put the value of the contract in the Income
statement
Table 25: Income Statement for 3 years period
Income and expenditure Statement

1st Year 2nd Year 3rd Year
Income
Turnover (net)
Other income
Total Income € € €
Expenditure
Sub contracted supplies
Material(delivery)
Repair work
Car insurance/costs
Financial leasing
Costs of advertising
Office supplies
Telephone/mobile, internet
Legal/tax service
Travelling expenses
Insurance costs
Personnel costs
Postal charges/mailings
Related costs of money transfer
Interest expenditures
Other costs
Total expenses
Profit before taxes
Net profit
Cash flow Statement
A Cash Flow Forecast is probably your most important financial tool. It is your
cash flow that shows you if, and when, you will run out of cash essential to run your
business. It allows you to take action before problems occur and even do “what if”
calculations before taking on new projects. The cash flow is usually a 12-month
projection that forecasts the receipts for your business. In a start-up situation, it is
preferable to have a start-up month to specifically show the costs incurred to start the
business. Within the Cash flow cycle you need to plan the time, in days, it takes to
purchase a product or materials, produce and sell an item, and then finally collect
payment on that item.
The cash flow expresses the changing amounts over time that is available to be used
in your business for investments or to pay debts. To calculate it, all movements of
cash (money) have to be taken in account. To calculate it, you have to plan on future
purchases and sales (flows of goods) and future expenditure and income (flows of
money). Here it is important to determine exactly the time points. This is because
even if the income and expenditure statement shows profit and the balance sheet
shows also positive equity for the owners, it is possible that your business is not
feasible or viable.
This is because a business needs cash in-hand in order to pay invoices. In other
words, a sale is not the equivalent to the receipt of money, while a purchase (e.g of
raw materials) often requires immediate expenditure.
Situation 8
For example, suppose a business purchases €1,000 worth of raw materials at the beginning
of the month. It takes one month to produce the product, one month to sell the product for
€2,000 and one-month to collect the cash from their customer. If they do not receive any
vendor credit for their raw materials, the process looks like this.
2nd of May Sell 31st of

July
MAY JUNE JULY
Purchase Collect
The business has to spend €1,000 at the beginning, but does not collect €2,000 for three
months. They still need to pay the overhead expenses in the interim. Without cash, or access
to credit, they could go bankrupt before collection. They therefore have to worry about selling
their products in a timely manner and collecting in a timely manner. Failing to do proper cash
planning is one of the most common causes of business failure.
The purpose of the cash flow statement is to monitor the changes in the cash position
of a business over a determined period of time.
The categories within the cash flow statement are similar to those of the income and
expenditure statement with the difference that income is recorded at the point in time
when it is deposited and expenditures are recorded when the payment is done. The
template for the cash flow statement (below) could be modified according with your
business.
There are a few ways you can use a cash flow forecast as a planning tool:
- short term planning to see where more cash than usual is needed. (For example
you may foresee a month when several large annual bills are due, and the cash in
the bank is likely to be low.)
- business planning (long term planning) to find where cash flow could break the
business, especially when the business wants to expand. For example, a seasonal
swimwear retailer, after months of quiet winter trading with a low cash flow, has to
buy the new season's stock, employ extra staff and advertise. And it may also be
planning to extend into the shop next door. After several lean months, the cash
supply may be at its lowest, even without the added expense of the new premises.
Cash will be very tight for several months, even with good takings, so the cash flow
will need careful planning and maybe the extension of premises delayed.
Table 26: Cash Flow Statement
Cash Flow Statement

1st Quarter 2nd Quarter 3rs Quarter 4th Quarter
Jan-March April-June July-Sept Oct-Dec
INFLOW
Revenue from products or
services sold
Interest Income
Interested Capital € € € €
OUTFLOW
Cost of Goods Produced
Sales, General and
Administration
Buildings and Equipment
Other Expenses
Interest Expenses
Taxes
TOTAL FUNDS OUT € € € €
Net Cash Flow € € € €
Plus: Beginning Cash
Balance
Ending Cash Balance € € € €
Break-even point analysis

The break-even point, put simply, is the point at which income matches expenditures.
Typically, initial expenditures are high. It takes time for the income to reach the same
level. The break-even point can apply to a product, an investment, or the entire
company's operations.
One of the most important questions which has to be answered for the financial plan
is: “How can I determine my expected sales revenue?”
Predicting the future is very difficult, but break-even analysis can help. The Break-
even point is the point where the costs (expenditures plus gross margin) are
covered. Your Break-even point is determined by dividing your Fixed costs by your
Gross Margin*:
Total fixed Costs
Break-even Point = ---------------------------------------
Gross Margin
Gross margin: for a manufacturer, gross margin is a measure of a company's

efficiency in turning raw materials into income; for a retailer, it measures their markup
over wholesale.
Most companies would like a gross margin that's as large as possible. An exception
is the discount retailer; part of their game is to make their operations and financing so
efficient that they can afford to keep their markup tiny.
It means, there are two elements you need to know to determine your Break-even
point:
1. Total fixed costs, and

2. Gross Margin
Total fixed costs are those expenses or expenditure you will have whether or not you
make any sales. They usually includes items such as building, personnel, loan
repayments, utilities and other miscellaneous fixed costs.
Financial ratios
Financial ratios are relationships determined from a company's financial information

and used for comparison purposes. Examples include measures such as “return on
investment” (ROI), “return on assets” (ROA), and “debt-to-equity ratio”, to name just
three. These ratios are the result of dividing one account balance or financial
measurement with another. Usually these measurements or account balances
(the amount of money in an account, equal to the net of credits and debits at that
point in time for that account) are found on one of the company's financial
statements—balance sheet, income statement, cash-flow statement, and/or
statement of changes in owner's equity. Financial ratios can provide small business
owners and managers with a valuable tool with which to measure their progress
against predetermined internal goals, a certain competitor, or the overall industry. In
addition, tracking various ratios over time is a powerful means of identifying trends in
their early stages. Ratios are also used by bankers, investors, and business analysts
to assess a company's financial status.
Ratios are calculated by dividing one number by another, total sales divided by
number of employees, for example. Ratios enable business owners to examine the
relationships between items and measure that relationship. Ratios are aids to
judgment and cannot take the place of experience. But experience with reading ratios
and tracking them over time will make any entrepreneur a better entrepreneur. Ratios
can help to pinpoint areas that need attention before the looming problem within the
area is easily visible.
Here you can see a few of the most important financial ratios:
1. Debt-to-equity ratio: (see Financial objectives - Stability p. 106)
The Debt-to-Equity Ratio measures how much money a company could safely be
able to borrow over long periods of time. Does this by taking the company's total
debt (including short term and long term obligations) and dividing it by the amount of
owner's equity. Generally, any company that has a debt-to-equity ratio of over 40 to
50% should be looked at more carefully to make sure there are no liquidity problems.
Debt-to-equity ratio = Total debt (total liabilities)/
Total equity x 100 to get %
For example, if a company has long-term debt of €3,000 and shareholder's equity of
€12,000, then the debt/equity ratio would be €3000 divided by €12,000 = 0.25. It is
important to realize that if the ratio is greater than 1, the majority of assets are
financed through debt. If it is smaller than 1, assets are primarily financed through
equity.
2. Net profit margin:
Profit margin = Net income/Sales
For example, if a company’s sales are €180, 980 while its net income is €42,325, its
profit margin is €42,325/€180,980 = 23.4%.
So, for every euro in sales, this business is generating a little more than 23 cents net
profit. How healthy is this? Other than the obvious generality that the higher the profit
margin the better off the business, the net profit margin is an extremely useful
measure of how your business is performing over time. Finally, you can see whether
your business’s net profit has increased, stayed the same, or decreased over last
year. And if it’s decreased, you’ll know to take steps to cure the problem, such as
better controlling your expenses.
3. Return on investment:
ROI = Amount of financial Gain/Total Investment Amount
Basic ROI calculation is commonly used for short-term (e..g., less than one
year) investments and benefits. For example, say €1,000 is invested and it
earns €1,250. This is a gain of €250. Divide the €250 by €1,000 (the amount
invested) gives an ROI of 25%.
4. Return on equity (ROE):
ROE means amount of net income returned as a percentage of shareholders

equity. Return on equity measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have invested.
ROE is expressed as a percentage and calculated as:
Return on Equity = Net Income/Shareholder's Equity
The ROE indicates what

return a company is generating on the owners' investment. Things to remember:
If the new shares are issued then you should use the average of the number of shares
throughout the year. For high growth of the company, you should expect a higher ROE.
An investor who buys a business for €100,000 has an equity of €100,000 in that
investment. This sum represents the total capital provided by the investor.
If the investor then makes a net profit each year from the business of €10,000, the return
on equity is 10%:
10,000 x 100
__________
100,000
5. Return on assets (ROA):
ROA gives an idea as to how efficient management (or owner of the company) is at
using its assets to generate earnings. Calculated by dividing a company's annual
earnings by its total assets, ROA is displayed as a percentage. Sometimes this is
referred to as "return on investment".
The formula for return on assets is:
For example, if one company has a net income of €50.000 and total assets value of
€250.000, its ROA is 20%; however, if another company earns the same amount but
has total assets of €500.000, it has an ROE of 10%. Based on this example, the first
company is better at converting its investment into profit.
You can increase the credibility of your financial plan by taking financial ratios from
successful enterprise in the market sector in which your business will compete and
compare with yours. Some of these data are available in the industries and
commerce reports.
Four stages in the Process of Financial Management
Financial management deals with two things: raising money and managing a
company’s finances in a way that achieves the highest rate of return.
Table 27: Four stages process of financial management
1. 2. 3. 4.
Preparation of past Preparation of Preparation of the Ongoing analysis of
Financial Statement Forecasts Financial Financial Results
Statements
- Income - Income - Pro-forma - Ratio analysis
Statement - Expens income - Measuring
- Balance es statement results versus
Sheet - Capital - Pro-forma plans
- Statement of expendit balance - Measuring
cash flows ures sheet results versus
- Pro-forma industry norms
statement of
cash flows
Sources of capital for Start-up
Before seeking financial support, ask yourself the following:
1. Do you need more capital or can you manage existing cash flow more
effectively?
2. How do you define your need?
3. How urgent is your need?
4. You can obtain the best terms when you anticipate your needs rather than
looking for money under pressure.
5. How big are your important risks?
6. In what state of development is the business?
7. For what purposes will the capital be used? Any lender will require that capital
be requested for very specific needs.
8. What is the trend of your industry/sector?
9. Is your business seasonal or cyclical? Seasonal needs for financing generally
are short term. Loans advanced for cyclical industries such as construction are
designed to support a business through depressed periods.
10. How experienced is your team?
11. How does your need for financing match with your business plan? All capital
providers will want to see your business plan for the start-up and growth of
your business.
There are two types of financing:

equity and debt financing. When looking for money, you must consider your
company's debt-to-equity ratio - the relation between euro you have borrowed
and euro you have invested in your business.
If your company has a high ratio of equity to debt, you should probably seek
debt financing. However, if your company has a high proportion of debt to
equity, experts advise that you should increase your ownership capital (equity
investment) for additional funds.
1. Equity Financing
Most small or growth-stage businesses use limited equity financing. As
with debt financing, additional equity often comes from non-professional
investors such as friends, relatives, employees, customers, or industry

colleagues.
2. Debt Financing
There are many sources for debt financing: banks, micro loans schemes,
savings and loans, commercial finance companies, and international funds
are the most common. Family members, friends, and former associates are
all potential sources, especially when capital requirements are smaller.
Consider this carefully because they will then participate in the increased
value of the business and have some control over your business.
In addition to equity considerations, lenders commonly require the

borrower's personal guarantees in case of default.
What do you think? Can a young start-up entrepreneur with a solid business plan get
a bank loan with minimal problems? A realistic answer will be: No!
You have to consider that:

 Bank lending is based on an assessment of risk
 Your greatest obstacle is likely to be a lack of assets
 Financial Institutions and early stage entrepreneurs are directly opposing
forces because financial institutions are looking for certainty, whilst
entrepreneurs are looking for possibilities.
How much money does your business need?
Your business plan should help you identify the amount of funding your new business
needs to start operating. Let us consider the question step by step:
Firstly, consider why you might need initial funding: Reasons could include:
• Buying supplies and inventory while you wait to get paid

• Paying wages and rent
• Buying equipment and fixtures
• Purchasing a computer, or
• Buying the business itself.
The new venture could fail if conditions change. Your banker may loan you the
money in the form of micro-credit, but may want your personal financial guarantee
and the equity in your house as collateral.
You should:
1. At first start on a very small basis without bank debt.

2. Consider the risks you are prepared to take with personal and some of family
savings. Think very hard, before you risk family home by using it to gain a
business loan.
3. In addition, encourage your team members for planning investment.
Whether you are seeking to raise equity or debt funding, you will need to present a
business and financing plan which clearly explains how your business will be
financed.
What could be basic reasons for investors to reject your request for finance?
1. Poor presentation by you or your team

2. Your financial proposals are poorly constructed
3. You have presented a weak Cash-flow statement, meaning that there is a risk
that debts might not be repaid
4. You or your team collectively do not have sufficient track record of business
start up or the industry in which you will operate.
5. You demonstrate a lack of financial commitment (e.g insufficient funds being
commited by the team)
6. You do not have a clear exit strategy* for the start-up.
Let us consider this final point in some detail:
*Exit strategy: From a small business point of view, a viable exit strategy is a plan
that allows the owners or investors to walk away from the business with what they
want to walk away with.
The "what they want" at the end of their period of ownership or investment may be
money. An investor is often looking for a particular percentage of return on his/her
investment, for instance, and obviously a business owner who is selling a business
wants to make a profit.
However, exit strategies for small businesses are not just about making money;
business owners often have other goals that they want their exit strategies to
accomplish, such as establishing a legacy, ensuring that the business remains in

their family. Source: www.wes.bc.ca
www.wes.bc.ca
Six common exit strategies for small companies:
1. Liquidation of the company
2. Keeping the business in your family
3. Selling the business to employees
4. Selling the business in the open market
5. Selling the business to a competitor, supplier, customer
6. IPO – offering the business to public by Initial Public Offer.
Whichever exit strategy you choose, you need to start working on it. Planning your
exit strategy in advance gives you the time to do it right and maximize your returns.
Final words…..
Your financial plan should be reviewed every month. Check your plan against the
actual financial results. This will help you anticipate problems before they arise. Ask
yourself if this is a good investment of your money and your time. Finance is difficult
for most start-up entrepreneurs. Use some of local professionals such as
consultants-accountants or small business consultants to help you make sense of
your financial statements. Exchange as much with other entrepreneurs in any
occasion on this financial issues. Good luck with your financial plan!
1. Which are the main financial objectives of the company?
2. Why do we need a financial plan?
3. What is the difference between Balance Sheet, Income Statement, Cash-Flow
and Break Even Point statement?
4. Discuss the most important sources of investment for Start-up?
5. For your own business and your own circumstances, what are the relative
advantages of debt versus equity as a basis for acquiring finance?
Part seven »Entrepreneurial Skills and Attitudes«

»Presentation of Your Business Plan«

 the basic principles of negotiating in business
 the principles of business networking for match-making
 the basics of project management
 how to negotiate and network successfully
 how to make use of project management tools
 the importance of business ethics in business practice
 how differentiate between ethical and non-ethical behavior in business
 how to present your business plan to a small audience using suitable
presentational tools
How to raise your negotiating skills in business?
“The more you sweat in training, the less you bleed in the fight.”
Very often in business you will need to use your negotiation skills. For example, when
buying raw materials you may want to negotiate the price, when arranging a loan you
may want to negotiate the repayment period, if you are taking out a contract for
someone to supply you with a service you may need to try to vary the terms and
conditions.
Negotiation is a process in which all parties involved attempt to reach a consensus in

situations where there may be potential conflict and disagreement. Being successful
in negotiations often requires much time to plan ahead, to think strategically about
your negotiations and to practice the skills you will require to achieve success.
BATNA is an acronym “Best Alternative to a Negotiated Agreement”, term (Fisher, 1981).

BATNAs are critical to negotiation because you cannot make a wise decision about whether
to accept a negotiated agreement unless you know what your alternatives are.
Example 1 – Bayram wants to buy a pair of shoes. He goes to Ufuk where there are many
shoe stores. Since he has so many options, his BATNA is very high – if he doesn’t like the
prices or selection (i.e.: his Negotiating Variables) in one store, he knows he can easily go to
another. Enver enjoys a very strong position and receives good service from a wide range of
sellers who want his business.
Example 2 – This time, Emran is looking for a hotel in a small town. It is 21.00 in the
evening. Emran is hungry and tired and has an important business meeting next
morning. There is only one guest-house near the bus station – and Emran doesn’t know of
any others. If he can’t make a deal with the guest-house manager, then he will have to sleep
in the bus station. Emran’s BATNA is very low.
Example 3 - If I have a written offer from a dealer to buy my car for €1,000, then my BATNA
when dealing with other potential purchasers would be €1,000, since I can get €1,000 for my
car even without reaching an agreement with such alternative purchasers.
In this example, other offers that illustrate the difficulty of valuing qualitative factors might
include:
- An offer of €900 by a close relative (is the goodwill generated worth €100 or more?)
- An offer of €1,100 in 45 days (what are the chances of this future commitment falling
through, and would my prior BATNA (€1,000) still be available if it did?)
- An offer from another dealer to offset €1,500 against the price of a new car (do I want to
buy a new car right now, the car which is being offered in particular? Also, is the probably
small reduction in monthly payments worth €1,000 to me today?) www.wikipedia.com
However, there are some general principles that apply in most situations. Below we
outline 10 general rules of negotiations which apply to every negotiator, deal maker,
or anyone who is trying to negotiate something.
10 rules of negotiations:
Rule 1. Be better prepared than other side:

If you are better prepared than the other party you are negotiating with, you stand a
better chance of success. Knowledge is really power at the negotiating table.
Whether you are on the buying side or selling side, you will have an edge over the
other party if you are better informed. Being better prepared will give you more
confidence at the table that will definitely help you improve your negotiation results.
Evaluate the information you collect and decide on the factors that will have an effect
on your negotiation. Keeping your eyes and ears open for additional information
during the negotiation can assist you in the end result. Before you sit down at the
table, know the real goal that you have. Understand what your limits on all aspects of
the deal are. When you are better prepared, you will be able to accelerate every step
of the process.
Rule 2: Learn to walk away, when is needed

Walking away from a deal can be the hardest thing to do in business. Sometimes, we
convince ourselves that we want the deal so much that we even have emotional
attachments to it. But sometimes learning to walk away is the only way to get what
you really want. Knowing that you have other alternatives gives you power over the
other party. Always be ready to walk away.
Rule 3: Perseverance Pays

Coming up with the biggest invention or negotiating the deal you really want,
perseverance will play a big part in the outcome. Sometimes, we get people trying to
push us to the edge because they try to find out how far we are willing to go. Success
comes to those who persevere to the end.
Rule 4: Keeping quiet, when need it

At some point in a negotiation, the best thing you can do is to keep quiet. When you
hear something which you really like, you can express interest in the offer and start
probing more. Never make it explicitly known that you are hearing something which
you like.
We often try too hard to make our message heard and understood. Learn to keep
quiet and listen to what the other party has to say. Practice effective listening and be
open to the other party’s message. Make a point of listening when the other party
starts talking. Taking notes on the important points is a good habit to adopt. Use
these points to help you formulate the responses that you might have. Listening is
the best way to collect information.
Rule 5: Do Not Rush To Close A Deal

Do not rush to close a deal. There is simply no need to say “yes” all the time during
the negotiation. If you find yourself eager to close a deal, take a step back and give
yourself a time-break. Sometimes we move so fast to close a deal that we trip
ourselves, only to regret our decision later.
Many people are so eager to close a deal that they forget that they are there for a
specific reason or a specific goal. Never rush to make a decision which you will later
regret.
Rule 6: Have the Right People in Your Team

What is really going to matter in a team negotiation is the quality of your team.
Always go into a negotiation process with your best team members. You actually are
a leader, but don’t think just about you. No matter how good you are or how good you
think you are, it is your team which should determine the success of your negotiation.
On the other hand, make always sure that your team is good prepared for the other
party.
Rule 7: Understand the terms and conditions

Failing to understand the terms and conditions thoroughly can cost you a lot. Always
make sure that all the terms are properly negotiated during the process. If possible,
make it a habit to document all the terms discussed. Having the terms documented
(and maybe signed) is a form of commitment both sides have. This will help you
avoid the problem of the other party going against an agreement that they have
originally agreed to.
Rule 8: Learn To Let Go

Many people get too hung up on a single issue. A negotiation is never about one
single issue or a single person. It is a combination of many factors which influence to
each other (market factors against internal company factors). Be open to
suggestions.
Rule 9: Make Friends, Not Enemies

It is always better to make friends than enemies. Understand that a successful
negotiation is not a one-off event. It is a series of relationships that might follow after
the deal is being done. Do not bargain so hard with the other party that you ruin the
opportunity for another deal. Rather than seeking a long-term relationship with the
party they are negotiating with, some negotiators head for immediate rewards. Even
when you are dealing with your competitors, it is still a good practice to be nice and
friendly to them. Not because it is important to be nice and avoid conflict, but simply
because it is good business.
Rule 10: Look At The Big Picture

Always remember the “Big Picture” – have in mind to cooperate with other side on
long term and at the same time consider all important aspects for both sides.
Successful negotiators are not born with negotiation skills. Knowing the basics and
principles of negotiations will not get you the deal you want. It is through disciplined
thoughts and disciplined actions and many experiences that you learn the art of
negotiation.
Pitching for investment - preparing an Investment Summary
“There is no ONE way to finance a company, but some ways create a higher probability of
success than others!”
Having a business plan is an absolute requirement when approaching and pitching

to investors for start-up business capital. The initial purpose of the plan however, is
not to provide an investor with an overly extensive document at the first meeting. Its
real value is as a preparation for you.
By going systematically through the steps necessary to create a successful business

plan will make you more knowledgeable about your business and much better
prepared to answer questions that an investor might ask. You will also be much
better prepared to justify your numbers and back-up any projections and assumptions
you might have made.
If you have a business plan then excellent! But it is important that you become
completely familiar with all aspects of the plan if your funding strategy is to succeed
when meeting the investor.
If you don't have a Business plan prepared then you are not ready to meet with
a potential investor.
Who could become your potential listeners and investors?
 Co-Founders
 Founders’ friends and family
 Business Angels (silent rich business owners in Turkey)
 Your suppliers
 Banks as loans provider
 Corporate (strategic) partners
 Customers
 Private placement (intellectuals, especially in IT field, innovations)
 International strategic partners (on long term).
Once you have created a solid business plan with a short executive summary you
can move on to create and finalize an Investment summary.
Your investment summary is a vital part of the capital raising process and is of
particular interest to a potential investor because it answers the question of “what's in
it for them?”
You need to be able to make a highly concentrated 30 second business proposition

which is condensed into a single paragraph. What makes this an attractive
investment opportunity? How much money is needed? How will it be used? What will
be the return on investment (ROI) and when will they see this investment repaid. This
short summary is what is known as an “elevator pitch”.
An Elevator Pitch is an overview of a product, service, project, person or other Solution and
is designed to just get a conversation started.
Your Elevator Pitch must stay at a high level and should answer fundamental questions like...
- What is it? (a product which solve the problem)
- Who needs it? (customers)
- Why should I believe what you say? (advantages of team)
If you have an Investment Summary already then Excellent! Potential investors will
be impressed that you recognize the importance of the numbers for the success of
the business. However, they will also expect you to be able to justify these numbers
and demonstrate a clear understanding of how you arrived at them.
If you do not have an Investment Summary then you need to prepare one.
The investment summary is of particular interest to investors because it highlights

what's in it for them. There is some repetition here from previous paragraphs.
How to present and Pitch your business plan?
It is easy to quit a job, it is difficult to quit a business!
10 most important slides in power point presentation
10 / 20 / 30 rule
 10 slides
 20 minutes
 30 point size font
1. Title slide
2. Problem of the target group, or technology problem/your value proposition
3. Solution (or partly solution)
4. Business model
5. Underlying important facts
6. Marketing and sales forecasts

7. Competition (3 main)
8. Management team / your advantages
9. Financial projections and ratios
10. Current status, milestones, timeline, need for capital.
Before presentation…
 Practice, practice and practice (with your team if you have one)!
 Time yourself
 Avoid too much technical jargon verbally and on slides
 Keep slides simple with lots of white
 Speak slowly and clearly, raise the voice, when needed
 Share the presentation among team members, but choose a lead
 Simplify – most people run out of time
 Be confident and respectful of questions and constructive feedback
 If you don’t know the answer, say so, then say what you will do to get the
answer.
Instructions for pitch
Pitching isn't only useful to raise money, it's an essential tool for reaching agreement
on any subject. The key to successful pitching is to get off to a fast start, explain the
relevance of what you do, stay at a high level, listen to audience reaction, and then
pitch over and over again until you get it right.
In the first minute you should state clearly – What you do. What business you are in.
What the product does.
Make it short and positive, for example:

 “We sell software, we sell hardware.”
 “We teach you to understand your customers.”
 “We help your customers with new value in logistic field.”
 “We prevent customers from additional costs in insurance service.”
Always listen to the inner feeling of yours and explain, for example:
 “We use digital signal processing in our hearing aids ----so what? -----our
product increases the clarity of sounds---- For instance, if you are at a cocktail
party with many conversations going on around you, you will be able to hear
what people are saying to you.”
It is very powerful to combine in a pitch an answer to »So, what?« with »For

instance«
Follow:
The foundation of a great pitch is research about the audience! – their background,
their current role, what they are doing, where are they heading. Make the pitch
meaningful to them.
Important in pitching: you want to communicate enough, not everything in order to

awake interest for questions in your audience. The purpose is to stimulate interest,
not to close a deal. Support your pitch with few slides, and remember the fewer slides
you use, the more compelling your idea!
What should an Investor's pitch include? Prepare some slides! Use slides to lead,
not read!
1. Title (organization name, your name & title, contact)

2. Problem: describe the challenge you are alleviating, the goal is to get
everyone nodding and buying-in
3. Solution: explain how do you alleviate this challenge, the meaning you make,
audience should clearly understand what is your value proposition
4. Business model: explain how you make money, who pays you, your channels
of distribution, your gross margin
5. Under-laying magic: describe the technology, magnet behind your product or
service
6. Marketing and sales – explain how will you reach your customers
7. Competition – too much is better then too little – provide a complete view
8. Management team: describe the key players in your team, any existing major
investors.
9. Financial projections: forecasts for 3-5 years
10. Explain the current status of your product, how will you use money that you
will raise?
Business Networking
”Most successful business networking is based on value added networking!”
One piece of research says that successful entrepreneur spends more than 50% of
time for business networking, that is prospecting for new customers, suppliers, trying
to find new partners or investors, looking for new business opportunities, etc.!
Let us consider how you might use networking to support your new business:
There are three types of networks important in business:
1. Operational,
2. Personal and
3. Strategic.
1. Operational networking involves cultivating the relationships with people you

need to accomplish your job. Entrepreneurs must be sure to hire the right people for
the business. This is a network you need in order to get things done within your
company.
2. Personal networking is an afterthought for many busy entrepreneurs. But these

networks allow you to meet a diverse group of like-minded professionals. They also
are a way to develop important social skills for many professionals and may be the
first place you turn when you start thinking about expanding your business.
3. Strategic networking is the toughest but most essential if entrepreneurs want to

become business leaders. You should spend a lot’s of effort to attract potential new
strategic investors. This allows entrepreneurs to share ideas about best practices in
management, learn new approaches and keep close tabs on developments in
business and technology. It helps entrepreneurs to see the bigger picture and create
their own visionary approach. This is where strategic ideas come into play.
10 rules for entrepreneurial business networking:
Rule 1
 Entrepreneurial “know who” is as important as entrepreneurial “know
how”.
 Be polite,
 But don’t be inhibited about developing contacts that will assist you in
starting
 your new venture.
Rule 2
• Be systematic, explicit and proactive in creating and managing your network.

• Make Value added contacts.
Rule 3
• Assess your contacts in terms of the specific type of venture you are starting.
Rule 4
• Locate your business venture geographically to take optimum advantage of

your contacts on local level.
Rule 5
• Use your personal contacts.

• The strengths and weaknesses of your personal contacts become apparent
only when they are used.
Rule 6
• Identify and communicate continuously with all your clients and customers.
Become a member of local business associations.
Rule 7
• Assess your entrepreneurial contacts not just in terms of traditional business

or industry attributes,
• But also in terms of entrepreneurial functions and needs.
Rule 8
• Contribute your own value added contacts.
Rule 9
• If feasible, use some kind of device to keep, track, sort and classify the
relationship you have as value added contacts.
Rule 10
• Don’t become too dependent on developing your value added contacts. Make
sure other entrepreneurs are doing similarly, and engage you to their business
network.
It is not what you know that counts, but who you know. But, if you don’t know “the
what”, then “the who” won’t talk to you.
Develop your entrepreneurial team
Simply, teams make it happen!”
”A team is a distinguishable set of two or more people who interact dynamically,

interdependently and adaptively towards a common and valued
goal/objective/mission, who have been each assigned specific roles or functions to
perform, and who have a limited lifespan.
The group of people who start a firm is an important part of the new venture concept.
Your team is the lifeblood of your venture. Successful entrepreneurs build successful
teams. The strength of your team determines how thoroughly you analyze the
problem, how many different partners you see, and how complete and competent
your solution will be.
What to do first?
At first you should find complementary team members by skills, knowledge,
experiences, education background and other criteria’s. Then you need to convince
them and communicate the whole concept of new venture and idea and purpose,
mission, goals, values and strategy for the team.
Before you begin to assemble a team, you must clearly define the reason for the
team's existence, the purpose and scope of the team, its mission, goals, values and
business strategy.
A sense of vision (a long term realistic picture of the company) is the most important
aspect of making a team successful. Teams perish when they don't clearly see the
vision: why they are doing what they do and where they are going. A team leader
must motivate the team toward the fulfilment of the goals.
Assembling of talents at key positions

Once the requirements for the team are laid out, the owner/manager (or coach) or the
responsible person for the leadership and management of the team must determine:
- which positions are needed;

- the experience and talents needed for the particular positions;
- assemble the talents needed for all position within the team from within
the department (or product service).
Talents could be brought in as outside consultants, free-lancer, short-term

contractors. You should consider making all team members permanent, if you intend
to the team's existence is long-term.
However, many times you cannot get the perfect talent, only the closest match. Ask
them where they thing they could best contribute, and the reassigning them. The
strength of a coach is his/her ability to evaluate and assess a team member and
know his/her potential and where he/she would best contribute to the team. The key
here is to properly build the talents in the right position. Roles and responsibilities
must be clearly defined and understood by everyone, later on to be put in the
contract.
When the team is finally assembled, the owner/manager should go over the purpose,
mission, goals and requirements for the team and make sure that they all fully
understand these. Clearly define each member's role and responsibilities and what
they are expected to contribute to the team and what is required of them. Then have
a meeting with each individual member and go over the roles and responsibilities.
Learning lessons and installing an environment where mistakes are tolerated

Creativity and innovation should become the important company slogans. Provide
them with the resources necessary to do the job. Set up an environment where
achievement is possible. If you have basic conditions, think about establishing user-
friendly environment for them (nice offices, coffee & tea bar, creative environment,
flexible breaks time etc).
Become a fast team

The market changes so fast that the only way to keep up is to react and innovate
faster. Keep all members ready to perform, faster and more efficiently than
previously. In sports, speed wins, on market exists the same rule. Make team
responsive, with entrepreneurial authority to develop products and service for the
market place on time.
Continuous improvement
Continuous improvement deals with learning, training, but the owner/manager must
evaluate his/her team and continuously improve the team. Each member must
inculcate the desire to continuously improve his/her talents and the processes and
their intended outcomes. It is important to have the end in mind when you begin the
project, but it is more important to continuously improve on the end-results. Self-
leadership and self-respect must be taught. Quality must be built into every process
and be part of every member.
Rewards
Everyone is equally important on the team. Have celebrations with the team when
certain business deals are reached. Make working in the team a joyous occasion. It
should be fun working on this team. Members should enjoy working on this team.
Complacency sets in when members do not feel that they are contributing, know their
purpose in the team and roles and responsibilities and are not rewarded for their
work. Ensure a shared vision. Set up reward systems. Leadership is about
relationships. The stronger the relationships between all team members, the coach
and upper management, the greater the success. Management is there to serve the
work force.
The team is always more important that its members. Avoid internal conflicts. If there
is a conflict, talk with all engaged sides and go back to the signed statements of the
roles and responsibilities. If an individual fail to comply, he/she cannot be part of the
team. A team is only as strong as its weakest link.
What makes a successful and effective team?
o A common purpose
o Measurable goals
o Effective leadership and conflict resolution
o Good permanent communication
o Good cohesion and mutual respect
o Situation monitoring
o Self-monitoring
o Flexibility
O Good working conditions.
Good luck in building your team!
Ethical culture in your company
Sometimes in business there will be times when you have to ask yourself “is it right to
do this?” Or “even though this is legal is it right?” In other words, at times you will
have to confront ethical issues: “Should I pay the expected bribe to win an important
contract?” “Should I employ X, just because he is a cousin of my wife but I know he is
very unreliable?”
Ethics provide the basic rules or parameters for conducting any activity in an
“acceptable” manner.
The idea of Ethical behavior rests on a set of widely shared values and beliefs
accepted by everyone working within an organization. It involves a common
understanding of what is right and wrong in the course of business dealings. If an
ethical culture forms the basis upon which everyone of a company makes business
decisions, the company's profitability can be enhanced and overall operational
efficiency improved.
Entrepreneurs typically live with the ever present threat of business failure arising
from limited financial resources and aggressive competition in the marketplace.
Under these circumstances, conflicting priorities arise and the entrepreneur is thus
faced with certain dilemmas. In seeking to resolve these, entrepreneurs must often
rely on their own judgment to determine ‘‘what is right’’.
Any decision where moral considerations are relevant may give rise to an ethical
dilemma. In general, an ethical dilemma may result from a decision that:
 requires a choice between rules
 has no rule, precedent or example to follow
 morally requires two or more courses of action,
 puts rational self interest in conflict with a moral principle.
Ethical leadership by entrepreneur - an owner of the company has the unique

opportunity to display honesty, integrity, and ethics in all key decisions. The owner’s
actions serve as a model for other employees to follow.
Entrepreneurial leadership
“You don't lead by pointing and telling people some place to go. You lead by going to that
place and making a case.”
Leadership is the process through which an entrepreneur is able to influence

employees to achieve the objectives of the organization. To be an effective leader,
an entrepreneur must:
1) build trust and confidence among employees and

2) effectively communicate with them.
Leaders can build trust in many ways. They can achieve it by working hard,
maintaining a constant message and/or being available to solve employees'
problems among others. By showing employees that they are fully committed to
achieving the vision, entrepreneurial leaders build trust and confidence in employees.
This in turn yields high employee satisfaction and commitment.
Effective communications is equally critical to successful leadership. If employees

are unclear about the company's vision, or they receive mixed messages over time,
they will be unable to focus all of their efforts on achieving the company's goals.
Conversely, by delineating the company's vision and goals, and reinforcing them over
time with the same message, the company's goals become engrained in its
employees.
In addition to building trust and effective communications, other keys to

entrepreneurial leadership include the following:
 Seeking self-improvement: a great leader always seeks to become even

better.
 Possessing technical skills: While the leader may not need to have the
greatest technical skills in their organizations, they need to be flexible enough
to lead the team.
 Accepting responsibility for actions: Leaders and companies always make
mistakes. Great leaders don't place blame on others.
 Making decisions: Good leaders must make good and timely decisions.
 Being a role model: A leader must set an example to employees and guide
them to excel.
The ability to effectively lead is a crucial factor in the success, or lack of it, in
entrepreneurial ventures. By understanding and embodying what it takes to lead
effectively, entrepreneurs can maximize their chances of success.
Nine characteristics of successful leaders:
“Satisfaction does not come with achievement, but with effort. Full effort is full victory.”
-Mahatma Gandhi
1: Self-Esteem
Realize your problem isn’t who you are, it’s what you have used to protect your
physical and emotional well being. It’s hiding who you are: a beautiful human being, a
wonderful source of awareness, knowledge, creativity, love and joy. Finding self-
confidence requires accepting responsibility for your own career, happiness, and life.
2: Need for Achievement

Need for achievement is defined as “the personal striving of individuals to attain goals
within their social environment.” Employees with high need for achievement are
potentially useful members of a company in that they desire to excel in competition,
tend to be independent, and have an interest in excellence.
3: Screening for Opportunity

Like all individuals, leaders screen incoming information to separate the useful from
the useless. However, successful entrepreneurs and business leaders screen
incoming information to constantly seek new growth opportunities. They act like gold
miners who must shift through tons of dirt to find those a few precious golden
nuggets.
4: Locus of Control
Successful leaders and entrepreneurs typically show a high internal locus of control.
Locus of control refers to an individual's generalized expectations concerning where
control over subsequent events resides. In other words, who or what is responsible
for what happens. In many different studies done over the years, those with a high
internal locus of control are more likely to experience success, than individuals who
are high on the external locus of control.
5: Goal Orientation
Businesses come and go, but those that last always share a common characteristic
with their founder—a relentless drive to accomplish goals. They understand what the
priorities are and continue to work toward that goal.
6: Optimism
Underlying successful entrepreneurial leadership is a boundless optimism that never
seems to end. When faced with a problem, they view it as a challenge. When faced
with a setback, they view it as a new direction, when told no, they say, “Maybe not
now, but I know you’ll change your mind later.”
7: Courage
This leadership characteristic requires a great deal of courage to build a company
from the ground up.
8: Tolerance of Ambiguity
Leaders often have to work in situations where there are no clear rules, where there
is always a risk that their efforts may fail, where the future (of the business, of the
industry, of the deal) may be uncertain. In short, they must be able to tolerate
ambiguity.
9: Strong Internal Motivation

The motivation that drives our behaviour comes from two sources: internal (intrinsic)
and external (extrinsic). Intrinsic factors include constructs like needs, desires,
motives, and will power. Extrinsic factors include any type of motivational influence
from the environment such as rewards and punishments. For entrepreneurs, the
most important motivational factor is the intrinsic one. Entrepreneurs keep going
despite the fact that employees tell them they are foolish, friends say they are
wasting their time, and family tells them to get a real job.
The good news is that many of these leadership characteristics are learnable. For
example, one can train the mind to recognize opportunity, optimism is a controllable
state of mind and even the need for achievement can be increased.
Discussion Questions
1. Can you think of other advice you would give to someone about to negotiate a
“business deal”?
2. Which are most important rules for a successful pitch of a business plan?
What aspects would you find most difficult?
3. How would you go about networking for your own business?
4. How could you develop an entrepreneurial team for your business?
5. Which are the most important characteristics of successful entrepreneurial
leader? Which characteristics do you think you already have? Which ones do
you think you need to develop further?
Bibliography:
Amabile M. Teresa (1997) “Motivating Creativity in Organizations”, California

Management Review No., 1 Fall
Barringer R. Bruce, Ireland R. Duane (2006) “Entrepreneurship, Successfully

Launching New Ventures”, Pearson, Prentice Hall, NY
Berginc J. (2004) »Inspiring Innovation – Entrepreneurial Approach« Innovative

Company - The Heart of Industrial Cluster, Cankarjev Dom, Ljubljana, February 27,
2004; presentation Toolmakers Cluster of Slovenia, editor dr. Brane Semolič;
Proceedings
Collins C.J., Lazier G. W. (1995) “Managing the Small to Mid-Sized Company”, Irwin
McGraw-Hill
Collins C.J., Lazier G.W. (1992) “Beyond Entrepreneurship”, Prentice Hall
EU Kosvet III Programme (2006) “Women Entrepreneurship in Rural Area Manual”,

Teachers guide
Filion, L.J. (2004) ‘Operators and visionaries: differences in the entrepreneurial and
managerial systems of two types of entrepreneurs’, International Journal of
Entrepreneurship and Small Business, 1, 1/2:35-55.
Filion, L.J. (2008) “Defining the Entrepreneur Complexity and Multi Dimensional
Systems”, working paper – 2008-03, HEC Montreal Canada
Filion, L.J. (1996). Différences dans les systèmes de gestion des propriétaires-
dirigeants, entrepreneurs et opérateurs de PME. Revue canadienne des sciences de
l’administration/Canadian Journal of Administrative Sciences, 13(4): 306-320.
Fischer R., W.L. Ury (1981) “Getting to Yes: Negotiantions Agreement Without Giving
In“; Houghton Miffin Company
Gerber M. (2005) “E Myth Mastery”, Harper Business
Gofatz A. and Mondejar R., (2005) “Business Creativity”, Palgrave Macmillan
Kawasaki G. (2004) “The Art of the Start”, Penguin Group, USA

Lumsdaine E., Binks Martin (2006) “Entrepreneurship from Creativity to Innovation”,

Traford Publishing U.K.
Proctor Tony (1999) “Creative Problem Solving”, Routledge, New York
Scottish Enterprise Foundation (2001) “Good Ideas Don’t Come out of the Blue, You
have to Work at them..”; brochure, Training Agency
Timmons A. Jeffry, Spinelli S. (2008) „New Venture Creation: Entrepreneurship for

the 21st Century: Entrepreneurship for the 21st Century”, McGraw Hill Companies;
New edition
Exploring Web sources:
http://sbinformation.about.com/cs/marketing/a/a040603.htm
http://www.altika.com/leadership/teambld.htm
http://www.inc.com
http://www.entrepreneur.com
http://www.fastcompany.com
http://www.successmagazine.com
http://articles.bplans.com/starting-a-business/estimating-realistic-start-up-
costs/62#ixzz0kmhihMmJ
http://www.entrepreneur.com/encyclopedia/term/82266.html
Entrepreneurs GLOSSARY
Acquisition - the act of contracting or assuming or acquiring possession of

something, in this case generally another company; something acquired
Angel investor- an individual who provides capital to one or more startup
companies. The individual is usually affluent or has a personal stake in the success
of the venture. Such investments are characterized by high levels of risk and a
potentially large return on the investment.
Assignment- the instrument by which a claim or right or interest or property is
transferred from one person to another.
Benchmark- a standard by which something can be measured or judged.
Brand- means a product's name, company name, or "mark;" the way the product or
company is perceived by the marketplace; it’s the act of building a unique reputation
for a product or company.
Business Plan- a proposal written to attract capital investment by designing a
blueprint for planned profitable growth.
Capital- wealth in the form of money or property owned by a person or business.
Cash flow- cash flow shows if, and when, the company will run out of cash essential
to run the business. It allows the entrepreneur to take action before problems occur
and even do “what if” calculations before taking on new projects. The cash flow is a
12-month projection that forecasts the receipts and disbursements for your business.
Cause-and-effect relationship- an association between actions or events such that
one or more is the result of the other or others.
Corporation- a type of business which has been established in accordance with
certain laws and which has specific regulations regarding taxation and the reporting
of business activities;
CE- stands for "Conformite Europeen," and represents a registration required of
products sold in the European Union countries.
Commercialization- the process whereby the results of scientific research or basic
technology is developed into products or services which can then be sold on the.
Competition- the act of competing as for profit or a prize; a business situation in
which two parties struggle to gain customers; also refers to those companies with
which a firm competes.
Compliance- acting according to certain accepted standards.
Contract- a binding agreement between two or more persons that is enforceable by
law.
Corporate entrepreneurship- Corporate entrepreneurship is the process whereby
an individual or a group of individuals in association with existing organization, create
a new organization or instigate renewal or innovation within that organization.
Corporation- The most common form of business organization, and one which is
chartered by a state and given many legal rights as an entity separate from
its owners.
Customer- someone who pays for goods or services.
Critical factors- extremely important issues. Often used to mean the factors which
make the difference between success or failure.
Culture (business)- Etiquette is a code of behaviour that delineates expectations for
social behaviour according to contemporary conventional norms within a society and
company.
Debt- money or goods or services owed by one person to another.
Due diligence- investigation and analysis a prudent entrepreneur, owner, executive,
or lender does in making business decisions; an internal audit of a target firm by an
acquiring firm.
Economic development- the development of wealth in countries or regions for the
well-being of their inhabitants;
Ecosystem for Start-ups - A Start-up ecosystem is formed by people, startups in
their various stages and various types of organizations in a location (physical or
virtual), interacting as a system to create and scale new start-up companies.
Elevator Pitch- an extremely concise description of an entrepreneur's idea.
End-user- the person who actually uses a product, whether or not they are the one
who actually purchased the product.
Entrepreneur- a person who organizes, operates, and assumes the risk for a
business venture.
Equity- in finance, you can think of equity as ownership in any asset after all debts
associated with that asset are paid off. For example, a car or house with no
outstanding debt is considered the owner's equity because he or she can readily sell
the item for cash.
Executive Summary- synopsis of the key points of a business plan or proposal.
Exit strategy- the way in which an investor plans to close out an investment. For
example, a venture capitalist or angel investor may look to an Initial Public Offering
(IPO) or acquisition as his/her exit strategy; also called "liquidity event."
Feasibility analysis – a preliminary evaluation of a business idea to determine if it is
worth pursuing.
Financial projections- a written report which quantitatively describes the financial
expectations of a start-up company.
Financial statement- a written report which quantitatively describes the financial
health of a company. This includes an income statement and a balance sheet, and
often also includes a cash flow statement. Financial statements are usually compiled
on a quarterly and annual basis.
Fixed costs- the costs that a company incurs in operating a business whether it sells
something or not (e.g. overhead costs).
Follow-on financing- an offering of shares in a company after a company has

received an initial venture investment or public offering; also called subsequent
offering.
Franchise- a form of business organization in which a firm which already has a
successful product or service (the franchisor) enters into a continuing contractual
relationship with other businesses (franchisees) operating under the
franchisor's trade name and usually with the franchisor's guidance, in exchange for
a fee.
Funding- financial resources provided to make some project possible.
Gazelles- fast-growth young technology based company.
Global strategy- an international expansion strategy in which firms compete for
market share by using the same basic approach in all foreign markets.
Goodwill- is the value of the intangible assets (such as the regular clients or the
established reputation) of a business.
Grant- project-based funding issued by a government agency or philanthropic
foundation for scientific research or other specific activities for the public benefit.
Home Based Business- a home based business is a business whose primary office
is in the owner's home. The business can be of any size or any type as long as the
office itself is located in a home.
Human resources- the field of business concerned with recruiting and managing
employees; all the people who work in a business or organization, considered as a
whole.
Industry standards- a basis for comparison or a reference point against which other
things can be evaluated which is generally accepted by a particular industry or group.
Initial public offering (IPO)- a company's first sale of stock to the public.
Integrated- formed into a whole or introduced into another entity.
Intellectual property (IP)-intangible property that is the result of creativity. Types of
Intellectual Property include: Patents, Trade Secrets, Know-how, Trademarks,
Copyrights.
Intrapreneur- a intrapreneur is one who takes on entrepreneur-like activities and
roles within a large corporate environment.
Investor- someone who commits capital in order to gain financial returns.
Lease- a written agreement in which the owner of a piece of property allows an
individual or business to use the property for a specified period of time in exchange
for regular payments.
Legal entity- a person or organization that can legally enter into a contract, and may
therefore be sued for failure to comply with the terms of the contract; a corporation is
an example of a legal business entity.
Liability- the state of being legally obliged and responsible; an obligation to pay
money to another party.
Licence- a legal document giving official permission to do something.
Licensee- someone to whom a license is granted.

Licensor- a person who gives another a license, particularly a private party doing so,
such as a business giving someone a license to sell its product.
Limited partnership- a business organization with one or more general partners,
who manage the business and assume legal debts and obligations. Limited partners
also enjoy rights to the partnership's cash flow, but are not liable for company
obligations.
Liquidity-the ability of an asset to be converted into cash quickly and without any
price discount.
Management team- top executives of a company.
Margins- a financial term referring to the value of net sales minus the cost of goods
and services sold.
Market- the world of commercial activity within which goods and services are bought
and sold.
Marketing mix- a particular blend of marketing strategies that a company employs to
promote its products and services.
Market share- the percentage of sales a company captures for a particular product
line; the percentage of total industry sales that a particular company controls.
Merger- a joining together of two previously separate enterprises. A true merger in
the legal sense occurs when both businesses dissolve and move their assets and
liabilities into a newly created entity.
Milestone- a significant event in a project.
New economy- sectors of economic activity that are knowledge driven, such as
information technology (IT) or telecommunications.
Niche market- part of a larger market segment that represents a narrow group of
customers with similar interests.
Non-Disclosure Agreement- (or NDA), is an agreement that two parties sign in
order to protect the privacy of ideas and prevent the disclosure of those ideas to third
parties.
Offering- the making available of a new securities issue to the public through an
underwriting; also called a “public offering”.
Order fulfillment- systems necessary to deliver a sales order. Very vague but is it
necessary?
Original Equipment Manufacturer (OEM)- a producer that provides a product to its
customers, who proceed to modify or bundle it before distributing it to their
customers.
Outsourcing- purchasing standard operational services from another business.
Outsourced services typically including accounting, payroll, IT, advertising, and
more.
Patent rights- the right granted by a patent; especially the exclusive right to an
invention.
Potential customer- someone who could potentially purchase goods or services.

Premium- having or reflecting superior quality or value; payment for insurance.
Product- commodities offered for sale; an artifact that has been created by someone
or some process; a consequence of someone's efforts or of a particular set of
circumstances.
Product certification- a document attesting to the truth of certain stated facts;
validating the authenticity of something.
Projections- a prediction made by extrapolating from past observations; financial
projections predicting future performance.
Proof of concept- evidence that demonstrates that a business model or idea is
feasible.
Proposal- a formal description of the creation, modification or termination of a
contract. A proposal may serve as the blueprint for a future agreement and may be
accepted or rejected by the entity or entities that receive it.
Prototype- a model, mockup, or preliminary assembly of a new product.
Public Relations (PR)- the deliberate promotion of a specific image for a business.
Often confused with publicity which is simply the materials used in a specific part of a
public relations effort.
Quantitative- expressible as a quantity or relating to or susceptible of measurement.
Rate of growth- the rate of increase in size per unit over time.
Reference customers- purchasers of a product or service whose background or
reputation is widely known and generally valued.
Research and development R&D- a process of systematic investigation to establish
facts, followed by the act of improving by expanding or enlarging or refining.
Regulations- rules specifying the appropriate behavior of agencies, organizations or
individuals in industry or government activities.
Return On Investment- (or ROI), is the amount of profit (return) based on the
amount of resources (funds) used to produce it.
Revenue- the entire amount of income before any deductions are made.
Royalties- payments to the holder of a patent or copyright or resource for the right to
use their property.
Sales channel-a means of access to customers, such as through the internet, via a
wholesale network, or via door to door selling.
Seed Money- the first round of investment capital for a start-up business.
Self assessment- analysis of oneself or one’s own performance in relation to an
objective standard; calculation of one’s own tax liability.
Shareholder- someone who holds shares of stock in a corporation.
Social entrepreneurship- a social entrepreneur is someone who recognizes a social
problem and uses entrepreneurial principles to organize, create, and manage a
venture to make social change. Social entrepreneurs are most commonly associated
with the voluntary and not-for-profit sectors.
Sole proprietorship- a small business owned by a single owner and not

incorporated; a sole proprietor pays no corporate income tax but has unlimited
liability for business debts and obligations.
Spin off- a form of corporate divestiture that results in a business unit or division
becoming an independent company.
Stakeholder- any party that has an interest (or "stake") in a firm or organization.
Start Up- is defined as a new business that has yet to achieve a scalable business
and sustainable positive cash flow or has been in operation for only a limited period
of time. A Start-up is an entrepreneurial venture which is typically a newly emerged,
fast-growing business that aims to meet a marketplace need by developing or
offering an innovative product, process or service.
Strategic alliance- a collaboration between two or more companies designed to
achieve some corporate objective. May include licensing agreements, management
contracts, or joint ventures.
Strategic planning- a tool used in the process of determining how to achieve the
company’s long term goals.
Strategic investor - a company that commits capital in order to gain financial
returns, generally in a situation where the outcomes will produce synergistic business
or product development returns as well. (Also known as a “corporate investor.”)
Technology commercialization- bringing scientific knowledge into product form
such that it can be offered for sale or delivery on the market in any other form.
Technology transfer- movement of technology or knowledge, often from the
laboratory into commercial enterprise.
Trademark- a form of legal protection for words, names, symbols, sounds, or colours
that distinguish goods and services. Trademarks, unlike patents, can be renewed
forever as long as they are being used in business.
Trade association- a group of people, usually within a common industry or business
community, who are united in a single organization for the purpose of enhancing their
industry or their business interests.
Turnaround- is defined as a business or business unit that is struggling or on the
verge of failing that has engaged in substantial change or redesign to correct the
problems.
Validating- serving to support or corroborate.
Value- the quality (positive or negative) that renders something desirable or valuable;
the amount (of money or goods or services) that is considered to be a fair equivalent
for something else.
Valuation- the determination of the value of a company's stock based on earnings
and the market value of assets; appraisal.
VAT (Value Added Tax)- is a sales tax on “value added”. It works by being charged
on the sale price of goods and services whether purchased by intermediate or final
consumers. However intermediate parties can reclaim VAT paid on their inputs, thus
ensuring that the net VAT they pay is in effect based on the value added at that
particular stage of the process.
Vendor- someone who promotes or exchanges goods or services for money.
Venture- a commercial undertaking that risks a loss but promises a profit; an
investment that is very risky but could yield great profits.
Venture capitalist (VC) - a speculator who makes money available for innovative
projects.
Warranty- a written assurance that some product or service will be provided or will
meet certain specifications.
Window of opportunity- a very narrow time frame in which to take advantage of a
given situation.
Working capital- assets available for use in the production of further assets.
Work plan- a series of steps to be carried out or goals to be accomplished.
Source: www.onelook.com
Thank you for reading this manual! This manual is an

investment of your time and passion to change your life for
your effort and to successfully develop your Start-up!

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This Project is co-financed by the European Union

and the Republic of Turkey

YOUNG ENTREPRENEURSHIP DEVELOPMENT

Entrepreneurship Skills for Start-up

Succeed in Establishing and

Innovative Start-ups for Young Entrepreneurs

Entrepreneurship is seen as a way to increase economic growth, competitiveness

In the coming years, we hope to see a stronger spirit of entrepreneurship in Turkey

Jordan Berginc PhD

For more information, please visit www.girisimci.ankaraka.org.tr

Contents, Figures, Tables …………

Part one »Entrepreneurship & Entrepreneurial process«

Part two The Start-up process»From idea to Business opportunity«

Part three »Business Planning«

Part four »Marketing Analyses and Marketing Strategy«

Part five »SWOT Analyses and Operational Plan for Your

Part six »Finance for Entrepreneurs«

Part seven »Entrepreneurial Skills and Attitudes«

Table 1: Main factors used to define the term »entrepreneur«

How can this manual benefit you?

What was the purpose in writing this manual?

How will you learn from this manual?

Part 7 deals with professional entrepreneurial skills and attitudes as well as

Welcome to the new entrepreneurial journey!

Part one »Entrepreneurship & Entrepreneurial process«

What you can learn from this chapter:

Why Become an Entrepreneur?

(1) to be independent, a desire that can be satisfied by owning

(7) to value your own skills and strenghts to raise confidency,

To become an entrepreneur is really a long journey in the land of personal

1. Is this your first venture?

In entrepreneurship is important to make a meaning

- Are you ready to work hard for your business idea?

- To fulfill your dreams with your idea,

If you want to succeed in your business you need:

"Entrepreneurship is the process of identifying, developing, and bringing a vision to

“Entrepreneurship refers to an individual’s ability to turn ideas into action. It includes

The terms entrepreneur and entrepreneurship can be applied to a surprisingly

“Entrepreneurs are dreamers who do” or

Table 1: Main factors used to define the term »entrepreneur«

Any definition of entrepreneurs and entrepreneurship should include at least these

Table 2: Factors that influence the decision for or against an

There are key personal characteristics that make people succeed as

Successful entrepreneurs seek outside help to supplement their skills, knowledge

What are characteristics of young entrepreneurs?

- Young entrepreneurs often show an inclination for new venture creation in

Key characteristics of young entrepreneurs:

A recent survey in the US suggest that young people often have:

1. A sense of integrity for customers and team members;

Among major obstacles faced by young entrepreneurs in Turkey is the lack of

Young Entrepreneurs Needs

Table 3: Basic types of entrepreneurs

Left-brain thinking Right-brain thinking

Of course most entrepreneurs (or entrepreneurial teams) need a mix of these

The differences between “innovators,” “entrepreneurs” and “managers”

Table 4: Visionary process

Vision Statement question - "What is our preferred future?"

Here is the example of Microsoft:

“A personal computer in every home, running Microsoft software.”

A vision is a statement about what your organization wants to become. All

Mission Statement - "What business are we in?"

Mission statements samples:

" Values Statement - "What do we stand for?"