Course: Entrepreneurship

Starting Your Enterprise

Outcomes
•How to prepare a 30-second message for “selling” your idea
•How to give a formal team presentation
•How to write a business plan
•Where to look for potential funding
IDEA SELLING
Idea “selling”

1.Be prepared to highlight the business opportunity

2.Have a working prototype
3.Have patent protection
4.Give a short but effective opening presentation

Preparation
o Message: verbal or written
•Telephone requests and message left with staff members
•Memos, letters, email, faxes
•Abstracts for proposals and scholarly papers
•Formal presentations
•Interviews
•Social situations with superiors
•Chance meetings

Elevator pitch
elevator pitch, elevator speech, or elevator statement
is a short summary used to quickly and simply define a person, profession, product, service,
organization or event and its value proposition.
Oral presentation

•Style and appearance

•Acting
•Mode of speaking
•PowerPoint
Written message

Formal presentation
•Last 15-30 minutes in length
•Rehearse
•Know how to operate the audio-visual equipment

WRITING A BUSINESS PLAN

Business plan benefits

•Yourself
•Potential lenders and investors
•Potential employees
•Potential customers
Business plan
•What is it that you expect to produce or provide, and why would anyone want to buy it?
•Why would anyone want to buy it from you and not your competition and why would they buy
now?
•How do you expect to make a profit?

Common mistakes
•Exaggerate
•Ignore obstacles
•Fail to prove your personal commitment
•Fail to prove your competence
Business plan components
•Front matter
•Description of the business
•Financial information
•Supporting documentation
Front matter
•Cover sheet
•Statement of purpose
•Table of contents

Description of the business

•Executive summary
•Background
•Description of your business
•Business strategy
•Management
•Operational plan and procedures
•Marketing plan
•Risk assessment

Financial information
•Overview of the financial plan
•Sources and uses of funding
•Capital equipment
•Balance sheet
•Estimate of your start up costs
•Break-even analysis
•Income projections
•Cash flow projections
•Exit strategy
•Schedule of milestones and important events
Supporting documentation
•Tax policy
•Personal financial statements
•A copy of any relevant contracts
•A copy of the resumes of key personnel
•Copies of letters of intent from suppliers
•Other documents

FINANCIAL SUPPORT
Funding mechanism

Internal financing

•Short term bank debt

•Customers upfront payment
•Main funding sources
•Founder’s personal assets
•Company cash flow
•Income from second job

External financing
Why internal financing is not the best option for startup business?

Constraints involved in external financing

•Entrepreneur:
•Access to finance on agreeable terms
•External provider:
•Risk and return

Equity finance
•Venture capitalists
•Institutional providers of external equity finance
•Business angels
•More informal source of external equity funding
•Government grants
•Government grants at regional, state or national level

Tips for gaining funding from venture capitalists

•Prepare a very clear and persuasive business plan

•Show annual internal rate of return of at least 35%

•Be prepared to share at least 30% of your business

Tips for gaining funding from business angels

•Provide a clear business plan
•Show significant annual internal rates of return of >20%
•Be prepared to share a significant portion of the business
•If business angels are family or friends, have a formal contract

Tips for gaining funding from government grants

•Seek advice as to evaluation criteria that will be applied to the grant application and the
monitoring activity and performance levels
•Expect a large amount of paperwork

Tips for gaining funding from bank loans

•Ascertain the precise information requirements
•Be prepared to offer regular monitoring information about the business and the project’s
performance
•Be prepared to develop a clear business plan with explicit monitoring structures for obtaining
business performance information
•Be prepared to forewarn the lending agencies of changing future financial requirements
•Be prepared to shop around at different banks to get the best deal