ADVANCED

ENTREPRENEURSHIP

1
 6ZC223 – ADVANCED ENTREPRENEURSHIP

2  Unit – I:  Orientation to Growth: Stages of a Startup Company,

Infant Mortality of Startup’s, Sustaining the Phase of Launching,
Entrepreneurial Propensity, Locus of Control, First Generation
Entrepreneur, Growth Opportunities, Diversification and Expansion
of Business, Growth Assessment, SWOT Analysis, Growth strategies
adopted by ideal startup, Ansoff Growth Matrix, Six ways of
Adjacencies for Growth. Case Study of Nike.

 Unit – II: Expanding Customer Base: Customer Segmentation:

Division of Market into Segments, Evaluating the profitability of
Segments. Developing Business Model in relation to the current
customers. Changing customer segments and revisit of business
models. Evaluation of Business Models for new customer segments.
Critical evaluation of business models Old Vs New. Risk of changing
the Business Models. Analyzing the scalability of business model
using Break Even Analysis.
  Unit – III: Traction of Business: Meaning of Business
3 Traction, Business Traction Process, and Metrics to
Measure Business Traction, Customer Retention, Customer
Churning, Relationship Business, Customer Life Time
Value, Identifying the unnecessary moves in business
traction. Traction of Business using Bull’s-eye framework.
Measuring the effectiveness of selected channels.
Budgeting and Planning.

 Unit – IV:Growing Revenues: Identifying Growing

Revenues, stabilizing growing revenues, Developing
additional revenues (licensing and franchising). Exploring
New channels and Partnerships for growth revenues.
Evaluating the Growth streams based on longevity. Lean
Startup Canvas.
  Unit – V: Sales Planning & Financial Modeling:
4 Understanding the consumer buying decision behavior,
setting sales plans, sales targets, Art of pitching the sales,
Selling process, Building a professional sales team , Sales
Management. Price Sensitivity of the market.
Optimization of cost and operational expenses. Financial
modeling of the Venture, Assessment of competitors and
Peer’s financial models.

 Unit – VI: Support System: Legal Management in

Startups: Issues and Legal constraints effecting the
business. Need for professional services: Legal
consultancy and Accounting. Need for proper
documentation for fool-proof administration of business.
Intellectual Property rights and their importance. Business
Mentoring, role of experts in managing business.
 Books Recommended
5  Robert D Hisrich, Michael P Peters, Dean A Shepherd,
Entrepreneurship, Sixth Edition, New Delhi, 2006.
 Thomas W. Zimmerer, Norman M. Scarborough, Essentials of
Entrepreneurship And Small Business Management, Fourth Edition,
Pearson, New Delhi, 2006
 Alfred E. Osborne, Entrepreneur’s Toolkit, Harvard Business
Essentials, HBS Press, USA, 2005.
 Madhurima Lall, Shikha Sahai, Entrepreneurship, Excel Books, First
Edition, New Delhi, 2006.
 S.S. Khanka, Entrepreneurial Development, S. Chand and Company
Limited, New Delhi, 2007.
 H. Nandan, Fundamentals of Entrepreneurship, Prentice Hall of India,
First Edition, New Delhi, 2007.
 S.R. Bhowmik, M. Bhowmik, Entrepreneurship-A tool for Economic
Growth And A key to Business Success, New Age International
Publishers, First Edition,  (formerly Wiley Eastern Limited), New
Delhi, 2007
 Unit – I: Orientation to Growth
6
Stages of a Startup
Monitoring
Initiation Planning Execution
and Control

Basically there are four stages from converting an idea into a

real product –
1. Initiation - First you need to have an idea and evaluate it
with market acceptance, competition and penetration.
 First you need to check the idea acceptance in the market
by connecting you real users.
 Then you need to check the competition available in the
market.
 If big players are working in same domain, it would be
difficult for you to penetrate the market.
 2. Planning - Once the idea is ready, you need to make the
7 framework to execute it. The relevant verticals of
planning will depend on the type of product/ service that
you have in your mind.
 Scope of work needs to be aligned with resources
available.
 Strategies for customer acquisition needs to be defined.

3. Execution - Execution is the actual implementation of

planned activities.

4. Monitoring and Control - With progress of execution,

you need to check whether things are moving in right
direction or not and alter the plan as per requirement.
 Sources of Startup Ideas
8

Personal Interest/Hobby
Start up Ideas Family Business
6%
16%
4 6
11 5
Suggestion Friends/Relatives
7% 5%
6

Education/Courses
6%
7
Prior Work
Experience
Chance Happening 45%
11% 45
16
Source: Data developed and provided
by the National Federation of
Other Independent Business Foundation and
sponsored by American Express Travel
4% Related Services Company, Inc.
 Lifecycle of a Startup
9
 Conception / Invention
 Seed Stage
 Formation /  Launch
incorporation  Growth Stage
 Market research  Expansion Phase
 Product research  Exit
 Early Stage  Post-Exit
 Product development
 Team formation
 Infrastructure build-
out
 Infant Mortality of Startup’s
10
 Some of the reason why startups do not make it are
outlined are as follows:

 Business idea is flawed: Thousands of people have

developed and launched their “apps” on the Apple or
Android platform and most disappear after some time
because they have not been able to gain the critical mass
required to become self-sustaining
Examples: E - Commerce platforms for selling medicines,
piracy of music and videos.
 Funding is insufficient: A common reason given for
pulling down shutters is “we never had enough money in
the bank!”
  Burn rate is too high: Once the company starts to earn
11 from its business, burn can be classified as spend minus
the earnings. The longer the period of the burn, the more
difficult it is to raise new funding.
 Competitive landscape: E-Commerce, music streaming,
logistics boom started to happen dozens of players
emerged in the same space, Later they had no option –
either to sell out to their larger rival or to shut shop.
 Weak management teams: Weak or in-disciplined
management teams have weak execution and their
insecurity perpetuates the challenge faced by the startup.
 The million dollar reason for why most startups fail
because while they have incredible ideas and technology,
they have not invested enough time and effort in
understanding how they will reach the customer.
 Launching Your Startup
12

 Understanding Venture Financing

 A Primer on Venture Capital
 Financing Your Venture
 Other Startup Considerations

 Raising Venture Capital

 The Transition from Idea to Execution
 Business Planning
 Sustaining the Phase of Launching
13
 But the foundation stage of a new venture is critical
because it’s the stage when entrepreneurs must define the
specific ingredients that make their product or service
competitive—the stage where they determine a target
market that will use that product or service.

 Here are a few steps that will help during the initial
phase:

1. Think Big: Start by brainstorming a wide array of market

opportunities, including the long shots, because this will
help to expand possibilities and unearth hidden
opportunities.
 2. Talk to every potential customer: Go to trade shows and
14 conferences. Connect with alumni. Start with the most
immediate circle—family, friends, and neighbors. Focus
on listening to their feedback and nonverbal
communication.
3. Don’t limit yourself at the start: You may have a
preconceived idea of your market, but you may be wrong.
For Example: “Instead of telling a potential customer you
want to create a social network for teachers, students, and
parents to improve communication, tell them you want to
improve education using technology … then ask yourself
why you are passionate about the idea.
4. List Potential Industries: Then list who might benefit
from your idea in each industry. This will help to identify
your end user—the ultimate customer who will buy and
loyally use your product or service.
 5. List all potential end users and divide them into
15 categories:
 Using the education / technology example, define
your end users. Teachers, administrators, parents,
and students are all potential end users.
 But age, location, and subject can further subdivide
each category.
 Identify the daily tasks of each group of end users
and ask yourself why a particular end user would
buy a product in a specific industry segment.
 Entrepreneurial Propensity
16
 Entrepreneurial Propensity is defined as
Individual’s favorable predisposition
(Inclination or tendency) towards new venture
creation.

 Individual Decision to start a business is

influenced by the personality of the individual
who want to become an entrepreneur and start
up environment
 Entrepreneurial Propensity Model
17
 Locus of Control
18

1. Internal locus of control is defined as the personal

belief that one has influence over outcomes through
ability, effort, or skills, whereas external locus of
control is the belief that external forces control
outcomes

2. External locus of control can be explained by

people’s beliefs about powerful others that influence
their lives, as well as the influence of blind fate, luck
or chance.
 First Generation Entrepreneur
19
 First Generation Entrepreneurs is a synonym for
New Entrepreneurs. They are actually the wealth
creators and fresh leaders.
 First Generation Entrepreneurs’ will have to face
hurdles and that’s obvious.
 They are the fellows who continually asks
themselves ‘How to stay motivated throughout the
day?’,
 ‘How to overtake/surpass the competitors?’,
 ‘How to be more productive?’ and eventually ‘the
question of all questions ‘How to be successful?’.
  A First Generation Entrepreneurs (FGE) has an ideology to
20 win the long road race. Some of these lineaments are Belief,
Passion, Networking, Optimism, Startup Capital and Partner
(Co-Founder).
 They can also compete ferociously by standing against those
businesses who follow the traditional business norms.
 They are in cooking startup, logistics occupation education,
healthcare, retail, e-commerce and mobile communication
space, besides many others.
 Kick starting your journey to being a successful entrepreneur
with these habits: Read a lot, set short-term and long-term
goals, connecting with positive people, being humble.
 E.g: Walt Disney original character creation was Oswald the
Lucky Rabbit. When Walt walked out on Universal Pictures
after getting a pay cut, he needed to create a replacement,
which is how Mickey Mouse came into being.
 Growth Opportunities
21
 Alan Lewis and Dan McKone in their new book,
Edge Strategy: A Mindset for Profitable Growth. Gave
the first five steps to edge opportunities for growth in your
own business
1. Understand your customers. You might think you know
your customers inside and out, The point is, your current
segments are based on the customers whose needs you're
already meeting.
 You need to rethink your segments around your
customers' unmet needs--the needs you'd be uniquely
positioned to meet, once you innovate properly around
your core assets.
 2. Slice and dice your offerings in creative, profitable,
22 customer-centric ways. Sometimes, the key to unlocking
new opportunities for profit doesn't require changing what
you offer, per se. It requires changing how you charge for
it.

3. Map the customer journey. "We're more than just a

grocery store; we're a restaurant and a premier brand.“

4. Assess your foundational assets. As laborious as it may

sound, the first thing you need to do is write down an
inventory of all your assets. Not just the hard stuff
(equipment, buildings), but the soft stuff (your culture,
your institutional knowledge) and the relationships (access
to suppliers, distributors, capital).
23 5. Prioritize your edge opportunities. If you've taken the
first four steps, you'll now have a list of promising
opportunities. Which one(s) do you pursue first?

Evaluate each opportunity by measurable criteria:

 Profit potential,
 Feasibility of implementation,
 Degree of risk,
 Time to delivery. 
 Diversification and Expansion of
24 Business

 Diversification can be about developing new

products/services, exploring new markets, and taking new
risks. The perception of risk comes down to a way to
maintain a measurement of business stability.
 Considering diversification is like the finance you have a
backup plan to either relaunch or restrict loss in the portfolio
until you find your footing again.
 The cost of ignoring this can be severe, Blockbuster and
Video Ezy As the world went digital, these companies did
not and failed to claim their place in the new order. They
could have transitioned and become the “Netflix” of the
entertainment industry.
  Business expansion is growth by increasing the number
25 of collection points your customers can buy products and
services from you.
 All successful business start-ups face the question of
handling business expansion and growth.
 Business expansion is a stage in a company’s cycle that
is fraught with both opportunities and risks.
 The growth of the business can carry with it an increase
in financial fortune for owners and increased pressure.
 Expansion is usually the ultimate endorsement of the
business’s initial concept, and the subsequent effort to
bring that vision to fruition.
 The key is to have the ambition that you had when you
first launched your business and use the same vigor to
launch the next stage of your business.
 Growth Assessment
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 Five Stages Of Growth Assessment

27 1. Get Product:
 Get to problem or solution fit
 Build your MVP, Don’t be too minimum
 Conduct problem or solution fit interviews like crazy
 Define and refine your MVP
2. MVP – Not Too “M”
 Learn what people want
 Prove demand / need, Keep risk or burn low
 Conduct ongoing user feedback
 Identify sustainable retention rates
 Growth - transition to growth – product market fit
 Assemble your team “ Everyone is responsible for growth”
 3. Check growth process:
28  Ideate – unbridled idea generation
 Prioritize – Focus on impact
 Test – Rapid Experimentation
 Analysis – Applicable Learning
4. Channel / Product Fit
 Identify your customers keep on searching
 Seek out high impact opportunities
 Hire channel specialists to ramp growth
5.Maturity:
 Identify new channels
 Check for the horizontal and vertical expansion
opportunities.
 SWOT ANALYSIS
29

 SWOT Analysis is a strategic planning method used to

evaluate the Strengths, Weaknesses, Opportunities, and
Threats involved in a business venture or business startup.
The four different factors in the SWOT analysis are defined as:
 Strengths: Attributes of the organization that are helpful to
achieving the objective
 Weaknesses: Attributes of the organization that are harmful
to achieving the objective
 Opportunities: External conditions that are helpful to
achieving the objective
 Threats: External conditions that could do damage to the
business’s performance
 Strength Weakness Opportunities Threats
Patents Lack of patent An unfilled Negative socio-
protection customer need cultural changes
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Strong brand names A weak brand name Loosening of Technological
regulations changes that threaten
to make a product
obsolete
Good reputation among Poor reputation A growing Threats of changes in
customers among customers market segment laws and regulations
Cost advantages from High cost structure Technological Shifts in consumer
proprietary know-how change tastes away from the
business’s products
Advantageous Lack of access to Socio-cultural Increased trade
manufacturing capabilities good raw materials changes barriers
or natural resources
Superior personnel Lack of access to
key distribution
channels
Favorable access to
distribution networks
Advantages in promotion,
such as advertising, public
relations, word of mouth
 Growth strategies adopted by ideal startup
31 1. Establish a value proposition:
Identify why customers come to you for a product or service.
What makes you relevant, differentiated and credible?

2. Identify your ideal customer.

Who is that audience?
Is that audience your ideal customer?

3. Define your key indicators.

Identify which key indicators affect the growth of your
business, then dedicate time and money to those areas
 4. Verify your revenue streams: Some great ideas or cool
32 products don’t necessarily have revenue streams
attached. Be careful to isolate and understand the
difference.
5. Look to your competition: Look toward similar
businesses that are growing in new, unique ways to
inform your growth strategy.
6. Focus on your strengths: Focusing on your strengths --
rather than trying to improve your weaknesses -- can
help you establish growth strategies.
7. Invest in talent: Your employees have direct contact
with your customers, so you need to hire people who are
motivated and inspired by your company’s value
proposition.
 Ansoff Growth Matrix
33  The matrix was developed by applied mathematician and
business manager H. Igor Ansoff in 1957.
 The Ansoff Matrix’s helped many marketers and leaders
understand the risks of growing their business.
  The four strategies of the Ansoff Matrix are:
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1. Market Penetration: It focuses on increasing sales of
existing products to an existing market.
2. Product Development: It focuses on introducing new
products to an existing market.
3. Market Development: It strategy focuses on entering a
new market using existing products.
4. Diversification: It focuses on entering a new market
with the introduction of new products.
 Of the four strategies, market penetration is the least risky
while diversification is the riskiest.
 Thus Ansoff Matrix also called as the Product / Market
Expansion Grid, is a tool used by firms to analyze and
plan their strategies for growth.
 Six ways of Adjacencies for Growth
35  There were six types of adjacencies that successful companies
used to outperform their competitors.
1. Expand along the value chain. This is one of the most
difficult adjacency moves.
De Beers extended its diamond business from wholesaling into
retailing.
2. Grow new products and services.
IBM moved into global services, which now constitutes 50% of
the company’s revenue and pretax profits.
3. Use new distribution channels.
EAS, a leading sports supplement company, made minor
changes in formulation, packaging, and celebrity sponsorship
of its Myoplex sports bar and moved from a niche position in
specialty nutrition stores to become the leader in its category,
selling to Wal-Mart.
 4. Enter new geographies.
36 Vodafone expanded from the UK to Europe, the United
States, Germany, and Japan.
5. Address new customer segments, often by modifying a
proven product or technology.
Charles Schwab expanded its advisory services for discount
brokerage customers to target high-net-worth individuals.
6. Move into the “white space” with a new business built
around a strong capability.
This is the rarest and most difficult adjacency move to pull
off.
American Airlines created the Sabre reservation system, a
spin-off now worth more than the airline itself. Sabre, in
turn, went on to create a new business adjacency of its own
in the online travel agent Travelocity.
 Case Study of Nike

37  Nike Over View •Nike is the Ancient Greek goddess of

victory “It is one of the most recognized symbols in the
world – The Swoosh. Simple. Fluid. Fast
 Nike is the world’s largest designer, marketer, and
distributor of sports-related apparel, equipment ,
accessories, athletic footwear and athletic apparel.
 Nike was founded in 1964 by Bill Bowerman and Phil
Knight and opened its first store in Santa Monica,
California, in 1966.
 The company introduced its Nike brand of shoes in 1972.
The company officially renamed itself Nike in 1978. BY
1980, the company had reached a 50% market share in
the U.S athletic shoe market and had become a publicly
traded company.
  By 1985 new era by introduction of a Michael Jordan-
endorsed basketball shoe. By end of 1988 Nike to the top
38
of industry. By 1988 started to began diversify with
purchase Cole Haan shoes and aquire other brands “ Nike
Over View cont. Bauer in 1995, Hurley in 2002, Converse
in 2003, Starter in 2004, Umbro in 2008
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