ICT302 – Entrepreneurship

and Innovation
Week 5
Lectorial – Business Planning

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 Agenda

Previous Topics For

Introduction
Week’s Topic This Week

Review
Keywords
Questions

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 Previous Week’s Topics

After completing this chapter you will be able to:

• Describe what a business model is
• Analyse existing and proposed businesses to determine what
business models they are applying and what business models they plan
to apply
• Develop and analyse alternative business models for new
entrepreneurial ventures

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 Introductions

Dr Khimji Vaghjiani Unit Coordinator

Email:
Consultation Time:
Khimji.v@sistc.nsw.edu.au

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 The Business Model Canvas

• The Business Model Canvas tool is based on the premise that a start-
up is something quite different than an ongoing venture. A start-up
should not be viewed as a smaller version of a company because
starting-up a company requires very different skills than operating
one does. A start-up that is still a start-up after some time—maybe
after a couple of years for some kinds of start-ups—is actually a failed
enterprise since it hasn’t converted into an ongoing venture
(Osterwalder et al., 2010).
• The business model canvas is made up of nine parts that, together,
end up describing the business model.

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 The Business Model Canvas

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 Business Model Canvas

The idea is to keep These interactions

adding descriptions or should not only be done
plans to the nine by hired sales people, at
This model is partly
components to create least until the business
based on the idea that
the initial business model has evolved into
the owner should be the
model and then to one that works, which
one interacting with
actually do the start-up can only happen when
potential customers so
activities and replace the venture owner is
he or she fully
the initial assumptions completely engaged
understands what these
in each of the nine parts with the potential
potential customers
with newer and better customers and the other
want.
information or plans to business operations
let the business model (Osterwalder et al.,
evolve. 2010).

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 Lean Start-up

Consistent with the Business Model Canvas approach, Ries (2011) advanced the idea
of the lean start-up.

His definition of a startup is “a human institution designed to create a new product

or service under conditions of extreme uncertainty” (p. 27), and the lean start-up
approach involves releasing a minimal viable product (MVP) to customers with the
expectation that this early prototype will change and evolve frequently and quickly
in response to customer feedback.

This is meant to be a relatively easy and inexpensive way to develop a product or

service by relying on customer feedback to guide the pivots in new directions that
will ultimately—and relatively quickly—lead to a product or service that will have
the appeal required for business success.

It is only then that the actual business can truly emerge.

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 Lean Start-up
Ries’s (2011) five lean start-up principles start with the idea that entrepreneurs are everywhere and that
anyone working in an environment where they seek to create new products or services “under conditions of
extreme uncertainty” (27) can use the lean start-up approach.

Second, a start-up is more than the product or service; it is an institution that must be managed in a new
way that promotes growth through innovation.

Third, startups are about learning “how to build a sustainable business” (p. 8-9) by validating product
or service design through frequent prototyping that allows entrepreneurs to test the concepts.

Forth, startups must follow this process or feedback loop: create products and services; measure how
the market reacts to them; and learn from that reaction to determine whether to pivot or to persevere
with an outcome the market accepts.

Finally, Ries (2011) suggested that entrepreneurial outcomes and innovation initiatives need to be measured
through innovative accounting.

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 The Lean Start-up

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 Growth Wheel

• According to its website, GrowthWheelR

(http://www.growthwheel.com/) is a decision-making tool for start-up
and growth companies to help business advisers and entrepreneurs focus,
set agendas, make decisions, and take action (GrowthWheel, 2015).
• It is effectively a more complex and detailed tool than the Business
Model Canvas for describing a business model. A web search will yield a
variety of tools, like the Business Model Canvas and the GrowthWheelR,
that can be used to describe business models.

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 Franchises as Business Models

• Franchises are basically business models developed by others (franchisors)

that have been proven to work in multiple contexts and that are sold to
entrepreneurs (franchisees) who will implement the business model in
contexts that the franchisor believes will result in a successful enterprise.
• Franchises apply various business models.
• Some are turnkey franchises, like McDonald’s, where the entire business
structure is set up from the design of the stores to the supply system, and the
franchisor sets up virtually everything for the new franchisee.
• Other franchise models, like that defining Tap ‘N’ Pay Canada
(http://www.tapnpay.ca/)—a business that provides debit and credit card
machines and point of sale equipment—advertise relatively low fees charged
to franchisees and quick set-ups in as little as two weeks
(http://www.betheboss.ca/franchises/tap-n-pay).

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 Review Questions

1. Why is it important to get the business model setup first before

working on the business plan?

2. Explain your understanding of lean start-up?

3. Describe the growth wheel and provide an appropriate example?

4. What is your understanding of franchises and the kind of business

model they use?

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 Topics for this week

After completing this chapter you will be able to:

• Describe the purposes of business planning
• Describe common business planning principles
• List and explain the elements of the business plan development process outlined
in this book
• Explain the purposes of each of the elements of the business plan development
process outlined in this book
• Explain how applying the business plan development process outlined in this
book can aid in developing a business plan that will meet entrepreneurs’ goals
• Describe general business planning guidelines and format

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 Week 5: Business Plan

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 Keywords / Concepts
Internal External
Business plan
purpose purpose

Expectations Milestones Opportunities

Business
Cashflow Team
model

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 Preparation For Your Webinar

• Read chapter 5
• Describe the purposes of business planning?
• Describe common business planning principles?
• List and explain the elements of the business plan development
process outlined in this book?
• Explain the purposes of each of the elements of the business plan
development process?
• Explain how applying the business plan development process can
aid in developing a business plan that will meet entrepreneurs’ goals?
• Describe general business planning guidelines and format?

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 Assessment 1 ?

Assessment 2 –groups ?

Any questions?

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