Tips for Creating a New Venture

1. Identify and screen opportunities ... create a vision and concept statement; build an initial core entrepreneurial team; describe the initial ideas about the value proposition and the business model
2. Refine the concept, determine feasibility, and prepare a mission statement ... research the business idea and prepare a set of scenarios; draft the outline of a business plan and an executive summary
3. Prepare a complete business plan with a financial plan and the legal organization suitable for the venture
4. Determine the amount of financial, physical, and human resources required ... prepare a financial model for the business and determine the necessary resources; prepare a plan for acquiring these resources
5. Secure the necessary resources and capabilities from investors, as sell as new talent and alliances
6. Launch the new venture!

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Basic Financial Statements

There are a variety of tools used for pro forma financial objectives planning and post-facto reporting ...

• Assumptions: a thing that is accepted as likely to happen ... the probability of a particular customer placing an order in the next 6 weeks, for example
• Budget: an estimate of income and expenditure for a set period of time
• Income Statement: provides performance information about a time period. It begins with sales and works down to net income and earnings per share (EPS)
• Cash Flow Statement: the total amount of money being transferred into and out of a business; a positive cash flow is good.
• Balance Sheet: a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time.

Pain/Pleasure Spectrum: Needs, Wants, Desires ... (Tool O-5)

While the terms are often used interchangeably, human needs, wants, and desires represent distinct levels of necessity and motivation. 

Needs are basic essentials for survival, wants are for improving one's quality of life, and desires are powerful emotional longings.

Needs

A need is a basic requirement necessary for survival and physical and psychological well-being. They are finite and their absence can lead to illness or death. The most famous model for this is Maslow's Hierarchy of Needs. 

Examples:

Physiological: Air, food, water, shelter, clothing, and sleep.

Safety: Financial security, personal health, and protection from harm.

Love and Belonging: Friendship, intimacy, and a sense of connection to a group or family.

Esteem: Respect, self-confidence, and a sense of achievement.

Self-Actualization: The realization of one's full potential and purpose. 

Wants

A want is a non-essential item or experience that improves your quality of life once your basic needs are met. Wants are heavily influenced by culture, personality, and marketing. They are unlimited and can change over time. 

Examples:

You need food, but you want to eat at a five-star restaurant.

You need clothing for warmth and protection, but you want a designer-brand jacket.

You need transportation, but you want a new sports car.

You need social connection, but you want a specific person as a romantic partner.

Desires

A desire is an intense, powerful longing or craving. It is often driven by emotion and is a step beyond a want. Desires can be aspirational and are sometimes unaffordable, which can lead to debt if pursued irresponsibly. 

Examples:

The desire for a life of luxury and social prestige.

The desire for fame or a specific kind of recognition.

The deep desire to have children, or to own a beautiful, large home.

The desire to achieve a state of personal fulfillment or self-expression.

Crucial Communication Channels (Tool D-9)

At the core, every successful business venture looks like this. 

Of course, large complex organizations can look much more complicated than this basic diagram. But fundamentally, all successful business ventures consist of these key elements and have these critical paths of communications.

The "alphabetical" communication channels are external, between the key business venture teams and customers:

A] The Research & Development Team communicating with customers to determine what customer problems, needs, wants, and desire the venture should address

B] The Marketing Team communicating with customers to promote current venture solutions, product, services, and processes that solve current customer problems, and obtain feedback from customers relating to the performance of the venture in solving their problems

C] The Sales Team obtaining and processing orders from customers, and customer relationship management

D] The Operations Team building and delivering solutions, products, and services to fill customer orders

E] The Finance/Accounting Team collecting payment for the value delivered to customers by the products, services, and processes provided by the venture

F] The Venture Management Team soliciting feedback and inputs regarding the relationship between the customers and the venture

The "numbered" communication channels in Figure 5 are internal, the information being shared between departments in a business venture.

1] Marketing and Innovation Development Departments share information about customer problems, needs, wants, and desires, and the benefits, fit, form, function, and features of new products, services, and processes being created in the organization.

2] The Marketing and Sales Departments coordinate information about the benefits, fit, form, function, and features of currently available solutions, products, services, and process that match customer requirements, including the price of the offerings.

3] The Sales Department communicates information about customer orders to the Finance/Accounting Department such that the customer is properly billed when the solutions, products, and services are delivered.

4] The Sales Department communicates information about customer orders to the Operations Department such that the appropriate products and services are delivered to the customer.

5] The Operations Department communicates information about product and service delivery to the customer so the Finance/Accounting Department can accurately bill the customer.

6] The Research & Development Department (often called the Engineering Department) provides the Operations Department with bills of material and assembly instructions for creating the solutions, products, and services being sold to customers.

Venture Hypothesis Outline

1. Title slide or page ... venture concept name, team members, 3-word concept summary
2. Opportunity ... the problem, market research and analysis, first customer(s) beachhead
3. Solution and venture concept ... products and services, competitive advantage
4. Business model ... how the venture will earn money (or self-sustain)
5. Marketing and sales strategies ... how the venture will attract and retain customers, tactical marketing
6. Product development and operations strategies ... how the venture will develop and deliver solutions to customers
7. Team and organization ... the current team and what do they do, advisors, team members to be added
8. Risks and variations ... downside and upside risks, timeline, and tolerances
9. Financial model ... estimate of units sold, average selling price, revenue, expenses, and EBITDA for first 5 years; key assumptions; significant startup expenses
10. Validation plan ... how the hypothesis will be validated

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