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The SCORE SLATE Mentoring Guideline

The US Small Business Administration SCORE program has a well-refined guideline for business mentoring, using the acronym SLATE ...

S] Stop & Suspend Judgment
L] Listen & Learn
A] Assess & Analyze
T] Test Ideas & Teach with Tools
E] Expectations Setting & Encouraging the Dream

As important as what mentors do is what they don't do: they don't make decisions for the venture team.

[1.03]

Marketing Brochure Prototype

A prototype marketing brochure is a good tool for "testing the waters" with prospective customers.
  1. Easy way to test a new product, service, solution idea
  2. Easy to iterate a concept
  3. Easy to put in front of prospective customers for feedback: test, measure, learn
  4. Customer can become part of the design process ... pencil and paper and eraser
  5. Inexpensive ... time, money, resources
  6. Works for most any idea concept
  7. Flexible "size" (number of pages) although the fewer the better 
  8. Can incorporate in the venture business plan, summary
  9. Can use to design and develop a product and/or service based on prospective customer reactions to the product and/or service describe in the prototype brochure
Here's a "pencil sketch" of a marketing brochure template:


Let's get ourselves some SPLUCK!

SPLUCK: an acronym for Skills, Passion, and Luck … traits shared by every successful Innovator and Entrepreneur. 

SKILLS can be learned. There certainly are a basic set of skills that most every innovator and entrepreneur must have ... but, they aren't necessarily the same set of skills for all.

PASSION is something internal to every individual … some have lots of it, others don’t. We can try to motivate passion in others, but it can’t be forced upon them. They either are, or they aren’t. Heredity versus Environment?  Closely related to Passion is Persistence ... someone passionate is usually someone persistent, too.

And then there's LUCK ... serendipity! Win the lottery!! YeeHaa.  So many folks wait for luck to change their lives. But the Innovator and Entrepreneur ... they don't wait for change to happen to them. Nope! They are the change they want to see in the world! They make their own luck!

SPLUCK: Skills, Passion, and LUCK! 

[Jim's TooSense: I was looking for word that would summarize the key traits of successful innovators and entrepreneurs. Many articles written about why they are good at what they do, and there is a diversity of other characteristics, too. But put them all in a big pot, and the big three that surface are Skills, Passion, and Luck. So I just slammed them all together into SPLUCK. And now you know the rest of the story!]



How Much Money Do We Need?

Q: How much money do we really need to get this new venture concept up and running?

A: It is usually not a fixed dollar amount ... most often, it's a range of desired funding versus the time for the venture to become stable (that is, consistently break-even). Too little money and the venture will not survive, too much money and some will likely be wasted.

The optimal amount is a trade-off with the length of time it will take for the venture to become stable (that is, consistently break-even week after week). The management team needs to know what results they can deliver if the investors do pony up the requested level of funding ... and what could happen with less money raised, or more money raised. The results are usually, but not always, a change in the time to become a stable company.

There are a variety of tools, spreadsheets, and more to assist in making financial projections and setting objectives. Here's a good one from SCORE: https://www.score.org/resource/financial-projections-template

A "lean" startup is a special case ... the venture is basically trying to launch and operate below the minimum level of funding need to become stable. Think of it as an experiment. There are things to be learned in a lean venture, and often the most important lesson is that the venture just isn't going to make it without a critical mass of resources. Another lesson is that money isn't the only answer. Too much money can actually be a bad thing, but usually not as bad as too little!

In general, the more money raised for a new venture, the faster that venture can become stable up to a point. Investors will often ask the range of funding the venture is seeking. What's the minimum level of funding to get it going and sustainable, and how long will it take? What's the minimum time to become stable, and how much funding will it take? And finally,  ... what does the venture team believe is the optimal trade-off between time and money?


A little humor: I once made a presentation to a group of "friendly" investors. Call them "friendly" because they already knew us (the management team). The investors had put a good deal of money into our venture, and were (currently) satisfied with the results. Now, we were seeking to raise new money for a spin-off.

In my presentation, I said we needed to raise $x million and it would take us about y months to get the new venture stable (consistently break-even) and sustainable. One of the investors asked what could happen if they put in half the money we were seeking. I said the venture could still probably make it but it would take so many months longer to stabilize, but that level of funding was still above the failure threshold.

The same investor then asked what could happen if we were able to raise three times the money we were seeking. The "wise guy" in me came to the surface. I said that level of funding was way above the amount needed to make it to the shortest possible time to stability, and that the management team would take the excess funds and all buy Porsches because the venture didn't need the money!  I point out again that these were "friendly" investors and I knew they had a sense of humor! They didn't throw me out the door. Rather, they had a good laugh and said those were exactly the "right" answers ... they were just testing the management team to make sure we knew where the end-caps really were!

--Jim

[1.07]



Innovation Hot Spots

While innovation is often associated with new products, new gizmogadgets, a broader perspective shows innovation occurring in many areas of a business and often has little or nothing to do with products.

Here are some key areas of innovation opportunity for a business venture ...
  1. Products (yes, still high on the list, of course!)
  2. Services
  3. Processes
  4. Business methods
  5. Business model
  6. Revenue model
  7. Positioning (relative to the competition)
  8. Paradigm (a combination of several innovation areas)
[1.10]

Tips for Writing a Venture Plan

  1. Tell your story, tell it quickly, and tell the truth.
  2. Make sure that on every page the reader gets the information you want them to get.
  3. Creativity helps, but scale it back and be traditional with your headings and your formatting.
  4. Use talking headings to send the reader in the desired direction.
  5. Brand your pages; use appropriate colors; use images and charts and graphs to help reader understand key points; write short paragraphs; use headings that help the reader follow the story you are telling; caption your charts/graphs; use graphics to highlight your sentences and use sentences to explain the graphics. 
  6. Avoid fluff.
  7. Cite your sources. 
  8. Every paragraph should represent a discrete chunk of information. Every paragraph needs a thesis sentence. This is normally the first sentence. The middle of the paragraph should add important information to elaborate on the main point. The last sentence of each paragraph should tie up the specific chunk of information and direct the reader to the next chunk of information in the next paragraph. The reader should know all of your main points by 'reading the first and last sentence of every paragraph.
  9. When using bullets or other formatting maneuvers, decide what you want to emphasize, then use the appropriate marking words or graphics. To emphasize importance, for example, use words or phrases that indicate value; if you emphasize time, then use words that indicate chronology. Make sure that the mixture of bullets and numbers you choose conveys the right tone.
  10. To proofread, print a copy and go through it out loud. Look for any place the reader stumbles out loud. Read it backwards if necessary. Have a friend outside of your team read it out loud and see where they get confused. Read slowly to catch basic errors. Allow adequate time to do all this ... it is time-consuming, so give yourself the time to become perfect.
  11. When in doubt, check for rules of grammar and usage with a handbook. [Jim's 2 cents: Save Swing Jazz, Pelicans, and the Oxford Comma! ... Strunk and White, the Chicago Manual of Style, and the US Government agree!]
[Thank you, Randy Accetta]

[2.05]

An 18-slide Venture Plan Presentation

Slide 1: "Billboard"
Slide 2: Core Team ... who, what
Slide 3: Problem / Customer / Opportunity ... scale and scope of problem, SOM/SAM/TAM
Slide 4: Solution ... brochure
Slide 5: Value Proposition ... Customer NWD Profile, Benefits, FFFF
Slide 6: "Underlying Magic"... differentiation, competitive advantages, core competencies
Slide 7: Industry and Environment ... Who, What, SWOT
Slide 8: Competitive Analysis ... Who, What, SWOT
Slide 9: Business Model ... BM canvas
Slide 10: Go-to-Market Plan ... Strategies
Slide 11: Sales Plan ... Objectives
Slide 12: Operations ... Production, distribution, delivery, margin objectives
Slide 13: Growth Strategies ... Scale and Scope
Slide 14: Timeline ... What, when, where
Slide 15: Financial Objectives and Key Metrics ...
Slide 16: Use of Funds ...
Slide 17: Funding Proposal ... Equity, debt, grants, gifts
Slide 18: "Billboard"


Slides 19 to 100+ will have all the gory details!! Lists of 100: customers, prospective customers, target markets, competitors, prospective collaborators, suppliers, prospective investors, ...

These 18 slides also form the foundation for a formal written business plan and an executive summary.

How to Start a New Venture

Go on a DXpedition ...

The Desire Phase ...
Determine why you (and your teammates) want to start a new venture

The Discover Phase ...
Form initial core entrepreneurial team
Identify problems or opportunities

The Define Phase ...
Screen problems or opportunities
Define the value proposition

The Design Phase ...
Generate potential solutions
Create a business venture hypothesis
Design a business venture plan

The Deploy Phase ...
Acquire needed resources
Launch the venture

The Develop Phase ...
Test, validate, and refine the venture hypothesis
Develop and iterate the venture based on real customer experiences

Ten Legal-Issue Mistakes That Entrepreneurs Make

  1. Failing to incorporate early enough.
  2. Issuing founder shares without vesting.
  3. Hiring a lawyer not experienced in dealing with entrepreneurs and venture capitalists.
  4. Failing to make a timely Section 83(b) election.
  5. Negotiating venture capital financing based solely on the valuation.
  6. Waiting to consider international intellectual property protection.
  7. Disclosing inventions without a nondisclosure agreement, or before the patent application is filed.
  8. Starting a business while employed by a potential competitor, or hiring employees without first checking their agreements with the current employer and their knowledge of trade secrets.
  9. Promising more in the business plan than can be delivered and failing to comply with state and federal securities laws.
  10. Thinking any legal problems can be solved later.
[Thank you, Connie Bagley]

[4.95]

Perspectives on Corporate Entrepreneurship

  1. Companies must constantly innovate ... without innovation they tend to do what they've always done and run the risk of getting stale and becoming competitively disadvantaged.
  2. For a company to thrive, it must tap the individual initiative of its team members ... this must be a major area of focus.
  3. On any initiative being pursued, team-member buy-in is absolutely essential for success.
  4. If a company want its people to be intrapreneurial in their thinking, they must be kept well informed about the company's processes and visions, and the impact of these processes and visions on profit.
  5. Leaders must give team members everything they need to be self-motivated and take the initiative to succeed.
  6. Companies must reward the creativity of their people.
  7. If a team member owns an initiative, he or she should be accountable for all aspects of its success.
  8. Companies must encourage resourcefulness and out-of-the-box thinking.
  9. All thought leaders must be constantly focused on customer needs and now to satisfy and exceed them.
  10. Leaders and managers must work to maximize team-member involvement in all key initiatives to tap the collective intellect of the team.
[Thank you, The One Minute Entrepreneur]

Are We Shooting Down Good Ideas?

  1. You know whether or not an idea is good based who proposed it.
  2. You observe from a distance rather than being lead down a path to the idea. (a.k.a. The Sniper)
  3. You believe every idea is improved with your input.
  4. Listing the top 10 ideas from your organization this year, half or more are your own.
  5. Brainstorming means narrowing down to the best idea, instead of hearing all of them.
  6. All ideas must be proven.
  7. You only want BIG ideas.
  8. You have no effective mechanisms to foster, collect, review, and implement ideas.
  9. Your competition is your main source of ideas.
  10. No matter how much you've talked about ideas, collected them, praised them, in the end you don't use them. (Like a maimed duck, you let them wander off and die.)
[Thank you, Dustin Staiger]

Perspectives on the Nature of Entrepreneurship

  1. Creation of Wealth ... assume risks in exchange for profit
  2. Creation of Enterprise ... founding a new business where none existed before
  3. Creation of Innovation ... making existing products or methods obsolete
  4. Creation of Change ... adjusting, adapting, modifying to meet new opportunities
  5. Creation of Employment ... employing, managing, developing the factors of production
  6. Creation of Value ... creating value for customers by exploiting untapped opportunities
  7. Creation of Growth ... sales, income, assets, and employment
[Thank you, Michael H. Morris]

Highlights of an Effective Venture Plan

  1. Start with a clear, concise executive summary of your venture. Think of it like an elevator pitch. In no more than two pages, billboard all the important stuff. At the top, communicate your value proposition: what your venture does, how it will make money, and why customers will want to pay for your product or service. If you are sending your plan to investors, include the amount of money you need and how you plan to use it. You have to know the whole picture before you can boil things down, so tackle the summary after finishing the rest of your plan.
  2. Next, establish the market opportunity. Answer questions like: How large is your target market? How fast is it growing? Where are the opportunities and threats, and how will you deal with them? Again, highlight your value proposition. Most of this market information can be found through industry associations, chambers of commerce, census data or even from other business owners. (Be sure to source all of your information in case you are asked to back up your claims or need to update your business plan.)
  3. While you may have convinced yourself that your product or service is unique, don't fall into that trap. Instead, get real and size up the competition: Who are they? What do they sell? How much market share do they have? Why will customers choose your product or service instead of theirs? What are the barriers to entry? Remember to include indirect competitors--those with similar capabilities that currently cater to a different market but could choose to challenge you down the road.
  4. Now that you've established your idea, start addressing the execution ... specifically, your team. Include profiles of each of your business's founders, partners or officers and what kinds of skills, qualifications and accomplishments they bring to the table. (Include resumes in an appendix.)
  5. If potential investors have read this far, it's time to give them the nuts and bolts of your business model. This includes a detailed description of all revenue streams (product sales, advertising, services, licensing) and the company's cost structure (salaries, rent, inventory, maintenance). Be sure to list all assumptions and provide a justification for them. Also, include names of key suppliers or distribution partners.
  6. After all of that, one big question still remains: Exactly how much money will your venture earn? More important, when will the cash come in the door? That's why you need a section containing past financial performance (if your company is a going concern) and financial projections.
  7. Three-year forward-looking profit-and-loss, balance sheet and cash-flow statements are a must ... as is a break-even analysis that shows how much revenue you need to cover your initial investment.
  8. For early stage companies with only so much in the bank, the cash-flow statement comparing quarterly receivables to payables is most critical. "Everyone misunderstands cash flow," says Tim Berry, president of business-plan software company Palo Alto Software. "People think that if they plan for [accounting] profits, they'll have cash flow. But many companies that go under are profitable when they die, because profits aren't cash."
  9. After you've buffed your plan to a shine, don't file it away to gather dust. "A business plan is the beginning of a process," says Berry. "Planning is like steering, and steering means constantly correcting errors. The plan itself holds just a piece of the value; it's the going back and seeing where you were wrong and why that matters."
[Thank you, Mary Crane]

[2.17]

Potential Sources of Venture Funding

  1. The "Fs" ... founders, family, friends, fanatics, fools ... the starting point for most independent ventures ... generally low to moderate sophistication, low to moderate investment ...
  2. Bootstrapping ...
  3. Customers ...
  4. Suppliers ...
  5. The "Strangers with Candy" ... angels, investment clubs ... wide range of investment interest and sophistication, generally low to moderate investment ...
  6. The "Vulture Capitalists" (VCs) ... venture capital firms ... usually focused on a specific industry ... moderate to high sophistication ... a mistaken target for many new ventures, very few new ventures are funded directly by VCs ...
  7. The "Big Ugly Monsters" (BUMs) ... corporate venture capital ... usually focused on specific industries and proven ventures ... may fund internally-developed ventures ... often part of a angel/VC network of investors ...
  8. Corporations ...
  9. Bank loans ...
[4.16]