Pitch and Planning
Description
This module focuses on how to pitch a business idea and how to write a winning business plan for a new venture. Emphasis is placed on the diverse aspects of business planning (marketing, sales, development, financial) that must be addressed in the venture plan.
Sections
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When you have finished studying this module, you will be able to fulfill the following learning objectives:
- Create and deliver a new venture pitch.
- Create and deliver an elevator pitch.
- Write an executive summary.
- Analyze the characteristics of successful business plan presentations.
- Evaluate sample business plans.
- Describe the elements of an entrepreneurial marketing and sales plan.
- Describe the elements of a product or service development plan.
- Itemize the information given in a financial plan and its purpose.
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This module opens with a video of Ali G pitching the “Ice Cream Glove” to investors. Amidst the comedy, what important lessons can be learned from the video?
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Words from the Wise: Ali G Invents the Ice Cream Glove
youtube.com— “Ali G presents his idea for an ice cream glove to a few marketing pros and even talks to Donald Trump.”
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1. The Venture Pitch
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Historically, experts suggested that entrepreneurs first develop a business plan and then distill the business plan into a pitch (i.e., presentation). The problem with this approach is that most entrepreneurs find themselves spending significant time writing a business plan that proves to be irrelevant, because through the process they discover critical flaws in their approach (Kawasaki, 2004).
A more efficient method may be to start with a brief pitch that encapsulates the core elements of your new venture concept and then to test the concept on as many people as possible—potential customers and experts familiar with your industry and market. As part of this pitching process, you might develop diagrams, illustrations, or prototypes to convey key ideas. After validating the ideas outlined in your pitch, you then write a business plan, which provides details about all the different elements of your venture concept.
What are the important aspects of a pitch?
How does a venture pitch differ from an elevator pitch?
What makes a pitch effective? Watch a pitch from Moot Corp, and evaluate the pitch using the ideas presented in this section.
Develop a pitch for a hypothetical new venture. Deliver and record your pitch, and revise the pitch based on your impressions. Record or perform your revised pitch, and ask classmates for a critique.
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Before You Write a Business Plan
businessweek.com— “First, you need to test your product or service with potential customers, and define your business model”
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The Art of the Pitch
guykawasaki.com— This reading, based on Chapter 3 of The Art of the Start, explains how to pitch your organization in a shorter and clearer way.
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Top Ten Delivery Tips
garrreynolds.com— “If I had only one tip to give, it would be to be passionate about your topic and let that enthusiasm come out. Yes, you need great content. Yes, you need professional, well designed visuals.”
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The Elevator Pitch
seanwise.com— “As I have discussed at length, if you want to raise capital, you need to get your Elevator Pitch locked down. Want to know more? Check out this video created by Mike Armitage, a producer at CBC as part of Dragons’ Den.”
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Moot Corp® Presentations
mootcorp.org— “The Moot Corp® Program at The University of Texas at Austin has partnered with Business Resource Software to offer access to the winning business plans and video presentations from the world renowned Moot Corp® Competition”
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2. The Venture Plan
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Many students equate starting a new venture with writing a business plan; the reality is that a business plan is just one component of the new venture formation process. The business plan is important nevertheless and serves a variety of purposes (Delmar and Shane, 2002). It helps you organize and articulate your thoughts to others and solidify a working relationship with your team. A business plan also helps you to identify potential flaws and work out details that you have not yet considered.
A polished business plan will be compelling only if it is based on a strong business model and strategy. Thus, you first need to develop a strong value proposition; a revenue model; and an industry, market, and competition analysis—the subjects of the module “Starting the New Venture”. As noted in Section 1 of this module, you also want to test and prove your ideas in some way before writing a plan, which takes your venture to the next level.
According to the following resources, what are some other important reasons to write a business plan?
What are the key topics and data that should appear in a business plan?
What constitutes an executive summary of a business plan?
Analyze and evaluate the strengths and weaknesses of a Moot Corp business plan. Then develop a business plan outline for a hypothetical venture and write an executive summary. Obtain feedback from classmates on the effectiveness of your executive summary and business plan outline.
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The Business Plan
gsb.stanford.edu— The business plan is an important document for any new venture. It helps lay out a road map for starting and building a company.
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The Right Business Plan for the Job
businessweek.com— “When entrepreneurs seek funding for a new venture, potential investors often want to see a business plan. The question is: What kind?”
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How to Create a Business Plan
entrepreneur.com— “Whether you’re just starting out, need funding or want to monitor the health of your business, creating a business plan is your first step on the path to success. Read our extensive how-to to get started on your plan.”
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The Art of the Executive Summary
blog.guykawasaki.com— “Several people have asked me for a blog entry about executive summaries. My colleague at Garage, Bill Reichert, wrote this explanation, and it’s as good as it gets”
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MOOT CORP® Competition Business Plans
businessplans.org— “The MOOT CORP® Competition simulates entrepreneurs asking investors for funding. MBAs from the best business schools in the world present their business plans to panels of investors. The investors then choose the best new venture.”
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3. The Marketing/Sales Plan
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Marketing and sales is the lifeblood of a venture. Very few ventures succeed with an “if I build it, they will come” (Field of Dreams) approach (Lange, 2004). Even for ventures with very compelling products or services, marketing and sales efforts are instrumental in attracting and maintaining a customer base. This is true even for powerful brands and proven products.
The challenge for a new venture is developing an effective marketing and sales plan that takes into account a position of limited financial capital. With limited capital, new ventures must employ creative and sometimes unconventional approaches for reaching their target customers. They must also undertake focused marketing activities, because broad-based campaigns (e.g., television commercials) are often prohibitively expensive.
When developing a marketing and sales plan, entrepreneurs need to consider the “marketing mix”, which includes the product, promotion, pricing, and channels of distribution.
According to the resources in this section, what should be in a marketing plan and how should you go about creating one?
Why is market timing important?
Why do new ventures need a long learning curve for sales?
Develop a detailed outline of a marketing and sales plan for a hypothetical new venture. For your product or service, what creative or unconventional marketing and sales approaches can you undertake to reach your target customer?
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The Ingredients of a Marketing Plan
entrepreneur.com— “Every how-to book on the market has a different take on the essential elements of a marketing plan. Those geared toward the big corporate crowd communicate in a language few human beings understand; small companies can get by with a half-dozen sheets”
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How to Create a Marketing Plan
entrepreneur.com— “What is a marketing plan and why is it so essential to the success of your business? Find out here, in the first section of our comprehensive guide to creating a marketing plan”
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Timing is Important: The Same Idea Can Have Different Fates
edcorner.stanford.edu— “Kaplan says that every idea is repeatedly proposed. Timing of an idea is very important and very difficult to call”
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Startups Need a Special Learning Curve for Sales
gsb.stanford.edu— “Getting a product from the back of a napkin to the customer is the dream of every entrepreneur. Yet young companies typically go to market and ramp up a sales force before they are really ready”
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Entrepreneurial marketing: A construct for integrating emerging entrepreneurship and marketing perspectives
Library Database
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“The purpose of this paper is to critically explore the construct of entrepreneurial marketing (EM). This term is used as an integrative conceptualization that reflects such alternative perspectives as guerrilla marketing, radical marketing, expeditionary marketing, disruptive marketing and others.”
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5. The Development Plan
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A product or service development plan includes the goals, budgets, scheduling, personnel, tools and methodologies, and risks involved in the creation of your product or service. There are different methodologies for developing a product or service, but one method that has gained currency over the last decade is “user-centered design.” With user-centered design, customers are engaged early in the design process and are involved in developing the core specifications of the product or service (Rosenthal and Capper, 2006). Customers are then engaged at each step in the development process to test the validity of design and development assumptions.
With user-centered design, it is often necessary to develop early illustrations and prototypes so users and developers can obtain a better understanding of how the product looks and functions. A prototype might take the form of a non-working mockup, schematics, process documents, an alpha or beta product, or small-scale test runs.
What are the key elements of a design and development plan?
Why is user-centered design a powerful approach to developing new products? Are there any limitations to user-centered design?
What can be learned from the Getting Real eBook from 37signals about product development planning?
Develop a detailed outline for a product development plan for a hypothetical venture and obtain feedback from your peers.
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Elements of a Business Plan: Design and Development Plan
entrepreneur.com— “The purpose of the design and development plan section is to provide investors with a description of the product’s design, chart its development within the context of production…”
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Project Development Plan (PDP) Template
dir.state.tx.us— “This template is intended to be a guide to begin the project development plan. The plan should be dynamic, changing with the project changes, but keeping the overall development plan documented.”
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Usability Basics
usability.gov— “Usability measures the quality of a user’s experience when interacting with a product or system—whether a Web site, a software application, mobile technology, or any user-operated device.”
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Getting Real
gettingreal.37signals.com— “Getting Real is the business, design, programming, and marketing philosophies of 37signals — a developer of web-based software used by over 1 million people and businesses in 70 countries”
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David Kelley: The future of design is human-centered
ted.com— “Low-key and thoughtful, IDEO founder David Kelley seems the antithesis of the “design star”—and indeed, he says that product design, within the past two decades, has become much less about the design and more about the user who’ll be experiencing it.”
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6. The Financial Plan
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The three statements that appear in a financial plan are an income statement, a balance sheet, and a cash flow statement. All three statements are important and interconnected. A financial plan often includes statements that predict three to five years into the future. These financial projections are known as “pro forma” statements. In addition to yearly statements, many financial plans include monthly cash flow statements for at least the first year to track the new venture’s cash position.
As important as the financial statements are the assumptions that underlie them, such as projected revenues, employee head-count and salaries, infusions of investment, cost of sales, legal costs, and so forth. When developing financial projections and the assumptions that underlie these projections, it is prudent to consider best, worst, and average cases.
According to the resources in the section, how is each type of financial statement used in the financial plan?
In what ways are the three financial statements interrelated?
Why is it important to develop three to five years of projections?
Why is it important to develop a monthly cash flow statement?
How will setting up accounting systems help in the development of your venture?
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Elements of a Business Plan: Financial Components
entrepreneur.com— “Financial data is always at the back of the business plan, but that doesn’t mean it’s any less important than up-front material such as the business concept and the management team.”
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A Closer Look at Financial Statements
eventuring.kauffman.org— “The ability to understand and communicate financial information is critical to every entrepreneur. To succeed at business, you need to learn the language of business.”
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Basic Business Numbers
blog.timberry.com— “This seven-part video, Basic Business Numbers, takes you through the fundamentals of financial forecasting to give you what you really need to know to do the financial projections that are normally part of a standard business plan”
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Smart Startups Don't Wait to Set Up Accounting Systems
gsb.stanford.edu— “The question of when to set up management control systems such as financial planning and monitoring tools haunts most entrepreneurs involved in startup operations.”