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What to Do Before Your Business Plan Course

John W. MullinsLondon Business School

REE 2004

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The Problem: This Turkey Won’t Fly!

• Occurs for many student teams partway through the course

• Too late to turn back and write a plan for a better opportunity

• Students are faced with convincing your panel of judges why their turkey will fly (when really it won’t)

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The Solution• Create a preceding course to focus

on opportunity assessment and development– Market, industry, team dimensions– Deliverable: a feasibility study, based

on actual primary and secondary research

– Either conclusion is welcomed• Feed the best into the business

plan course

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The Genesis of the Course

“When a business with a reputation for poor

fundamentals meets a management team with a

reputation for brilliance, it’s the reputation of the former that

remains intact.”Warren Buffett

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Research Question

How do successful entrepreneurs (and investors,

too) assess market opportunities?

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Point of Confusion #1: The Market / Industry

Distinction

• What’s a market?• What’s an industry?• These are frequently confused!

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The Seven Domains of Attractive Opportunities Market Domains Industry Domains

Market Attractiveness Industry Attractiveness

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Point of Confusion #2:The Macro / Micro

Distinction

• Large and growing markets are important, but…

• Structurally attractive industries (in a five forces sense) are also important, but…

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The Seven Domains of Attractive Opportunities

Macro Level

Micro Level

Market Domains Industry Domains

Market Attractiveness

Target Segment Benefits and Attractiveness

Industry Attractiveness

Sustainable Advantage

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Point of Confusion #3:What’s Crucial about

Entrepreneurs and Their Teams…

• It’s not found on their CVs• Not simply about “chemistry” or

“character” or “entrepreneurial drive”

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The Seven Domains of

Attractive Opportunities Macro

Level

Micro Level

Market Domains Industry Domains

Mission, Ability toAspirations, Execute Propensity on CSFsfor Risk

Connectedness up and down Value Chain

Team Domains

Market Attractiveness

Target Segment Benefits and Attractiveness

Industry Attractiveness

Sustainable Advantage

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Putting the Seven Domains to Work

• No opportunity is perfect – all have significant question marks or negatives at the outset

• Thus, the opportunity development challenge:– Reshape: turn question marks or minuses

into pluses (different market, industry, or team)

– Mitigate: weaknesses offset with compensating strengths

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The Seven Domains…• Identify key weaknesses

– Questions to be answered• Suggest avenues for reshaping the

opportunity • Identify key strengths, jump-start

business planning– Crucial in telling the story to resource

providers• Integrate and bring to life material

seen (learned?) in the core

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A Final Note

• For the seven domains…– Scores are not additive: summing the

scores across the seven domains is meaningless

– Strong scores at the micro level can mitigate poor macro-level scores

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But don’t just take it from me…

“When a business with a reputation for poor

fundamentals meets a management team with a

reputation for brilliance, it’s the reputation of the former that

remains intact.”Warren Buffett

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If You Need a Textbook… The New Business Road Test

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To Download Chapter 1 for Your Business Plan Course:

www.london.edu/faculty/jwmullins