[Book Review] the Smart Enterpreneur
When I was in college, guys usually pretended they were in a band.. Now they pretend they are in a start-up.
Ha! That! First sentence in this book is kinda intriguing and funny somehow… :p
Sebelum dikembalikan ke perpustakaan, ada baiknya kita review dulu nih buku biar gak lupa. Buku ini memaparkan tentang tools yang mungkin akan berguna bagi entrepreneurship journey ke depannya 🙂
- Idea creation and evaluation
Opportunities and ideas come side-by-side. Most entrepreneurs must go for a thinking process to identify an opportunity, then jump to idea or solutions (and compare them to alternative solutions).
Opportunity, knowledge and solution.
There are typically two categories of new venture ideas:
A. Demand-pull idea
In response to costumer need / problem. Usually, this idea is market-driven. There are 6 phases for idea generation exercises:
- – Seek unsolved problems
- – Define problems
- – Brainstorm ideas and solution
- – Organize and synthesize ideas
- – Evaluate and select ideas
- – Plan how t o implement that idea
A good idea needs to go through serial of testing and questioning process.
B. Knowledge-push idea
The innovative solution itself seems like an opportunity. Most of the technology-based ventures fall into this category. You need to find a problem that can be solved profitably by applying your technology / knowledge. Finding a market for a new technology is challenging and we must make some trial and error. Here are some evaluation tool that may help to map possibilities:
- – What does you technology do?
- – What are the alternatives?
- – Map out the alternatives, industries and markets? (knowledge matrix and evaluation matrix: cost, ease of use, durability, does a market exist, approval)
- – Compare advantages for the customer and for your business
2. From idea to business proposition
After you come up with an idea, now it is time for market segmentation and preferred witnesses.
- Top-down research (secondary research)
It is also called ‘desk’ research because your do your market research from information from market report, statistics, media. Top-down research can provide numbers essential for market size estimation, for example.
- Bottom-up (primary research) preferred witness testimony
Anyway, sometimes in the real-life, those numbers may behave differently, therefore we need bottom-up research. There are ways of selecting preferred witnesses, such as direct (customers we hope to sell/work with) or indirect (regular contact of our target customer), buying influences (economic buyer, technical buyer, user buyer), etc,
Conducting and structuring witness interview must also be carefully planned with formatted questions and scenarios. By combining top-down and bottom-up research we can identify our potential market segment. As visualization tool, before doing bottom-up research, we can draw a product/market (P/M) matrix to find out the most attractive market for which product.
Value chain is the path of business transactions that add some value. How to find our place in business environment? We need to first plot our value chain. A typical template of a value chain in technology venture is:
Fill in each component with our values, and of course, the initial value chain assumptions may be revised later after go-to-market route. With Porter’s 5 Forces, you can locate power in the value chain. Each force may make a new venture difficult to enter market. Those 5 forces are:
- Threat of new entrants
- Threat of substitutes
- Industry rivalry
Our value chain may face resistance and risk. To deal with, we can find a way around a bottleneck, through a bottleneck, and perhaps change products/service/business strategy.
Okay, but now how to protect our business ideas from imitation? In order to make our values is sustainable over time. protectability and freedom to operate are the most important factors. It is time for legal mechanisms to speak, such as:
The simplest form of IP as we do not require registration and automatically created, normally belong to an individual. But, registered industrial rights differ from copyright
- Registered monopoly rights
Registered for patents, trademarks, etc.
- Trade secret
This ‘secret’ strategy is an option if you do not wish to register for a patent. KFC and Coca Cola are examples of companies that can maintain and safe-guards their secret recipes for a long tome.
Choosing a strategy for entering a new market for a new venture can be cumbersome. That’s why you may be asking yourself lots of things, such as which market segment should I focus on? Which activities in the value chain my venture perform? Is registered IP rights be beneficial? We can describe our strategy model as:
Assess ENVIRONMENTAL factors
Choose best MARKET approach
Foresee RESOURCES needed
Strategy in environment complexity:
3. Proof of concept
Your proof of concept can be sought in a number of ways, prototyping plays an important role. Prototyping is used as a design aids, market-testing aid, communication, and persuasion. There are stages and type of prototyping, depending on the nature of your business.
- Early state and lo-fi (low fidelity) prototyping –> paper prototyping for market testing is a kinda of simulation of our concept. One of the paper prototyping apps for mobile can be found in: https://popapp.in/ . Cool :). Experience prototyping is more like AR for early design development and user testing. Meanwhile, presentation of virtual prototyping in CAD simulation and animation video can also be accepted.
- Physical/manufacturing prototypes –> if you go for a highly technical venture then you need this type of prototyping. For presentations to investor or customer feedback, these are most often used: development prototypes, alpha prototype (full features but used internally for testing), beta prototype (shown to potential customers for free trial), pre-production prototype, rapid prototyping (3D print, etc).
- Non-physical and service prototypes –> if you go for a more service-based venture, then you can do some story boarding (like film and advertising industry, to visualize costumer journey), role playing, or pilot test.
Assembling a winning team is highly crucial. People management, skills, and roles in a start-up is likely to be different from those in larger organisations.
A strong team can make something out of a second rate idea, but a great idea will not succeed if the team is not fit for purpose
Sources of capital takes a high priority in most start-ups but actually there are different sources of capital, not only venture capital (VC).
The word ‘entrepreneurship’ is often uttered in the same breath as ‘venture capital’
However, VC is one of the hardest, the most expensive type of finance to raise. Depending on how mature a venture is, there are some possible funding paths:
- Cheapest sources of early capital: 3Fs (Founders, Friends, Family –> read: investments from founders’ sympathetic friends and members), subsidy (if you win prizes and award from some kind of biz competition or public sector), prospetic business costumers, bootstrapping (financing yourself with your own capital).
- Business sources of capital : debt, equity, and strategic partnership
ROADMAPS: Entrepreneur should also think of a roadmaps; staged of developments to achieve. These actions to succeed are categorized into the areas:
- Product development/technology roadmaps (steps taken to reach dev objective? testing activities? skills and how many people? cost?)
- Operational roadmaps (when will start operating? basic operations? HR things? Sales and marketing?)
- Financial roadmaps (how much you spend on the activities – ‘cash burn’? How much raised? Estimated income – BEP, profit, + cash flow)
Reference: “The Smart Entrepreneur: How to Build for a Successful Business” by Bart Clarysse and Sabrina Kiefer