Explain the Four Types of Entrepreneurial Ventures, and Describe Their Underlying Characteristics

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• Desire to avoid taking risks

- Distinguish one’s ‘product’, ‘business concept’, ‘business model’ and ‘business plan’ from one another. Expand on the notion of a business model. What are it’s six key components? What do we mean by the foundation and proprietary levels of the business model? What makes the business model at SOUTHWEST AIRLINES so unique---how does it give the company competitive advantage? Lecture 8

Business Plan

A plan explains why you’re in business. You might want to provide high-quality, affordable administrative services to small businesses. Or maybe you plan to operate a cafe that sells exotic coffee and tea blends to lunchtime patrons in a busy commercial district. Plans often begin with an executive summary and mission statement. The summary is an abbreviated description of what your business does and how you plan to make it successful. Business owners include an executive summary in their plans to give executives, investors and other interested parties a snapshot of their company. A one- or two-sentence mission statement describes your business philosophy. Your company’s name, type, location and starting date make up one section of the business plan. Another section outlines your credentials and work experience; business owners sometimes attach their résumés for more detail. The business plan lists your products or services and a strategy for marketing them. Business owners looking for loans and other funding sources must include financial information in their plans. Lenders and potential investors review current and previous statements to see how you’ve handled your business’s finances in the past. They want to know how much funding you need, why you need it and how you plan to repay a loan if you seek a loan rather than investment capital.

Business Model

How and where you run your company is your business model. A franchise is one business model. An online store, home goods retailer and home-based business are other models. How you deliver your product or service to customers also defines your business model. Shipping goods directly to your customers is one delivery method. Shipping your goods from a warehouse is another common delivery mode.

• More than a business concept or business idea

• Less than a business plan

• Captures the essence of how it will work

• Strategy • Architecture • How we make money

Six Key Components

1 How do we create value?

• Select 1 From Each Set:

• Offering: primarily products/primarily services/heavy mix

• Offering: standardized/some customization/high customization

• Offering: broad line/medium breadth/narrow line

• Offering: deep lines/medium depth/shallow lines • Offering: access to product/product itself/product bundled with other firm’s

product/service

• Offering: internal manufacturing or service delivery/outsourcing/licensing/reselling/value added reselling (make clear what will be outsourced and what will be done internally)

• Offering: direct distribution/indirect distribution (if indirect: single or multi-channel)

2 For whom do we create value?

• Select 1 From Each Set:

Type of customer: b-to-b/ b-to-c/ both/ other

• Local/regional/national/international market

• Where customer is in value chain: upstream supplier/downstream supplier/government/ institutional/ wholesaler/ retailer/ service provider/ final consumer

• Broad or general market/ niche market • Approach to customer: transactional/relational

3 What is our source of competence/advantage?

• Select 1 Or More:

• Production or operating systems

• Selling/marketing

• Information management / mining / packaging

• Technology / R&D / creative or innovative capability / intellectual capital

• Financial management / arbitrage • Supply chain management / logistics

• Networking / resource leveraging

4 How do we differentiate ourselves?

• Select 1 Or More:

• Image of operational excellence / consistency / dependability

• Product or service quality / selection / features / availability

• Technology / Innovation leadership

• Low price / value for the money

• Intimate customer relationship/experience

5 How do we make money?

• Decide for Each Set

• Volumes: high/med/low

• Margins: high/med/low

• Operating leverage (cost structure): high/med/low

• Pricing & revenue sources:

–Single/few/multiple revenue drivers

–Fixed/flexible pricing

6 What are our time, scope and size ambitions?

• Select 1:

• Subsistence model

• Lifestyle or Income model

• Managed Growth model

• Aggressive Growth model • Speculative model

• Full article on D2L