THE ENTREPRENURIAL MIND

COURSE DESCRIPTION

This course will introduce you to

1. the fundamentals of entrepreneurship,
2. including the entrepreneurial process
3. and how to recognize business opportunities.
The goal is for people with little to no knowledge of entrepreneurship to emerge with tools they can use to assess their readiness to
START THEIR OWN BUSINESS.

COURSE DESCRIPTION:
This course provides an overview of the entrepreneurial process that will teach students to identify, assess, shape, and act on opportunities
in a variety of contexts, settings and organizations. Students will learn and implement the Entrepreneurial methods which will give them a proven
and repeatable process to enable to create new and added value for stakeholders and society. The abilities to ‘think like an entrepreneur’ and ‘act
like an innovator’ are critical skills for success across industries and are proven tools to help distinguish in the workplace and accelerate careers.
The course aims to develop highly motivated individuals who are not just able to scan the environment and identify business opportunities, but can
mobilize the necessary resources to tap these opportunities on a continuing basis, typically through the creation of a new enterprise. Likewise, it
develops individuals with entrepreneurial mindset contribute a significant role in the management and leadership of large (existing) organizations.

COURSE TOPICS
MIDTERMS
Introduction to Entrepreneurial Mind · What is your big idea?
Innopreneurship: Entrepreneurship and Innovation · The Wealth Conversion Principle
· The Entrepreneur and The Innovator · Personal Branding
· Relevance of Studying Entrepreneurship and Innovation · Raising Funds
· Why be an Entrepreneur? · Why partners are needed?
· The 4-Gate Model to prosperity · Outside investors and your company’s worth
· 12 M’s Entrepreneurship Journey Map · Forming your team
Gate 1 – Preparation: Money, Model, and Mentor

Development of the Business Plan via a Business Model · Need for Inclusiveness
The Business Model · Opportunity-Seeking Process
· Understanding Industry Opportunity Screening:
· What is a Business Model? · 5-Point Test for Opportunity Screening
· Two parts and Ten Building Blocks of a Business Model · Industry Screening: Key Factors for success
Opportunity Seeking: Market – Product Fit · Market Research
· Voice of Customers (VOC) Gate 2- Marketing: Mindset, Market, and Message
· Voice of Enterprise (VOE) · Opportunity Seizing
· New Business versus Expansion · Marketing Mix
· Market-Driven Strategy vs. Market-Driving Strategy · Expanding the Portfolio
· Other ways to grow · Managing Risk
FINALS
Innovation · Opportunity Seizing via Operating Model
· 4 competencies of an innovator · Management Skills
· How to improve creativity and be an innovator · Putting the Operating Model Together
· 6 tips to create an innovation mindset Writing the Business Plan
· Innovating a business model · Tips to ace your business plan
· 5 tips on innovating the business model · Business plan template
· Learning innovation The Daily Journey
· How to innovate the marketing mix on demand Gate 4 – Self- Leadership: Moving Forward, Mission and Mastery
Business Implementation · Moving Forward
Gate 3 – Execution: Machinery, Methods and Management Skills · Mission
· Machinery · Mastery
· Methods · 4 areas of negligence of entrepreneurs
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· 4 ideal leadership values of entrepreneurs

PART 1: INTRODUCTION TO ENTREPRENEURSHIP

the business.

5 Components of an entrepreneur

1. New
· 4 key result areas

RICHEST PEOPLE IN THE PHILIPPINES ARE MOSTLE ENTREPRENEURS.

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Entrepreneurial Mindset is a term applied to a way of thinking. It’s about creativity, design thinking, and development of innovative
solutions to problems. While these ideas can be applied to business development, the entrepreneurial mindset can be applied to any
situation in which ideas, creativity, and focus on stakeholder needs can be used to solve real world problems.

CHAPTER 1
INNOPRENEURSHIP: ENTREPRENEURSHIP+INNOVATION

Entrepreneurs: Innovators or creative minds that can make things happen.

“Making things happen is not the same as making new things happen.”
- An owner of a business who invests his/her resources to bring idea to life, setting the direction that transforms that idea
into reality, thus providing and gaining value that balances effort, purposes and profit.
- Different from a corporate entrepreneur who does everything like an entrepreneur but does not have a financial stake in

You could study well, work for others forever, but you might miss the opportunities to do more for yourself and for your family. You
only have one life to live and leave a legacy. What will you choose to do?

1. Owner who invests resources – risk taking

2. Brings an idea to life – idea may or may not come from the entrepreneur, but turning an idea into revenue maximization
entails defining the best options.
3. Setting direction – getting quality information and making choices from these pieces of information
4. Making things happen – ensure all the interdependent elements are in harmony
5. Adding value – entails financial understanding

Who is an Innovator?
- A person who introduces a new process, product, services or a business model to the marketplace that becomes
commercially successful.
2 Elements

2. Commercial success – requires customer acceptance

Different from an inventor who creates something new but has not attained commercial success.

Business + Personal Plan

A firm need to have a business plan
a. Written document (for outside inventors)
b. Simpler outline of a business model ( for internal guidance)
- It provides the direction where the firm is going.

Prosperity for All

Profit is a requisite for a business.
3 elements to create profit for a business idea:
1. Cash
2. Inventories
3. Receivables

Wealth Conversion Principle

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- Business starts with an idea (based on the vision of the proponent). Then, investment of cash (or the equivalent of cash) is
needed to bring the idea to life.
- The cash is used to buy Inventories
- Inventories are sold, often with some credit terms, and when these Receivables are collected, they are converted back to
cash.
- It is a cycle with each cycle adding greater value to the firm.

3 S’s Requisites to prosperity

- To make the wealth conversion principle come alive
1. Squad - form a team, which includes your choice of business partners.
2. Spread – need to ensure that products are sold are priced higher than the cost.
3. Speed – create a system to manage account receivables effectively.

Key Factors to Successful Entrepreneurship

1. Commitment – a strong drive to achieve goals and objectives through focus and pro-active follow-through
2. Coordination – the organization of different people or groups coming from various functions to attain efficiency,
effectiveness and/or impact.
3. Competency – having a combination of ability, attitude and behavior to do particular role or job repetitively well.

4-Gate Model to Prosperity (House of Prosperity)

1. Preparation Gate
2. Marketing Gate
3. Execution Gate
4. Self-leadership Gate

Gatekeepers – screens the potential entrants along the way.

CEO (Customers, Employees and Owners) – he/she needs to find a good balance of all three constituents and ensure each of these
three parties gets a compelling based on what is valuable to them.

Gates Interest and Expectations Gatekeepers

Preparation Profit and Dividends Owners and Stockholders
Marketing Quality and Good Price Customers
Execution High Pay and Work-Life Harmony Employees
Self-Leadership Fulfillment Self

12 M’s to Successful Entrepreneurship

Gate 1: Preparation (IQ - Intelligence quotient: capacity to think and reason)
a. Money – cash component
Success Story:
Butch Salvador was broke and had Php10 left, just enough to make photocopies of his business leaflet. He knew a car
repairman and uses the parking lot of a mall for prospecting and left his marketing leaflets on windshields of ten cars with
dents, which clearly needed some repair. He decided on this strategy due to lack of resources. One out of ten came and the
next customer saw them repairing car dents outside the car owner’s house. From this, Car Magic was born.
b. Model – the business model or the big picture plan to generate sales revenue profit, cash flow, growth, and how to scale
up.
c. Mentors – are the experienced advisers who can add value to the entrepreneur by giving sound guidance to increase the
competency, lessen the risks, and help open more opportunities for the entrepreneur to succeed.
Example:
International furniture designer Kenneth Cobonpue was encourage by his mother (who was already in the furniture
business) to build his own toyswhen he was a child.
Gate 2: Marketing (CQ- Creativity quotient: the capacity to innovate)
a. Mindset –is about beliefs. That being an innopreneur is better than being just an entrepreneur.
-one must have a mindset to find a novel differentiation or Unique Selling Proposition (USP) that solves a real problem, by
not selling the same thing as everybody else.
-That it is possible to earn dollars not just as an OFW but as an exporter.
b. Market – a set of buyers that an entrepreneur focuses attention on.
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-it also includes the channel where the target market can see what is being offered.
Example:
AHEAD tutorial focused on students doing well instead of students having low grades when they started. To change the
negative perception to tutorials as a last resort for students who were failing in school. By focusing on achievers, they were
able to change perception, gained status and made tutorials something students looked forward to.
c. Message - brand positioning that will be communicated to persuade a target customer to buy.
(Example: Iphone vs Myphone)
Gate 3: Execution (EQ- Emotional Quotient: the capacity to sense and to emphatize)
a. Machinery- it is about an organization structure that can deliver the value planned; hence, the organizational structure can
only be identified after the value proposition is formulated.
b. Methods – are about systems and processes that allow the entrepreneur information and control.
c. Management Skills – about the ability to carry out the plans through people, rewards and leadership.
Gate 4: Self-Leadership (AQ- Adversity Quotient: the capacity to recover and make progress)
-it is needed when problems and obstacles are experienced because of the nature of entrepreneurship, where risks and uncertainty is
expected.
Example:
Billionaire Jack Ma, founder of Alibaba.
- Started from when he failed a key primary test twice, and failed three times while in middle school.
- He also applied to study in Harvard and rejected ten times.
- Got rejected 30 times in applying for a job.
- 25 people applied in KFC and they accepted 24 except him.
- Five people applied for a police job and they accepted four except him.
But he persisted, not giving up on himself. When faced with adversity, stop giving excuses and start finding solutions to keep
improving.
Not just leadership in business but also in one’s personal life.
a. Moving forward – having the grit to continue the business despite obstacles.
b. Mission – about purpose or the reason why the business exists beyond making a profit.
Example: USLT providing hundreds of scholarships to students
c. Mastery –building capabilities, knowing the self, the environment as well as the operations.

Entrepreneurship Key Factors Matrix

Key Factors for
Success / 4-Gate Model Preparation Marketing Execution Self – Leadership
Commitment Money Mindset Machinery Moving Forward
Coordination Model Market Methods Mission
Competency Mentors Message Management Skills Mastery
An entrepreneur needs four different types of commitment:
1. Money – Commitment to maximize return on investment.
2. Mindset – Commitment to have an innovation mindset.
3. Machinery – Commitment to create an effective organization.
4. Moving Forward – Commitment to keep iterating toward objectives and goals.
An entrepreneur needs four different tasks of coordination:
1. Model – Coordinate the interdependency of a business model.
2. Market – Coordinate choice and penetration of the target market.
3. Methods – Coordinate processes needed to routinize operations.
4. Mission – Coordinate the establishment and fulfillment of a company’s mission.
An entrepreneur needs four different groups of competencies:
1. Mentors – Competency related to sense making and risk assessment that can be provided or guided mentors.
2. Message – Competency related to customer-focused communication, expressed in terms of a positioning or a message.
3. Management Skills – Competency related to initiative and resource management and influencing people skills as part of
critical management tasks.
4. Mastery – Competency related to adaptability and grit resulting to mastery of strategy and change, as well as customer
understanding and self-transformation.

Is Entrepreneurship for Everyone?

- It can be learned but it is not for everybody.
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- Passion is not enough. A person needs an eye to satisfy unmet needs of a group of prospects that can be large enough to
have a differentiated, growing, profitable, scalable and sustainable operation.
7 competencies of an Entrepreneur
Competencies – combination of abilities (technical skills like knowledge and expertise) and behavior (like people skills or
motivational level)
1. Risk appetite – sees rewards for taking on opportunities that have potential positive (or negative) consequences.
2. Sensemaking – scanning the environment to detect and interpret what is happening today in order to connect and take
actions on potential future outcomes.
3. Customer-Focus – choosing, initiating and sustaining relationships with customers.
4. Initiative – being proactive in taking prompt actions to attain objectives.
5. Influence – ability to use personal branding and interpersonal styles to gain buy-in from constituents.
6. Adaptability – adjusting to external changes while initiating internal changes to attain objectives.
7. Grit – persistency to attain long-term goals despite adversity.

4 Competencies of an Innovator
1. Creativity – forming a mental image or new idea about the future.
2. Critical Thinking – offering unique ways to solve defined problems
3. Collaboration – developing relationships with the right partners to attain objectives. (benchmarking)
4. Communication – engaging constituents to make them understand and accept your message.

Chapter 2: GATE-1 PREPARATION:

MONEY, MODEL AND MENTORS

Topics
1. 4 DIFFERENT TYPES OF MENTORS NEEDED BY ENTREPRENEURS
2. THREE SERIES OF INVESTMENT
3. RAISIING FUNDS
4. PERSONAL BRANDING
5. ELEMENTS OF A GOOD IDEA

What’s your big idea?

An entrepreneur must be aware of the important task of doing a feasibility study.

Elements Of A Good Idea

 Money - Cash component
 Model - The business model or the big picture plan to generate sales revenue profit, cash flow, growth, and how to scale
up.
 Mentor - Are the experienced advisers who can add value to the entrepreneur.

4 basic questions that is important to investors

1. Who is your target market?
- It gives an indicator of how big the market is.
2. What is being offered?
- This answers what’s in it for the target market, addressing the pain points of the consumer.
o Conscious (Actual demand)
o Unconscious (latent demand)
3. Why is the offer relevant or unique?
- This answers why the offer is compelling to the target market.
4. How will this make money for the firm?
- This answers how the firm can win the marketplace and what’s in it for the investors.

3 Levels of Strategy
1. CORPORATE LEVEL
- What industry do we enter / exit and why? What’s the potential value capture?
2. BUSINESS LEVEL
- What is (or could be) our competitive advantage?
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3. FUNCTIONAL LEVEL
- What is the compelling reason for consumers and customers to buy our products and/or services and prefer us over
competition?

PERSONAL BRANDING
- It is a term use to describe the image of one’s self in the public’s mind from previous choices made that will affect the
future level of personal influence, which is part of self-awareness and self-mastery.
- Before investing make sure that your personal branding is credit-worthy and funding-worthy.
- Personal branding makes others feel good and feel right working and dealing with the entrepreneur. Lack of good personal
branding will not attract talent and resources so entrepreneurs must therefore not underestimate its importance, as every
act they make is a rehearsal for the future.

RAISING FUNDS
Basic Ways and Simplest Ways to Raise Capital
 Savings - Discretionary funds from unspent money earned previously by the entrepreneur.
 Partnership - It includes investment from relatives, friends and acquaintances.
 Loans - Money advances, which may be sourced from individual informal channel or financial intermediaries like
banks.
 Customer’s Advances - Terms of sales advantageous to the seller, such as cash with order (CWO), asking for down
payment (DP), cash on delivery (COD, or collecting franchise fee upfront.

Sources of Funding from Outsiders

1. Angel investor - money invested by an outside individual to a firm.
2. Super angel - big amount of money invested by an outside individual to a firm.
3. Venture capital - typically over 10 individuals with none owning over 10% of investment pool forming themselves as a
venture investing company.
4. Private equities - typically over 10 individuals, forming themselves as a private equity investment company, focusing on
firms that already have revenues and profit.
5. Going public - amount of money invested via initial public offering (IPO) from the stock market.

NOTE: Entrepreneurs must therefore not limit their expansion on internally generated funds, or borrowing money from bank, or
asking partners to put in more money. On a bigger scale, the company may be attractive to public investors in the stock market.

Why partners are needed?

Right partners can provide:
 Needed initial funding
 Opening doors to further fund and spread financial risk
 Creating immediate credibility
 Making entrepreneur highly accountable
 Provide mentorship both professional level( operational and strategic) and personal level (personal growth)

Inventory BENEFITS of having great partners

1. Provide immediate feedback on strengths weaknesses of plans
2. Help give operational and strategic directions
3. Provide additional funding
4. Spread out financial risk
5. Narrow your knowledge gap
6. Offer immediate credibility to your company
7. Open their network of contacts to you ( key suppliers, customers) to lower cost or raise revenues
8. Give an assurance of fairness on dealing with valuation and stock ownership specially after recovering investment.
9. Mentorship on professional level
10. Mentorship on personal level
THE ENTREPRENURIAL MIND

Success Story: when Jollibee bought 70% of Mang Inasal in 2010, it took over a functional department of Mang Inasal every six
months starting from the treasury group. In five years’ time, sales of Mang Inasal went up to 2.4 times despite increasing the
number of stores by only 30%, creating much productive Mang Inasal in the process.
THREE SERIES OF INVESTMENT
SERIES REVENUE PROFIT DESCRIPTION RISK LEVEL INVESTEMENT
PREMIUM
A No No Product or Service exists but no business High None of lowest
operation.
B Yes No Business exists with revenue generation but lack Moderate but can be Case-to-Case
either revenue sources or productivity scale to attractive if investment will
be profitable. leapfrog volume way
beyond breakeven point.
C Yes Yes Company is operating with both revenue and Low Highest
profit increasing.
Note: A is not yet a business only an idea.
Example: The Facebook, decision making in economics

Choosing Mentors
1. A mentor is a trusted and experience adviser who is interested in the success of the mentee.
2. He/She does this by investing time to be a sounding board, to listen and understand context, ask questions, give sound
advice, offer alternative opinions, opening windows of opportunities and lessening risks of the mentee.

4 Different Types of Mentors Needed by Entrepreneurs

Types of Role of Mentor for the entrepreneurs Examples for a Start-Up
Mentors Advertising Agency
Needed
Operational Guides on matters related to present operations, especially key factors for Client acquisition, presentation,
success that the firm should do exceptionally well execution
Functional Guides on matters related to support functional areas on which the Accounting tax, human resource
entrepreneur may need some advice
Personal Guides on matters related to personal growth Work-life harmony
Strategic Guides on matters related to the future vision of the entrepreneur Consulting, service

8 QUALITIES of a great mentor

1. Interested in the success of the mentee.
2. Invest time to listen and understand the different situations of the mentees.
3. Provide advice, both business and personal
4. Help mentees by tapping into the mentor’s network
5. Open doors for opportunities
6. Lessen risk by calling attention to such areas
7. Inspire the mentee
8. Sincerely desire that the entrepreneur succeeds and be even better than them

PART 2: DEVELOPMENT OF THE BUSINESS PLAN VIA A BUSINESS MODEL

Developing a Business Plan
An important task in starting a new venture is to develop a business plan, which is a "road map" to guide the future of a business
or venture.

CHAPTER 3: THE BUSINESS MODEL

Learning Objectives:
1. Explain the relevance of business plan prior operation/
THE ENTREPRENURIAL MIND

2. Prepare a simple business plan.

What is a Business Model?

o A description of the means and methods a firm employs to generate sales revenue, profit, and cash flow, while providing a
template for the business to scale up.
o It has 10 building blocks subdivided into two parts – the offering model and the operating model, with the definition of
terms of each building block.

The offering model is composed of what people in the marketing and sales departments typically handle – target market, value
proposition, channel, customer bonding strategy and revenue model.
 Target Market – The intended recipients of a firm’s products or services.
 Value Proposition – The relevant and unique benefit that the consumer gets from buying or owning the firm’s product or
services.
 Channel – The distribution system where products or services will be made available to the customers.
 Customer Bonding Strategy – The relationship as well as the solution that will be established with buyers and end users.
 Revenue Model – The compensation a firm will get for providing its value proposition to support its intended profit.

The operating model, on the other hand, is what people in the operations department t, like supply chain and customer fulfillment.
Oversee – value chain, resources and processes, complementors, configuration and cost.
1. Value Network – The strategic linkage of extended supply chain for the firm to provide specific products or services to the
customers.
2. Resources and Processes
o Resources: The hard and soft assets deployed by the firm to carry out its value proposition for the customers.
o Processes: The critical repetitive activities that are routinized by the company to deliver the value to the customers and to
the company in a sustainable way.
3. Complementors – People or groups who will help both directly and indirectly, to enhance the value proposition.
4. Configuration – Rearrangement of resources, processes, activities and offerings that can help enhance the profit goal of the
company.
5. Cost – The monetary consequences of the means to carry out the value proposition.
NOTE: To improve a firm’s profit, the entrepreneur looks at maximizing his revenue in the offering model while minimizing cost in
the operating model.

KEY QUESTIONS TO ASK ABOUT YOUR BUSINESS MODEL

Offering model
1. Target Market
 Market Space – Who is the target market that has the greatest potential for the firm?
2. Value Proposition
 Novelty – What are the biggest unmet needs we should satisfy in a novel way?
3. Channel
 Go-to-market – Where do we make our products conveniently available consistent with the target market’s buying pattern?
4. Customer Bonding Strategy
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 Organization – How do we have a customer-centric organization that can engage, deliver solutions and build positive
relationships with customers better than competition?

5. Revenue Model
 Price – What will be the most attractive pricing scheme that can leapfrog demand and meet our objectives (revenue, profit
or social cause)?
Operating model
1. Value Network
 Linkage Structure – How are activities linked & sequenced?
2. Resources and Processes
 Capabilities –What assets should we leverage & what activities should we perform well to unlock value?
3. Complementors
 Lock-in – What will make it appealing to start and stay as complementors or partners?
4. Configuration
 Efficiency – How do we reorganize to provide value without over- or under-spending?
5. Cost
 Infrastructure –What is the infrastructure cost that will carry out value proposition?

THE 7 ELEMENTS OF A STRONG BUSINESS MODEL

Creating a business model isn’t simply about completing your business plan or determining which products to pursue. It’s about
mapping out how you will create ongoing value for your customers.
Where will your business idea start, how should it progress, and when will you know you’ve been successful? How will you create
value for customers? Follow these simple steps to securing a strong business model.
1. Identify your specific audience.
Targeting a wide audience won’t allow your business to hone in on customers who truly need and want your product or service.
Instead, when creating your business model, narrow your audience down to two or three detailed buyer personas. Outline each
persona’s demographics, common challenges and the solutions your company will offer.

2. Establish business processes.

Before your business can go live, you need to have an understanding of the activities required to make your business model work.
Determine key business activities by first identifying the core aspect of your business’s offering. Are you responsible for providing a
service, shipping a product or offering consulting? In the case of Ticketbis, an online ticket exchange marketplace, key business
processes include marketing and product delivery management.
3. Record key business resources.
What does your company need to carry out daily processes, find new customers and reach business goals? Document essential
business resources to ensure your business model is adequately prepared to sustain the needs of your business. Common resource
examples may include a website, capital, warehouses, intellectual property and customer lists.
4. Develop a strong value proposition.
How will your company stand out among the competition? Do you provide an innovative service, revolutionary product or a new
twist on an old favorite? Establishing exactly what your business offers and why it’s better than competitors is the beginning of a
strong value proposition. Once you’ve got a few value propositions defined, link each one to a service or product delivery system to
determine how you will remain valuable to customers over time.
5. Determine key business partners.
No business can function properly (let alone reach established goals) without key partners that contribute to the business’s ability to
serve customers. When creating a business model, select key partners, like suppliers, strategic alliances or advertising partners.
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Using the previous example of Home Depot, key business partners may be lumber suppliers, parts wholesalers and logistics
companies.

6. Create a demand generation strategy.

Unless you’re taking a radical approach to launching your company, you’ll need a strategy that builds interest in your business,
generates leads and is designed to close sales. How will customers find you? More importantly, what should they do once they
become aware of your brand? Developing a demand generation strategy creates a blueprint of the customer’s journey while
documenting the key motivators for taking action.
7. Leave room for innovation.
When launching a company and developing a business model, your business plan is based on many assumptions. After all, until you
begin to welcome paying customers, you don’t truly know if your business model will meet their ongoing needs. For this reason, it’s
important to leave room for future innovations. Don’t make a critical mistake by thinking your initial plan is a static document.
Instead, review it often and implement changes as needed.

Risks and Profit Potential Vary Among Business Models

Entrepreneurs launching a new company often compare various business models and select one that is likely to generate the best
revenues.

The Business Model Canvas

In the early 2000s, Alexander Osterwalder invented the business model canvas to help businesses develop and analyze potential
business frameworks.
The business model canvas features nine sections or "building blocks" that define customer segments, value propositions, revenue
streams, distribution channels, customer relationships, key activities, resources, partners, and cost structures. The model also guides
users through the major areas of consideration for a business's structure and strategy.

MORE ABOUT THE BUSINESS MODEL CANVAS

The Business Model Canvas reflects systematically on your business model, so you can focus on your business model segment by
segment. This also means you can start with a brain dump, filing out the segments the spring to your mind first and then work on the
empty segments to close the gaps. The following list with questions will help you brainstorm and compare several variations and
ideas for your next business model.
1. KEY PARTNERS
o Who are your key partners/suppliers?
o What are the motivations for the partnerships?
2. KEY ACTIVITIES
o What key activities does your value proposition require?
o What activities are important the most in distribution channels, customer relationships, revenue stream…?
3. VALUE PROPOSITION
o What core value do you deliver to the customer?
o Which customer needs are you satisfying?
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4. CUSTOMER RELATIONSHIP
o What relationship that the target customer expects you to establish?
o How can you integrate that into your business in terms of cost and format?
5. CUSTOMER SEGMENT
o Which classes are you creating values for?
o Who is your most important customer?
6. KEY RESOURCE
o What key resources does your value proposition require?
o What resources are important the most in distribution channels, customer relationships, revenue stream…?
7. DISTRIBUTION CHANNEL
o Through which channels that your customers want to be reached?
o Which channels work best? How much do they cost? How can they be integrated into your and your customers’ routines?
8. COST STRUCTURE
o What are the most cost in your business?
o Which key resources/ activities are most expensive?
9. REVENUE STREAM
o For what value are your customers willing to pay?
o What and how do they recently pay? How would they prefer to pay?
o How much does every revenue stream contribute to the overall revenues?

Diversified Business Models

 Combining multiple business models (or using a variety of business models) in a single company is called a diversified
business model. As companies mature, they often shift from their original business model to a diversified model to embrace
technological advances, open new markets, or add product categories.

Examples of Diversified Business Models

How Investors Analyze Business Models

 Business models offer insights into a company's long-term profit potential. Investors tend to focus on several areas before
choosing companies to add to their portfolios: This is especially true of market size, product demand, scalability, and the
ability to add new channels.
 These components have the most significant potential to impact net income, which is the accurate way investors measure a
company's wealth-generating potential. If net income increases, the company is doing well and can be a good investment.

Market Size and Product Demand

 Business models include insights into the marketplace, like customer demand, potential for reaching new customers, and
expansion opportunities. These insights help investors and analysts understand whether a company has long-term profit
potential.
 By expanding their product line beyond collectibles, the company has increased its customer base to both the collector
market and parents of small children. They improved their opportunity to increase gross profit while sustaining their USP as
a brand for people who love horses.
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Scalability
 Scalability refers to a company's ability to expand or grow with the same amount of resources. If a company is limited by
geography, customer demand, service delivery, or product availability, its potential for growth and profitability is also
limited unless the business model shifts.

CHAPTER 4: OPPORTUNITY SEEKING: MARKET-PRODUCT FIT

What is Opportunity Seeking?

Opportunity-seeking and initiative

Entrepreneurs seek opportunities and take the initiative to transform them into business situations.

How do you identify an opportunity?

Here are four ways to identify more business opportunities.
 Listen to your potential clients and past leads. When you’re targeting potential customers listen to their needs, wants,
challenges and frustrations with your industry.
 Listen to your customers.
 Look at your competitors.
 Look at industry trends and insights.

What are your opportunity examples?

Examples include who is on your team, your patents and intellectual property, and your location. Opportunities and threats are
external—things that are going on outside your company, in the larger market.

What are the qualities of an opportunity?

Four essential qualities: (1) attractive (2) durable (3) timely, and (4) anchored in a product, service or business that creates value for
its buyer or end user.

How do you identify market opportunities?

 Identify the target audience;
 Recognize the peculiarities of local customers’ buying habits;
 Explore competitors’ marketing research opportunities and strategies;
 Shape the product or service’s identity;
 Understand what clients like most/least about the existing product.

How to spot opportunities?

Voice of Customers (VOC)

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 Is a research process used to capture needs of consumers (end users) and customers (channels).
 A key to voice customers is identifying and understanding pain points, barriers and its root causes to trigger greater demand
in an industry.
Pain Point Process

Step 1: PAIN HUNTING

 Entrepreneurs must choose a specific group of people as their target market.
 The group must behave in a homogeneous way like having common traits and seeking common benefits.
Types of Benefits
1. Functional Benefit – benefit related to the performance of the product or service.
2. Economic Benefit – benefit related to the price of the product or service.
3. Emotional Benefit – benefit related to how the owner feels when owning or using the product or service.
4. Social Benefit – benefit related to how others will perceive the owner of the product or service.
 When entrepreneurs have chosen a target market for pain hunting, the target group becomes his/her focus, looking for
their unmet needs along the consumer decision journey.
 Without pain hunting, blind spots may happen and the entrepreneur might leave out critical details.
Step 2: PAIN POINTS IDENTIFICATION
 To know consumer pain points, the target market can be asked what they dislike about a particular brand or product.
Examples:
 Lack of area coverage
 Unsupervised placement and merchandising
 Sporadic availability of stocks
 Low margin
 Transactional approach, not relational or strategic in account development
 Unprofessional salespeople
While most benefit segmentation is based on consumer’s functional needs, another way to do segmentation is via emotive needs,
called “Needscope” by market research firm Kantar.
This includes:
1. Expressive (how one looks) – used by fashion and personal care
2. Gratification (how one feels) – used by food and pharmaceutical products
3. Combination of expressive and gratification ( how one looks and feels) – used by automotive and telecom industries.
Step 3: PAIN POINTS UNDERSTANDING
 Not all pain points have the same level of importance.
 Entrepreneurs must understand the frequency and depth then choose the key pain point priorities that must be solved due
to relative higher impact that cab be felt by the customer.
Step 4: PAIN POINTS HEALING
 It is important for entrepreneurs to have empathy and not just understand pain points, but also accept that change is
needed, and that speed of change by external factors may leave them obsolete in their industry.
Lifestyle Trends
Another practical way to spot opportunity via voice of customers is by looking at lifestyle trends of how people live, how people
work, how people play, how people die and how people invest.
Voice of Enterprise (VOE)
It is the process to articulate the needs of the entrepreneur or his/her company.
Opportunity-Seeking Process
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Opportunity starts with ideation that have specific problems identified, and rough solutions proposed. It is followed by the discovery
phase where the entrepreneur wants to spend a little but learn a lot. This evaluation and redirection stage narrows the knowledge
gaps of the entrepreneur, revealing potential risks, validating or unveiling faulty assumptions about the business, finally leading to
incubation by building the actual solution, doing rapid testing, prototyping and validating to ensure it is feasible to execute the idea.

5-Point Test for Opportunity Screening

1. Customer – Is the market real?
2. Timing – is it big enough?
3. Finance – Can it be profitable?
4. Product – Can we differentiate?
5. Competitiveness – Can we win?
Is the market real?
 Entrepreneurs must have a sense making skill to determine that a market gap or market problem truly exists, be practical
enough to do business with those willing to transact with them, and finally be competent enough to know whether or not
the firm is in the best position to satisfy the unmet needs.
Is the market big enough?
 A market must be scalable as businesses must plan to grow. Channel of distribution can also determine the extent of
market reach, hence, the size of the market.
Can we be profitable?
 Entrepreneurs must know the breakeven point of the company as well as the recovery period of the investment, so they
can plan to gain critical mass of volume to have superior financial returns.
Can we differentiate?
 Differentiation is about uniqueness, but uniqueness can only be considered if there is brand relevance.
Can we win?
 Entrepreneurs can have profitable businesses but their financial returns may not be optimal yet. They must not just think of
making money but winning a white space in the marketplace for impact and to be effective and efficient.
Note: the 5 point will help us decide whether such business will assure us a profitable business
OPPORTUNITY SCREENING
It is important to come up with a short list of a few very promising opportunities, which could scrutinize in detail.

Personal Screening
 Do I have the drive to pursue this opportunity to the end?
 Will I spend all my time, effort, and money to make the business opportunity work?
 Will I sacrifice my existing lifestyles, endure emotional hardship, and forego my usual comforts to succeed in this business
opportunity?

The 12 R’s of Opportunity Screening

Relevance Resonance Reinforcement of entrepreneurial interest Revenue
Responsiveness Reach Range Revolutionary Impact
Returns Relative ease of information Resource required Risks
Guys, the 12 R’s simply imply that before you engage in business you need to scrutinize the ins and outs of the business for not lose
your investment, are there possible market for your business, is there any growth in that particular area etc. etc. That is you need to
conduct the:
Eight Analysis Types to Identify Market Opportunities
1. Consumer segmentation
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To understand your demand, you must identify consumer segments that share common characteristics. These characteristics
can be “hard” variables such as age, gender, place of residence, educational level, occupation and level of income or “soft” variables
such as lifestyle, attitude, values and purchasing motivations.
Hard variables can help estimate the number of potential customers a business can have. For example, a nappies/diapers
producer should know how many children under 3 years live in a certain country as well as the birth rate. Soft variables can help
identify motivations that lead to purchasing decisions including price, prestige, convenience, durability and design.
An example of how segmentation can help identify market opportunities is Aguas Danone, a bottled water company in
Argentina. Several years ago the company´s sales were falling and they were looking for a new product. Aguas Danone identified two
drivers behind non-alcoholic drinks consumption: health and flavor. Bottled water was perceived as healthy but did not offer the
attribute of good taste. Soft drinks and juices tasted good, but were perceived as highly caloric. The company realized there was an
opportunity for healthy drinks offering both taste and flavour. As a result, they launched flavored bottled waters Ser with great
success. According to data from Euromonitor International, Aguas Danone has been the leader of Reduced Sugar Flavoured Bottled
Water in Argentina since launching in 2002, beating giants such as Coca Cola and Nestlé. As of 2016, Aguas Danone still had 57% off-
trade value share of Reduced Sugar Flavoured Bottled Water as well.
2. Purchase situation analysis
Purchase situations must also be examined to uncover expansion opportunities. Questions to ask when reviewing purchase
analysis are:
When do people buy our product or service?
Is it when they need it?
Where do people make the purchase?
How do they pay?
Looking at distribution channels, payment methods and all other circumstances that involve purchasing decisions can teach
you how consumers buy and how you can position your product appropriately. Offering new shopping alternatives may bring new
customers. For example, vending machines offering snacks like yoghurt and individual juices have been introduced in the hallways of
the subway of Santiago de Chile, promoting on-the-go consumption.
Another aspect to explore is the acceptance of different means of payment. For example, Amazon recently launched
Amazon Cash in the US, enabling consumers without credit cards to shop online by adding credit to their personal Amazon accounts.
3. Direct competition analysis
In addition to analysing demand and purchasing situations, it is important to analyse supply. Knowing the existing players in
the market where you are competing or going to compete is important when evaluating opportunities. Relevant questions in this
case are:
What are the products and brands of our industry that are growing more significantly and why?
What is their value proposition?
What competitive advantage do we have over them?
For example, SKY airline, competing in the Chilean market against a notably positioned brand such as LAN, found there was
an opportunity to differentiate itself with a low cost model, which until then had not existed in Chile. SKY lowered its costs, by
eliminating complimentary food and beverages for all passengers during flights and in doing so lowered its ticket prices. This helped
the company increase its share of carried passengers from 10% in 2008 up to 20% in 2017, according to Euromonitor International.
4. Indirect competition analysis
Opportunities can also be found by analysing substitute industries. For example, thanks to the decrease in airfares, airlines
may look for opportunities in consumer segments currently supplied by other means of transport. Air carriers should research how
many people travel on long-distance buses and trains, which routes are the most in-demand, how much travelers pay for their
tickets, what the occupation rate of long-distance buses and trains is and what is necessary to persuade a current passenger of buses
or trains to choose to travel by plane instead. This type of analysis helps establish competitive advantages against indirect
competitors and provide insight on additional opportunities for growth.
5. Analysis of complementary products and services
Companies should monitor the performance of other companies’ products, which are complementary to their own. For
instance, a packaging company should monitor sales of products that it could potentially package, while a company producing coffee
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machines should gather insights on the evolution of different types of coffee sales. Trends in complementary markets should be
taken into account when making investment decisions.

6. Analysis of other industries

In some cases, the objective of companies is not to continue operating within an industrial sector but to expand a certain
business model or philosophy. For example, a British holding of companies, Easy Group, started maximising the occupancy rate of
flights with the airline Easy Jet. Easy Group understood that it was preferable to sell a seat at a lower price than not selling it at all.
Easy Jet opted for a rate management model that depended on the occupancy rate of flights and the time remaining until the day of
the flight. With this business model, it managed to increase occupancy rates. Easy applied the same model to cinemas when it
created Easy Cinema and then with buses for Easy Bus. In any case, to enter a new industry it is important to learn about
competition first: market sizes, market shares, growth rates, unit prices, per capita sales and brands positioning.
7. Foreign markets analysis
When a company operates in a mature or saturated market, exploring other countries may lead to additional opportunities.
Markets in different countries grow at different paces for several reasons, including disparities in the level of economic development
and local habits. Knowing the evolution of per capita consumption of a given product in a given country can serve as an indicator of
the maturity of the product’s life cycle. Having information on the size of the market and competitors in other countries will help to
estimate the business potential.
In addition to product sales, you can also investigate what happens in more developed countries in terms of consumption
habits. For example:
What is the percentage of people who use the smartphone to pay for their purchases?
What is the market share of private labels in a certain industry?
Answers to those questions in more developed countries can serve as indicators of the potential the indexes have in their
own country. On the other hand, monitoring what happens in other countries may lead to new products or services present still
absent in your current market.
8. Environment analysis
Market opportunities can also be identified by analyzing changes in the environment with technological and scientific
developments generating new business opportunities. For example, the growth of the Internet and smartphones’ penetration has
enabled the arrival of companies with new business models such as Airbnb and Uber. According to Euromonitor International, the
share of mobile internet subscriptions to mobile telephone subscriptions in the world was 20% in 2011, reaching 53% in 2016. And
while globally only 17% of households possessed a smartphone in 2011, this percentage reached 45% in 2016. Beyond mobile and
the Internet, artificial intelligence, robotization, internet of things, biotechnology and renewable energy sources also provide
multiple business opportunities.
Changes in a country’s regulatory framework can also create opportunities. Since June 2016, Chile requires companies to
include labels on products high in calories, sodium, sugars and saturated fats. This obligation may represent a growth opportunity
for healthier products not affected by the new labels. Euromonitor International expects product sales in Chile will be impacted
depending on the product type. Obtaining more market research on category and product sales in Chile may help identify categories
that have growth opportunities for new products without labels.
Other transformations in the environment such as climate change, geopolitical movements and changes in financial markets
also influence market opportunities. It is imperative to consider using market research to gain insight on the local business
environment; ensuring that your strategy will flourish in a new or developing marketplace.
Consumer segmentation, purchasing decisions, direct and indirect competitors, complementary products and services,
industry, foreign markets and environmental analysis are the eight types of analysis that will help your organization identify new
market opportunities. Using a variety of analysis will help your business gain a holistic view of opportunities and help create long-
term strategic business plans. Once opportunities are identified, companies must move quickly to create a plan. It is necessary to
develop a value proposition, plan the commercialization chain and estimate costs, revenues, cash flows and financing needs. Not all
market opportunities identified will succeed but experimenting will give answers on the potential of each.
To minimize the costs of failed opportunities, pilot testing new products, services or business models can be performed in
controlled areas. Risks in pilot testing include alerting the competition about your strategy. This risk must be compared against the
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risk and cost of launching a new product at a global scale and failing. When pilot testing many experiments will fail, but some will
succeed and be developed at a larger scale.
For example, in 2013 Coca-Cola launched Coca-Cola Life within the Low Calorie Cola Carbonates category. It was a pilot test
that started in Argentina and Chile, followed by launches in other countries like the UK, Sweden, Australia, Switzerland, Japan and
New Zealand. Sales of Coca-Cola Life did not grow as much as expected in many of these markets. According to Euromonitor
International, in 2016 Coca Cola Life reached less than 2% value share in Australia and less than 4% value share in the UK. As such,
Coca Cola discontinued the brand in those two countries. In other countries similar measures have been announced: retirement of
the product line within the market or reduction of production within the market. Pilot testing helped Coca Cola determine success of
Coca Cola Life, since a failure at a global scale would have had higher costs in terms of expenditure and brand image.

How to Identify Gaps in the Market

When developing a new product or service, it is critical to assess what need it will fill and what your competitors are offering. This so
called gap in the market could be the difference between an astounding product launch or an equally impressive product flop. Here
are ways you can identify a gap in your market:
1. Start with your strengths
Your strengths are based on your competence, or knowledge, skills, and experience. It is something that you like to do, and
when you are doing it, the outputs are amazing comparing with other people. Prepare yourself taking the following steps:
Create a list of your most important strengths.
Describe all the strengths you have listed in the previous step.
List the things you can do depending on those strengths.
Relate your strengths and the things you can do with possible problems. Problems that you can solve for other people.
In such a way you will know what you can do with the biggest strengths that you own.
2. Find a niche in the existing market where there are unsolved problems
You need to find a niche in an existing market where unsolved problems are related to your own strengths. How can you
find the niche in the existing market with unsolved problems that you can dominate while solving them?
You need to start with the market on which you want to focus your research to find the specific niche.
The best markets that are worth your focus will need to have:
 High demand for the solution of the problems.
 Many existing products and services solving such problems.
 Lots of easy to find customers.
 The competition that you can easily beat.
When you choose the existing market where you want to find the gap, you will need to take following action steps:
 Look again at your strengths and interests. Try to find a relation with the market and the problems that companies solve on
that market.
 Make a list of the specific problems that aren’t currently solved and you can solve them.
 Make a list of the specific Improvements of current problem-solving processes.
 Test your conclusions from previous steps. Ensure that you test with potential customers on the market you choose.
 Using this approach, you will come up with endless possible niche ideas. These niche ideas are possible places where you
find the gap in an established market. If you start with your strengths and get positive feedback from potential customers,
you are on the right way to dominate this niche in the market.
3. Monitor Trends in Your Area of Expertise
If you have your finger on the pulse of current trends, consider what is missing. Are there products that you yourself would
use but that are not on the market? Have you heard of any desired services from your network of colleagues? Keeping in touch
with those in your industry is a great way to monitor current trends and take advantage of opportunities when they arise.
Do you have a systematic method to trap items and ideas?
4. Elicit Feedback from Customers (and Listen to it!)
Do you routinely get feedback from your current and former customers? If not, you may be missing a golden opportunity to
offer something new (and profitable) to a group of individuals who already value your work. Maintaining regular contact with
your customers has the added benefits of keeping your company fresh in their minds as well as creating a natural pool of
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potential charter clients for anything new you launch. But sometimes clients are telling you what you want to hear. Using a
third party for some client interviews offers a different set of ears.

5. Evaluate Competitors’ Offerings and Differentiate Yourself

Hopefully you know who your major competitors are and what they are offering. How do you distinguish yourself from
them? Are you offering products or services that provide more (value, service, convenience, etc) to your customers? Making
sure that you not only know your competition but also how you differ from them will help you gain better control of your corner
of the market and identify any potential gaps.
Again outside perspectives and interviews with clients and prospects can help.
6. Think Globally
Sometimes the best idea has already been developed into a successful product in another corner of the world. A
German startup incubator, Rocket Internet, consistently generates billions of dollars per year by identifying successful
international companies and legally imitating their business model. Perhaps an international company holds the key to helping
you identify a gap in your own market.
7. Adapt an Existing Product or Service
You might already have an existing product or service that, with some changes, could be made into an even more profitable
asset. Take Netflix, the entertainment giant who successfully identified a market gap that its competitors were not filling.
Instead of wading through the aisles of a brick-and-mortar video rental store, Netflix customers could browse its impressive
array of DVDs online and receive them via mail. But, they didn’t stop there. They expanded their offerings to include streaming
services and, more recently, producing blockbuster tv shows (like House of Cards) based upon their own customer viewing data.
Do you have a current product or service that can be adapted to better fit the market? Or, do you have a competitor whose
product or service you can do better?
8. Hire Outside Resources to do the Legwork for You
If you’re having trouble identifying and taking advantage of a market gap, it might be time to call a professional. Outside
resources can help you by performing market research, identifying potential customers, obtaining feedback on product ideas,
providing unbiased input on your current direction, and utilizing a specialized network on your behalf.

CHAPTER 5: FEASIBILITY STUDY

The Pre-Feasibility Study
To narrow down the many opportunities into one or two attractive ones. The next step is to conduct a pre-feasibility study to
ascertain the viability of the opportunity. This time, the entrepreneur must go down to details and consider the following factors:
A. Market Potential and Prospects – Market potential is based on the estimated number of possible customers who might avail the
product or service.
1. Segmenting the Market – using a set of demographics (e.g., gender, age, place of residence, income, etc.) will be the most
basic approach in determining the target segment.
2. Assessing Competition – this process would determine how saturated the market is in the given area of coverage.
3. Estimating Market Share and Sales – entrepreneur should assess the potential market share he or she can attract.
B.Technology Assessment and Operation Viability – The entrepreneur would be able to determine whether the product or service
offering will meet the demand or not.
1. Quantities Demanded – this would determine the capacity of operations.
2. Quantities Specifications Demanded – dictates the quality of input, quality assurance of the process transforming input to
output. Quality output, and quality outcomes for the customers who will be looking for specific results.
3. Delivery Expectations – knowing how much, how frequent, and when to deliver to customers.
4. Price Expectations – the selling price would be evaluated by the customer.
C. Investment Requirements and Production / Servicing Costs – The entrepreneur needs to determine how much money is needed
to start the business opportunity which consideration to the technologies and operation levels required.
1. Pre-Operating Costs – these are the costs related to the preparation for the launch of the business.
2. Production / Service Facilitate Investments – long term investments for the actual business establishments.
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3. Working Capital Investments – this includes needed to operationalize the business, composed of cash, accounts receivable,
and inventories
D. Financial Forecasts and Determination of Financial Feasibility – Monetary transactions that the business is expected to engage
in. Financial forecasts will indicate the feasibility of the enterprise.
1. Financial Statement – measures an enterprise performance in terms of revenue and expenses over a certain period.

2. Balance Sheet
Assets – all the investments in the enterprise including the initial investments.
Liabilities – represents the enterprise debts to suppliers, to banks, to government, to employees, and other financiers.
Stockholders’ equity – investors’ investments in the stock (or shares) on the business.

3. Financial Ratios and Measurements

THE FEASIBILITY STUDY

 A feasibility study is more comprehensive and detailed.
 A feasibility study is prepared to convince bankers and investors to put money into the business opportunity.
1. A more in-depth study of market potential to ensure that the business proposal will reach the forecasted sales figure.
2. Proof that the product or service being offered has the right design, attributes, specifications, and preferred feature.
3. Proof that the entrepreneur and his or her team have the necessary experience, skills, and capabilities to maximize the
ventures chances of success.
4. Legal visibility
5. More detailed costing on the different assets and more justification for the production and operating expenses.

More thorough analysis of the technology and its sustainability.