opportunity, strategy & the evaluation of the business plan?
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Opportunity, Strategy & the Evaluation of the Business Plan? - The nature of opportunity, How entreprneeurs really work, can and do entrepreneurs use a business plan?, Business plan or business model?, Forecasting, formats, and evaluationTRANSCRIPT
Opportunity, Strategy & the Evaluation of the Business Plan?
Mohd. Murray Hunter
Discussion Today
The nature of opportunity
How entrepreneurs really work
Can and do entrepreneurs use a
business plan?
Forecasting
Formats
Evaluation
Business Plan or Business Model?
Small Business Verses Entrepreneurship
Raw materials
Transport
Production Transport
Warehouse
Supermarket
Community
Farm
Transport
Education
Research & Development
Management
Fossil Fuels Pollution
Power generation
Export/Import
Air Transport
Waste
Competition & Tension
Conflict
Government
Diversity
Economic Growth
Health Development Poverty &
Unhappiness
Consumption
Uncertainty
New Paradigms
Regulation
Merging Industries
Change
Shock
Gestalt
Competitor’s new products
Technology Demographics
New Information
Lifestyle
Changing Tastes
Economy
Regulation
New Opportunities
©Hunter (2011)
Product Opportunity
Gap
Social Social and cultural trends
and drivers Reviving historical trends Influence of international
trends
Technology State of the art and emerging technology Re-evaluating existing
technology Technology applied in new
areas
Economic State of the economy
Shift in focus on where to spend money
Level of disposable income Level of debt
Regulation Restriction of existing
regulations New regulations and impact
on product markets and supply chains
Perceptual Changes
The Environment
Experience
New Knowledge Changing
Domicile Outlook
Urbanization, growing
confidence about social status, etc.
New knowledge about health, fitness,
food, etc.
Aspirations
Where am I now?
Where do I want to be?
Global Convergence
Peers and Role Models
Attitudes
New technology
Changing traditions
Changing Affluence
The benefits of exercise and working out in a gym
Women wanting a safe and secure environment
Women feeling intimidated in conventional gyms in the weight
areas.
Not working out in
conventional gyms
Pick up women’s changing perceptions
Current situation
Changing Perceptions
Result in creation of Fernwood
Women’s Health Club Concept
Opportunity
Support/Facilitate
Regulate/Control Encourage/Discourage
Intellectual Property Laws
Anti-trust Laws
Taxation
Legal System
Board of Investment
Specific Regulatory Bodies i.e., Pesticides Board
Capital Raising Institutions
Labour Laws
Environmental Laws
Business Formation Procedures
Licensing & Permits
Contract Enforcement
Policing of Corruption
Property Laws
Education & Training
R&D Policy
Trade barriers & Protection
Product Standards & safety
Fiscal & Monetary Policy
Changing Technology
Relatively Stable
Flux & Transformation De
crea
sing S
tabi
lity
Increasing Complexity
Routine Non-Routine
Subsistence Farming
Cash cropping
Market gardening Consulting Business
FMCG Manufacturing
Small Retail
Wholesaling
Electronic Goods
Computer & Mobile Phone Airlines
Automobile Manufacture
DVD Rental
Medical Services Fast Food
Construction New technologies
New Business models
Imitation Replication & Extension
Allocative Supply/Demand changes
Demographic changes
Discovery Incongruities
Structural changes
Locus of change
Value creation
Analytical
Deductive (Black & white)
Intuitive
Inductive
Degree of ambiguity Active/Imaginative
Passive/Reactive The forms of opportunity©Hunter (2011)
Large Companies & Consumer Type
Markets High analytical & Low
intuitive opportunities, high strategy & low tactical
exploitation
Breakthrough Technology
High analytical and high intuitive opportunities, high
strategy & high tactical exploitation
Imitative Business
Low analytical & low intuitive opportunities, low strategy &
low tactical exploitation
Entrepreneurial
Low analytical & high intuitive, low strategy & high tactical
exploitation
Growing importance
of formal strategy
Growing importance of tactical moves
Low
High
Analytical
Low High Intuitive
©Hunter (2011)
Automobile
Chassis Engine Tires Control & management
Systems
Braking System Environment
Steel
Suspension systems
Fuel
Compression &
Combustion
Rubber
Chemical Processes
Plantations
Road Rules
Roads & Carriageways
Alloys
Hydraulics
Electronics
Microprocessors
Sources of Opportunity (Opportunity Anchors)
Market Void Technology Infusion
Structural changes Resource Monopoly
Regulation Non-Innovative
Incongruities
Demographic Changes
Perceptual Changes
Invention
Incremental Improvement
Adaptation
New Processes
New Materials
Changes in Industry Structure
New Processes
Adaptation, combination &
integration
Physical Resource
Capability Resource
Legal Resource
Brand Resource
Scarcity Power
Cost/value Shift
Effect on Product
Effect on Process
Personal Service &
Consulting
Duplication
Extension
Copy/ Imitation
Strategies for each source of opportunity
Market Orientated Firms
High adaptability to the environment but low
generative idea & strategy ability
Conservative firms
Very low adaptability to environment
Both Market & Entrepreneurially Orientated Firms
High adaptive and idea generative & strategy development ability
Entrepreneurial Firms
High generative idea & strategy capability
Mar
ket
Ori
enta
tion
Entrepreneurial Orientation
High
High
Low
Low
Four potential firm opportunity seeking typologies
Fastfood (General Characteristics)
1. Cheap 2. Good standard of hygiene 3. Good service 4. Fast and efficient 5. Specialize in a particular food 6. Know what to expect 7. A meeting place for people
Charcoal Burger Grill
1. Location near young people (university): convenient
2. Cheap and affordable 3. Good service 4. Authentic charcoal BBQ
burger grill (western style) 5. Convenient meeting place
with WiFi etc.
University
Location
Potential success parameters
Co
nce
pt
Extr
acti
on
Constructed Concept Concept Extraction
A (location) + B (characteristics) = C (constructed Concept)
A
B
C
©Hunter (2011)
Organically produced high active concentration shampoo with product
variants to suit various conditions.
Central Theme (Product Proposition)
Underlying Assumptions High & discerning
market end. Customers who
want mass custom produced
products.
Low competition in segment.
Rapidly growing segment.
Products match personal values.
Sustainable
Strategy Characteristics
Brand Theme
Features Benefits Signal
Attributes Channels
Customers
Laundry Service
Service Convenience Price Quality Relationship
Matching product to some marketspace
Matching marketspace to some product
Two ways to scan for opportunities
Ambition, sense of mission, attitudes, beliefs, values, available (and potential resources), self efficacy, networks, skills, competencies, and capabilities, etc.
Vision Platform
Micro-enterprise
Street Stalls
Corner Shops
Micro-entrepreneurs
Lifestyle Businesses
Independent specialty Retail SME Level
Large manufacturing
Independent Retail Chains
Large Business
Specialty Wholesaling
Automobile Manufacturers
Airlines
Universities
Modern Extensive Farming Enterprises
Large Pharmaceutical Companies
Banks
Mega Business
Mall Type Shopping Centres
Opportunities
Cognitive Bias
An identified market where enterprise resources and competencies will be able to exploit
The potential opportunity will have a large enough market size to sustain the enterprise
The enterprise will be able to take advantage of this opportunity better than any other competitors
Outside elements in the supply chain will support the enterprise
Any factor or group of factors that will allow the enterprise to grow in a
sustainable manner within the market environment
Threats
Competitors identifying the same opportunities and enacting upon them
The regulatory environment and potential changes within it
Inability to penetrate the existing supply chain and make alternative strategies
Dependence on survival from a single or very few customers
Depending on a single product for total Any factor or group of factors that may potentially hinder enterprise growth in a sustainable manner without any contingencies verse
acts of God, bad weather, drought, etc.
Strengths
Personal and enterprise competencies, knowledge & experience that can be utilized for the benefit of the enterprise
Facilities, infrastructure, financial backing & liquidity, long timeframe view
Ability to learn through research and experimentation
Any network connections with industry and access to the supply chain for both information and marketing
Ambition and vision (but not delusional), focus & commitment
Ability to innovate technically, market and organizational wise
Any factor or group of factors that can assist the enterprise gain
competitive advantage over its competitors
Weaknesses
Competency gap Short term timeframe, no fall back position if positive results
delayed or there are technical or market failures Poor infrastructure that hinders production or marketing Shortage of funds to undertake project to completion Qualified or lack of commitment by any key people within
organization Lack of network, knowledge and access to supply chain
Any factor or group of factors that can hinder the enterprise gain competitive advantage over its
competitors
Opportunities are seen with bias according to knowledge,
experience, wisdom, educational background, market knowledge,
competencies, etc.
Risks/ Uncertainties
Any factor or groups of factors
that make outcomes uncertain
in the future
Any factor or groups of factors that may lead to venture failure
Networks
Skills, Capabilities
Resources
Making Connection
Vision Platform
Time & Space
Strategy
Competitive Field
©Hunter (2011)
Idea/Product/Concept1. What is the idea/product/concept?
2. Is there a consumer need for this idea/product/concept?3. Do many people need this idea/product/concept?4. How do consumers cope with their problem/need/want without this idea/product/concept now?
5. Will this idea/product/concept provide a better solution to the consumer than what is already available?
Marketing1. Who are the potential customers and target market?2. How many potential customers are there (how large is the market)?3. Who are the competitors (and potential competitors)?4. How are your competitors doing in the market (decline, stable, growth)?5. Is it their major business (do they rely on other forms of business)?6. How will you promote the product (what advertising and promotion strategy)?
7. What will be your pricing strategy (what revenue over cost)?8. Do you have the ability to reach potential customers?
Skills
1. What skills do you need to realize the opportunity?
2. Do you have these skills or can they be acquired?
3. Are these skills commonly available to all competitors (and potential)?4. Can I manage this venture?
Networks
1. What networks do I need on the supply side?
2. What networks do I need to obtain resources (materials, people, finance)?3. What networks do I need on the sales side?
4. How crucial are these networks to success/failure?
Resources
1. What resources do I need?
2. Are these resources available?
3. Are these resources within my reach?
4. Are these resources available to everyone?
5. Will I have enough financial resources to sustain this venture?
Product
1. Does the product solve a consumer problem, or satisfy a want or need?2. Is this problem, want or need an important one?
3. What are the alternative solutions to the consumer?
4. What is the cost to the consumer of these solutions?
Product/Strategy
1. Can I develop a product/strategy that is different from others?2. Will this different product/strategy be valued (or provide benefits) to consumers?
Change In User Habits
Risk None
None
Some
Some
Great
Great
Dangerous
High
High
None
Change in how and where people buy the product
Medium
Medium
Medium
Low
Low
How Entrepreneurs Really Work
The Summarised
Entrepreneurial
Process
Idea
Turn into Opportunity
Final Commitment
Start-Up
Growth
Sustainability
Creativity
Innovation
Strategy
Sales
NPD
Resource Gathering
Your Moves
Your Competitor’s
Moves
Your advantages & Disadvantages
©Hunter (2011)
Ideas Opportunities Strategies Opportunity Performance match Match
Spots
Evaluates &
Elaborates
Selects
Implements & Modifies
Perception & Creativity
Innovation Strategic Thinking
Venture Operations
Capabilities Governing Competitive Scope
Competencies Entrepreneurial, Opportunity
identification, Network, Conceptual, Strategic, Commitment
Resources Networks
Uniqueness / Differentiation
Management Capability
Competitive Advantage Costs: To customers, to operate Knowledge: Competitive environment Relationships: Customers, suppliers, financiers, (relative power) Structure: Organizational ability Technology: strength
Opportunities
Environment
Firm Opportunity Trajectory
Firm Alternative Opportunity Trajectory
Field of Network Based
Opportunities
Can and do entrepreneurs use a business plan?
The Secret
Business PlanOr
Business Model?
Consumers
Positioning
Targeting
Segmentation
Market Identification
The Causation Process
Product idea to compete with
existing products in market
Attempting to create
some form of
competitive advantage
Opportunity
Refining the Idea
Concept
The set of possible ideas/products/markets
The Effectuation Process
Potential new novel product extending
market field or creating a new one through existing or new channels and business models.
Vision & Goals
Modified Vision & Goals
Actual Path & Performance
Wind in the case of a yacht or environmental turbulence in the
case of a firm.
X X X X
Evolved Strategy
Tactics Applied
Trial and error tactical use with various levels of Success/Non-Success
New Products Existing Products
Existing Markets
New Markets
Causation
Effectuation
Opportunity Shift
Present Networks
Needed Networks Realignment of Networks
Present Strategies
Needed Strategies Realignment of Strategies
An identified opportunity in
the past
Newly identified opportunity needing
different goals, strategies,
competencies, skills, resources and
organization than previously
Time
Present Organization
Present Skills & Competencies
Present Resources
Needed Organization
Needed Skills & Competencies
Needed Resources
Reengineering of Total Organization
What strategies are required to successfully
exploit the new opportunity and meet the organizations new goals?
Realignment of Organization
Realignment of Skills & Competencies
Realignment of Resources
What type of organization and business model is
needed to support the selected strategy?
What skills, competencies and technologies are
needed to support the new business model
and strategy?
What resources are needed to support
skills, competencies, technologies, new
business model and strategy?
What new goals are needed to exploit
the newly identified opportunity?
The Opportunity Landscape
New Goals Present Goals Setting of New goals
What networks are needed to exploit the opportunity, acquires
skills, technologies and resources, support the new business model
and strategy?
Com
petiti
vene
ss
Industrial
Industrial Markets These markets usually buy
materials and components to manufacture other products, or supplies necessary to run a
business. Manufacturers usually deal directly
with industrial customers or act through distributors.
Consumer
Consumer Markets Consumer products include automobiles, white goods, electrical goods, fast moving consumer
products and services, including financial, insurance, travel, etc.
Companies market and sell direct to consumers, through distributors and/or retailers, etc. Many manufacturers tend to
service national markets, while many service businesses are localized, except where companies have overcome fragmentation.
International
International Markets An international market could be any type of the other markets excepting it
is in a remote location from the enterprise.
The entering firm will have to decide whether to enter directly through a fully owned
subsidiary, joint venture with a local partner, utilize a distributor or other representative,
license or franchise the product or service to a local company. The enterprise will also have to adapt its strategies to the local ways of doing
things.
Resale Resale Markets Second hand goods, some
internet sites like eBay, Auctions & Real Estate, etc.
Sales often undertaken by intermediaries, pricing varies
according to demand & supply, power in market according to scarcity
Government
Government Markets Usually high volume capital &
service products. Goods usually decided upon through issuing specifications and tenders. In
some industries the government market can be up to 60% of the total market. This market although decisions made
through tenders, strategies based upon building strong relationships necessary.
Types of Markets
An exciting low cost airline to fly
on
Young & invigorating image
Baggage
No baggage transfers No connection with
other airline baggage services
Baggage surcharge Auto-check with no
baggage
Internet Bookings
Limited use of travel agents
Fast Aircraft turn-around times
Not burdened by traditional air and ground
crew procedures No connection with other
airlines
Standardized aircraft to cut down on
maintenance costs
Extra means of revenue
Paid snacks & meals Seating
Blankets Computerized ticketing
methods Related businesses -
hotels
General savings on overheads
Low landing charges and terminal fees
Headquarters located at airport terminal
Young good looking air & ground crews Modern and trendy
aircraft interiors Advertising image
Perspectives
A
va
ila
bilit
y I
nc
rea
ses
Usefulness Increases
Media Reports
Ideas
Data
Information
Knowledge
Wisdom
The Continuum from media reports to wisdom in relation to availability and usefulness
Where does the informati on come from?
$ Cost
$ Return
Deg
ree o
f P
rocessin
g
Final Product Form
Selection of Crop
Trials
Propagation
Land Preparation
Planting, Maintenance &
Irrigation
Harvesting & Extraction
Product Development
Final Product
Crop & Project Failure
No Return
Co
mp
os
t &
Mu
lch
Bio
fue
l
An
ima
l Fe
ed
Cru
de
Es
se
ntia
l Oil
Org
an
ic A
gro
-
pro
du
ct
Co
sm
etic
&
Aro
ma
the
rap
y
Nu
trice
utic
al
Ph
arm
ac
eu
tica
l
Conceptual Value Added Processing Options with Revenue and Cost
Implications
Consumers
Wholesalers & retailers
Manufacturers
Flavour & Fragrance Houses
Traders & Brokers
Primary Producer
Essential oil as primary Product. Focus on market demand & supply
and meeting standard
Essential oil as an ingredient in
a product. Focus on uses
and applications research
Manufacture of end products. Focus on
formulation and end product
development
Technical Focus
General or Niche Customers
Vertica
l Integ
ratio
n A
lon
g th
e Su
pp
ly
Ch
ain
Application Focus
Technology Focus
IP Focus (?) Specific
Customer
Branding Theme Consumer
Marketing Reaching
Mass or selected Markets
New Product Development
Agro Industrial Consumer Orientation Orientation Orientation
Consumer Trends
Important
Technical Trends
Important
Demand & Supply, Buying
Criteria Important
Venture Focus Along Different Parts of the Supply Chain
Potential New Crop Ideas screened through a process that eliminates
potential ideas.
? The industrial product ideation process aims to generate ideas from
a zero base.
Leads to one crop (idea) to be developed
Leads to many ideas to be further screened
Research into genetic material and propagation
methods
Ongoing genetic material improvement
research
Leads onto
Acceptable genetic material for commercial
production and a set of propagation
practices
Leads onto
Research into planting, spacings densities, best environmental conditions, nutrient and moisture levels
Acceptable field practices for the
crop
Leads onto
Research into harvesting methods, harvest
timeframes, pre-extraction handling methods
Acceptable harvest and pre-extraction practices for the
crop
Ongoing agronomic research aimed
towards better yields and chemical composition
Leads onto
Research into various extraction methods and
techniques
Acceptable extraction practices
Research into post extraction handling
methods
Acceptable post extraction handling
practices
Ongoing research into post extraction
handling
Leads onto
Leads onto
Leads onto Leads onto
The set of optimum enterprise site specific agronomic and extraction
practices
An Operational Farm Research and
Management Plan
Ideation
Evaluate for Opportunity
Develop Product Specifications
Market & Product Planning
Concept & Prototype Generation
Packaging Design
Manufacturing System Design
Product Registration
Further Product Formulation
Final Product & Packaging Review
Limited Test Market Refinement of
Product Before launch
Product Launch
Post Launch Product
Refinements
The generation of an original product idea from some source
Development of a desired list of
product attributes
Idea needs to be evaluated to determine whether it is a viable market opportunity
Early attention needed to prevent delays in final
approval
Difficult to organise because of high customer
concentration
Needed to fix any unforseen product issues immediately before/after
launch
Both technical and market aspects
The design of plant for new product forms will require a
number of product formulation modifications
Concerned about encapsulating desired theme and attributes into packaging
Early product/strategy concepts
Objectives
Sales Profitability Growth Sustainability Survival
Competitive Strategy
New Product Development
Marketing Strategy
Intellectual Property Strategy
General Operational Strategies
Resource Strategies
Capital Goods
Strategy
Finance Strategy
Personnel Strategy Supply Chain
Strategy
Business Model
Procurement Strategy
Manufacturing Strategy
Accounting
Work Procedures
Operational Policies
Competitive Capability
Strategic Decisions
Opportunity
Competitive Rivalries Lemongrass quick yield and straightforward to cultivate and distil – expect high elasticity of supply from both existing and new producers. Producers of substitutes very aggressive
Bargaining Power of Suppliers Collecting the most suitable planting material require effort. Extraction and harvest .technology needs to be acquired or developed Analytical equipment or service maybe expensive/remote.
Substitutes Citral (main constituents) can be produced from a number of chemical feed stocks. Alternative oils (litsea cubeba) cost much less to produce. Lemon myrtle oil much smoother and acceptable to end users Many alternatives to lemongrass in product formulations.
Trends & Technology Alternative technologies to steam distillation (CO2) can make much smoother oil but will increase capital needs greatly. Natural, exotic, organic, FAIRTRADE could increase oils popularity (?) if seen as exotic.
Substitutes
Tre
nd
s &
Te
ch
no
log
y
Bargaining power of buyers
Bargaining power of suppliers
Competitive Rivalries
Re
gu
lati
on
Regulation SCCP placed lemongrass oil under scrutiny as a cosmetic ingredient in EU.
Industry Competitors
Intensity of Rivalry
Bargaining Power of Buyers Currently small item of trade in flavour industry, strong relationships with established producers.
High Market Growth Low Strong Weak Relative Competitive Position
Crude Essential Oil Steam Distilled
Essential Oil under
CO2 extraction
Cosmetic production for international
market
Organic Cosmetic
production for international
market
Essential Oil Based Agro-
chemical
Organisational Capability Creative, Opportunity, conceptual, strategic, Learning, Organisational, financial, Technical,
Marketing, Networking and Commitment Competencies
How the Business is Currently Performing
The base for potential future Development
Resources Existing and Available to the Business
The Set of Potential Opportunities
Tim
e a
nd C
om
pany
Evo
lutio
n/C
han
ge
Enterprise Performance
Personal Objectives
Stre
ngth
s and W
eaknesse
s T
hem
e Personal Resou
rces Netw
ork Product M
anagem
ent Fin
ance
4 Ps & S
kills Facilities A
ttributes
Exte
rnal In
fluence
s &
Thre
ats
M
arke
t E
conom
y Reg
ula
tion T
echnol
ogy
P
ositio
n Soc
ial S
ituat
ion Chan
ge &
Com
petition
A
spirat
ions
D
evel
opm
ent
Key internal influences on the strategic
process
The process of product/market development
Key external influences on the strategic
process
Competitive Position
Cognitive Bias
Structural/ Support Strategies
Interventional Strategies
Essential Oil Development Research Project Gantt & Milestone ChartActivity/Research Objectives Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Genetic Material/Propagation1. Selection Initial selections2. Propagation trials Seed/vegetative3. Index selection Continuing ProgLand Preparation1. Clearing & Initial Preparation 10 Ha. Plot2. Level & slope3. Irrigation infrastructure Sprinkler systemPlanting/Maintenance Trials1. Trial row planting/spacings/plots Var. densities2. Nutrient trials NPK x 3levels3. Weeding trials Manual vs. chem.Harvesting Trials1. Harvest trials Manual2. Post harvest handling variations Packing density3. Mechanisation trials Mod. HarvesterExtraction Trials1. Distillation trial (part maturity) Stage sampling2. Distillation trial (full maturity) Ea. Rep. plots3. Large scale field distillation compare lab samp4. Variances of distillation times Yield/constituents5. Charge packing variance trials Yield varianceEconomic Appraisal Full castings
M1: Propagation Methodolgy
M2: Optimum spacing/density
M3: Optimum Nutrient levels
M4: Optimum weed control techniques
M5: Knowledge Yields & Biomass
M6: Knowledge composition/
Var. conditions
M7: Optimum Distil parameters
M8: Full economic study
Format
Forecasting
Rate of Adoption
100%
80%
60%
40%
20%
1975 1980 1985 1990 1995 2000 2005 2010
Innovation Growth Maturity
Checklists
Questions you should ask about financial viability?
1. Costs of Crop Domestication
o Can they potential crop be domesticated into field production easily?
o If not, will biomass be wild-collected?o What method would be most suitable for
propagation, from seed, cuttings, tissue culture, other?
o Does nursery propagation of the potential crop require any other special care?
o What staffing will be required?o What would be the approximate costs of
achieving the above?
2. Field Preparation and Infrastructure
o What overall infrastructure will be needed?, i.e., nursery, road access, fencing, outbuildings, farming equipment, etc.
o What land preparation is needed, land levelling and contouring, drainage, etc.
o Does the crop require large amounts of water to thrive during growth?
o Is there adequate water available through rainfall to satisfy this?
o Will irrigation be required? If so, what method? Will dams and catchment areas have to be constructed to ensure a plentiful water supply?
o What will be the approximate costs of this?o Are there any other potential costs?
3. Planting and Maintenance
o Approximately how long will the crop take from field planting to harvest maturity?
o How will the potential crop be planted?, manually/automated? What will be the costs involved?
o What would the approximate planting density be?o Will nutrients have to be applied? If so, how
regularly? How much? What method will be used to apply them? What will be the approximate costs of this?
o How often are re-plantings required? After each harvest, after a number of seasons, after how many years, what are the costs involved to prepare for each re-planting?
4. Harvesting, Extraction and Post Extractiono Is harvest timing crucial?, i.e., a time of day, a very short window
in a particular month, etco What are the costs involved in achieving this harvest window?o What method of harvest will be utilised? Manual, semi-
mechanised, fully mechanisedo What would be the approximate costs of building the harvest
equipment?o What method of extraction will be required? Hydro-distillation,
steam distillation, destructive distillation, vacuum distillation, solvent extraction, other
o What power sources will be utilised? What are their costs?o How will spent biomass be dealt with? Does it have any
economic value or can it be used back in the farming process?o Is the technology understood for the above processes? If not,
what will be the costs of acquiring it?o What will be the fabrication costs to build the above?o What regulations (i.e., EPA) are relevant to the processes? And
how much will development and compliance cost?o Will specialist staff be required?o What would the approximate cost of energy to oil yield?
5. Estimated (guessed) Project Size and Yieldso How many hectares do you anticipate to
cultivate?o How many years will it take to achieve this?o What (based on literature and other
knowledge) would be the approximate biomass per hectare achievable? (min. and max. est.)
o Does the biomass have to be wilted, stored or otherwise processed before extraction?
o What would be the yield as a percentage of biomass after extraction?
6. Estimated Financial Viabilityo 1. Research costs =o 2. Costs of crop domestication =o 3. Field preparation and infrastructure costs =o 4. Propagation, planting and maintenance costs =o 5. Harvesting, extraction & post extraction costs
=o Total Capital Costs (1+3) =o Total operational costs (2+4+5) =o Total amount of oil yielded =o Total oil value =o Value – total operational costs =o Return/total capital costs x 100 = Return on
investment
Competencies Required During the Essential Oil Development Process
Screening & Bio-prospecting
Propagation & domestication or
introduction
Planting, cultivation & maintenance
Harvesting, Extraction and
wastage handling
New product development &
creation of value added products &
activities
Strategic, operations, finance and technical
management
Product & venture management
Marketing & commercialisation
Sustaining and growing the enterprise
(adapting & survival)
Output: Result/Performance, Sustainable and healthy enterprise or
a struggling and failing enterprise
Opportunity and technical competencies require:
Botany, ethno-botany, research ability, chemistry, bio-chemistry, analytical
chemistry. Market and specific technical product knowledge
Technical Competencies require: Plant physiology, micro-propagation, nursery
management, agronomics
Technical competencies require:
Bio-system engineering, Soil management,
entomology, plant nutrition, Agronomics, field
management, irrigation engineering
Technical competencies require:
Thermodynamics and plant physiology, heat transfer, distillation engineering,
chemistry, chemical engineering, agricultural
engineering, environmental engineering (waste
management)
Strategic, opportunity and technical
competencies require: Project management,
marketing management, chemistry, cosmetic
chemistry, perfumery/ flavour knowledge,
Packaging & design, manufacturing
engineering
Strategic, organizational, relationship opportunity competencies require:
Business strategic, industry knowledge, industry
networks, ability to raise finance, ability to plan,
implement & adjust, leadership, entrepreneurial
Strategic and organizational
competencies require: Administrative, financial management, technical management, strategic
management, personnel management, resources
management, entreprenuerial
Competency Present Not Present Comments
Technical 1. Botany2. Plant Physiology3. Chemistry/Analytical4. Micro-propagation5. Nursery Management6. Environmental Engineering7. Chemical
engineering/thermodynamics/etc8. Soil Management9. Agronomy/plant nutrition/field
management10. Entomology11. Irrigation engineering12. Agricultural Engineering13. Regulation knowledge14. Cosmetic chemistry/food etc15. Perfume/flavours16. Packaging & design17. Consumer product manufacturing
Basic
BasicExperienc
eExperienc
eExperienc
eBasicBasicBasic
LowLowLowLowLowLowLowLowLow
Need guidanceNeed assistanceNeed guidance Assistance AvailableCan design Need appraisalUse contractorUse instituteReplicated experimentsWith EnvironmentUse contractorCan developNeed assistanceLearn from experienceUse contractor
Opportunity/Entrepreneurial/Commitment1. Able to screen environment for
opportunities2. Able to evaluate opportunities3. Commitment level
YesYes
Passionate
Need to see realistically
Relationship1. Have relationships in target
industries2. Have relationships in research
area3. Have relationships in finance
industry
A fewA fewSome
Organising/Management1. Able to project manage2. Able to administrate3. Able to financially manage
operation4. Able to undertake research5. Able to keep key people
motivated
YesYesYesYesYes
Strategic1. Understand dynamics of market
and industry environment2. Able to plan for a business
within this environment3. Able to implement, evaluate
and adjust plans in this environment
YesYesYes
Believe so but not tested
Budget Items for an Essential Oil Research Project1. Capital Equipment and Infrastructure Developmenta) Land Preparation
Field preparation Fencing Buildings (equipment storage, office, processing equipment, etc) Access roads and internal roads Dams and irrigation equipment
b) Farming Equipment Tractors and accessories Ploughs, etc Basic farming implementsa) Harvesting Equipment
Harvester and foliage binsCart and/or field trays
b) Processing Equipment Field and/or commercial distillery Source for steam generationa) Laboratory Equipment Laboratory distillation equipment Glassware Scales GC (optional)a) Regulatory Compliance Any licenses relevant to rural operations
1. Project Costsa) Seed and/or other genetic materials
Cost from seed supplier/merchant Travel and costs of field procurement
b) Nursery Seed germination housing (pest, sun and weather proof) Potting transfer facility (weather protected) Tissue culture facility (if required) Nursery materialsa) Farm Chemicals and Supplies Fertilisers Pesticides/Herbicides Other agricultural materialsa) General Overhead Costs Electricity, rates and other expenses Insurance & sundries Repairs and maintenance1. Project Operational Costs
Wages & salaries (general workers) Administration costs Consultation, researcher costs and allowances Travel and accommodation Other operating expenses
Resources
Tangible Resources Intangible Resources
Product Designs
Knowledge
Intellectual property
Research & Development
Creativity Brands
Team Specific Experience
Reputation
Organizational Routines
Relationships
Passion
People
Plant & Equipment
Property & Location
Technology
Cash & Other Finance
Access to inputs
Business model
Time
Organizational Culture
Wool Processing
Raw Woolen Materials
Skilled Employees
Incoming Trends & Ideas
Fabrics & Fashion
Skilled Designers
Technology (Universities & Research
Institutions)
Suppliers
Dye & Chemical Industries
International Supplier Chains Wholesalers
Retailers Domestic Supply Chains
Retailers
Wholesalers
Deve
lope
d Fir
m
Valu
e Cha
ins
Finance Houses
Support Businesses All kinds of Knowledge
Perceived Opportunities
Rese
arch
Strategies
Spin-off Opportunities
Critics & Media
Regulatory
Competitive Environment (Direct & Indirect Competitors)
Decision Maker
Inside the firm Father
Accountant
Bank
Customer
Employees
Property Owner
Competencies
Friends
Expectations
Suppliers
Auto Parts manufacturers
Automobile manufacturer
Coordination, Kanban, JIT, etc.
Independent Dealerships
Sales coordination, Custom Ordering
Service Centres
Consumers
In constant communication about service times and
other car owner information Road Side Assist
Schemes
Sources of Technology
Suppliers
Customers
Competitors
Regulators Other
Stakeholders
Critical
Necessary
Important
Useful
Not Important
Customer A
Customer B
Customer C
Wholesale A
Wholesale B
Supplier A Supplier B
Supplier C
Backup Supplier A
Backup Supplier
B+C
Supplier D
Supplier E
Accountant
Bank
Father
EPA
Taxation
Systems Software
Best Friend Competitor A
Competitor B
Competitor C
Stakeholder category
Priority
A New Venture Checklist
Basic Feasibility of the venture• Can the product or service work?
• Is it legal?
Competitive Advantages of the New Venture• What specific competitive advantages will the product/service offer?• What are the competitive advantages of firms already in business?
• How long will it take for firms to respond?• Will the initial competitive advantage be maintained?
Buyer Decisions in the Venture• Who Are the customers likely to be?
• How much will each customer buy and how many customers are there?• Where are these customers located and how will they be serviced?
Marketing of the Goods and Services• How much will be spent of advertising and promotion?• What share of the market will the company capture?
• How long will it take to capture?• Who will perform the selling functions?
• How will prices be set?• How will they compare with competitors prices?
• How important is location and how will it be determined?• What distribution channels will be used – wholesale, retail, agents, direct?
• What are the sales targets? By when should they be met?• Can any orders be obtained before starting the business? How many?
Production of the Goods and Services• Will the company make or buy what it sells?
• Or will it use a combination of these two strategies?• Are sources of suppliers available at reasonable prices?
• How long will delivery take?• Have adequate lease arrangements for premises been made?
• Will the needed equipment be available on time?• Do any special problems with plant setup exist?
• How will quality be controlled?• How will returns and servicing be handled?
• How will pilferage, waste, spoilage, and scrap be controlled?
Staffing Decisions in the Venture• How will competence in each area of the business be ensured?
• Who will have to be hired? By when? How will they be found and recruited?• Will a banker, accountant, lawyer or other advisors be needed?
• How will replacements be obtained if key people leave?• Will special benefit schemes need to be arranged?
Control of the Venture• What records will be needed? When?
• Will any special controls be required? What are they? • Who will be responsible for them?
Financing the Venture
• How much will be needed for the development of the product or service?• How much will be needed for setting up operations?
• How much will be needed for working capital?• Where will the money come from?
• Which assumptions in the financial forecasts are most critical and uncertain?• What will be the return on equity, sales?
• How does it compare with the rest of the industry?• When and how will investors get their money back?
• What will be the need from the bank?• What will be the bank’s response?
Pitfalls to look for in Selecting New Ideas and Opportunities
• Lack of Objective Evaluation
• No real insight into the market
• Inadequate understanding of technical requirements
• Poor financial understanding
• Lack of Venture uniqueness
• Ignorance of legal issues
Why New Ventures Fail (look for anything fundamentally wrong)
• Insufficient Capital
• No business plan
• No managerial focus
• Inadequate records
• Lack of profit focus
• Cash flow
• Inadequate systems
• Failure to plan for taxation
• Inadequate resource management
• Break even point
Business Plan Assessment
There are 10 components of a business plan
1. Is your business plan thorough in all areas
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
Executive Summary
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
Description of the Business
Have you covered this in
the plan?
Is the answer clear? (Yes or
no)
Is the answer Complete? (Yes
or no)
What type of business will you have?
What products or services will you sell?
Why does it promise to be successful?
What is the growth potential?
How is it unique?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
MarketingHave you
covered this in the plan?
Is the answer clear? (Yes
or no)
Is the answer Complete? (Yes or no)
Do you have a pricing strategy?
How big is the market?
Who will be your competitors?
How are their businesses prospering?
How will you promote sales?
What market share do you want?
Who will be your customers?
What A&P strategy will you use?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
OperationsHave you
covered this in the plan?
Is the answer
clear? (Yes or no)
Is the answer
Complete? (Yes or no)
Have you identified a specific location?
Have you identified the advantages of this Location?
Are there any zoning or tax considerations?
Will you have access to transportation?
Will your suppliers be conveniently located?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
Management Have you covered
this in the plan?
Is the answer clear? (Yes or
no)
Is the answer
Complete? (Yes or
no)
Who will manage the business?
What qualifications do they have?
How many employees will you have?
What will they do?
How much will you pay them?
What consultants do you need?
What legal form of organisation will you have?
What regulations will affect your business?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
Financial
Have you covered
this in the plan?
Is the answer
clear? (Yes or no)
Is the answer
Complete? (Yes or no)
What is your total expected business income for the year? Quarterly for the next two years? (Forecast)
What is your expected monthly cash flow duringThe year?
Have you included a method of paying yourself?What sales volume do you need to
make a profit during the three years?
What will be the break even point?What are your projected assets,
liabilities, net worth?What are your financial needs?What are your funding sources?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
Critical RisksHave you covered
this in the plan?
Is the answer clear? (Yes or
no)
Is the answer
Complete? (Yes or
no)
What are the potential problems you have identified?
Have you calculated the risks?
What alternative courses of actionExist?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
Harvest StrategyHave you covered
this in the plan?
Is the answer clear? (Yes or
no)
Is the answer
Complete? (Yes or
no)
How have you planned for theOrderly transfer of the venture
Assets if ownership of the venture is Passed to a corporation?
Is there a continuity of businessStrategy for orderly transition?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
Milestone ScheduleHave you covered
this in the plan?
Is the answer
clear? (Yes or no)
Is the answer
Complete? (Yes or no)
How have you set your objectives?
Do you have deadlines for eachStage of your growth?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
Appendix & Bibliography
Have you covered this in the plan?
Is the answer
clear? (Yes or no)
Is the answer
Complete? (Yes or no)
Have you included any documentsDrawings, agreements, or other
Materials needed to supportThe plan?
Are there any names of references,Advisors, or technical sources
You should include?
Are there any other supporting documents?
5 Outstanding (thorough and complete in all areas)4 Very good (most areas covered but could use improvement in detail)
3 Good (some areas covered in detail but other areas missing)2 Fair (a few areas covered but very limited detail)
1 Poor (no written plans)
SummaryComponents Points
Executive Summary
5 4 3 2 1
Description of the business
5 4 3 2 1
Marketing 5 4 3 2 1
Operations 5 4 3 2 1
Management 5 4 3 2 1
Financial 5 4 3 2 1
Critical Risks 5 4 3 2 1
Succession Planning
5 4 3 2 1
Milestone schedule
5 4 3 2 1
Appendix 5 4 3 2 1
Score
50 Outstanding (the ideal business plan)45-49 Very Good
40-44 Good (the plan is sound with a few areas that need to be refined)35-39 Above Average (this plan has some good areas but needs improvement
Before presentation)30-34 Average (some areas covered in detail yet other areas show
Weaknesses)20-29 Below average (most areas need greater detail and improvement)
Below 20 Poor (plan needs to be researched and documented much better)
Thank You