entrepreneurship the entrepreneurial process … beyond the books! escp-eap - european executive mba...

EntrepreneurshipThe entrepreneurial process

… beyond the books!

ESCP-EAP - European Executive MBA

LONDON WORKSHOP - December'05, 16th and 17th

Bienvenue !

Charles Fouché

MBA BabsonField Consultant Management in adversityEship ESCP-EAP

Unemployed people Ph D at Lille (France)

Entrepreneur Tisanes Fouché

Email : Chfouche@yahoo.comOffice : 00 33 1 30 59 60 05

Traditional eship approach, hum…

The Main Idea

Entrepreneurship is not like

in the books or in the magazines !

Only trust the “DOERS” !

Not the counselors

WE WILL TRY TO REMAIN AS CONCRETE AS POSSIBLE THROUGHOUT THIS WORKSHOP

Workshop goals

• Break misconceptions• Hammer actual business creation issues• Provide concrete methodology to start up• Build up a short list of common mistakes

• Meet your expectations

• Fine tuning for next workshops

By the way …

• Who are you ?• What are your expectations ?• Did you come with a project ?

Day 1

Friday 6H

Intro and overview

Presentation and Business Model Game

Eship fundamentals IHow to approach business creationKey success factors of the new venture

Case – Beautiful Legs by PostInto the business planBusiness Model Team work

Day in a nutshell - Debriefing

Program13:30 to 20:00

Eship fundamentals II From Dream to reality

Real Case : Start a distribution companyRound by round approach

Testimony : Innocent DrinksStart up storyEuropean subsidiaries set up

Tisanes Fouché’s story – if time allows

Final Debriefing

Day 2

Saturday 6H

Program8:30 to 16:30

Presentations and BM game

I HOPE

YOU ARE PREPARED !

VOLUNTEERS ONLY OF COURSE !

Presentations and BM game

5 minutes max.

HOW DOES YOUR ACTIVITY

MAKE MONEY ?

Convince us

to invest money in it

because of its profitability.

Eship fundamentals 1

Breaking the myths …

Public press (Forbes, Fortune,…)

Media

Success stories

Some Consultants

Our own fantasies

The entrepreneurial path is polluted !

Setting up your business is NOT

Eship fundamentals 1

Breaking the myths …

Finding the “unique” idea with no competitors

Writing the million $ winning Business Plan

Retiring as a millionaire in your mid 30’s

Doing great advertising

“Thinking global” !

Going public within 3 years

Organizing successive fund raisings

Networking

Key Success factors are not

Eship fundamentals 1

Breaking the myths …

Comprehensive all inclusive business plan

Great intellectual reasoning skills

Natural capacities to speak in public

Expensive international consulting advices

Association with your college mates

Let’s go back to

the basics

and let’s stick to them !

Eship fundamentals 1

Breaking the myths …

Simplicity and

good common sense

Back to …

Eship fundamentals 1

Breaking the myths …

Business organization …

Eship fundamentals 1

Back to the basics

ENTREPRISE, … A COMPLEX SYSTEM

STATE AND COLLECTIVITY SOCIAL SERVICES

DIRECTION & ORGANIZATION

COMPONENTS

DYNAMIC IN SPACE AND TIME

JOB MARKET

CONSULTANTS

LOGISTICS

OPERATIONSSALES

ADMINISTRATIONInvoicing

RESEARCH&

DEVPT

HUMAN RESSOURCES

BOOK KEEPING

ACCOUNTING

LEGAL & ADMINI.

CLIENTS

AF

TE

R

SA

LE

SS

AL

E F

OR

CE

Social taxesTaxes

PDTS & SERVICES

SUPPLIERS

ALWAYS

KEEP IN MIND

THAT YOU ARE SIMPLY

TRYING TO BUILD SUCH AN ORGANIZATION

Charles Fouché, ESCP-EAP

WHATEVER THE SIZE OF YOUR BUSINESS …

Eship fundamentals 1

Back to the basics

Charles Fouché, ESCP-EAP

But where does it start ?

It starts with YOU

Eship fundamentals 1

Back to the basics

Entrepreneur… hum … a way of life !

Working time

Break even

Salary evolve

Saving power

Stress level

35 to 60 H 50 to 75+ H

Average/ regular Potentially high

High but limited Extremely high

Step 1 is your choice !

Eship fundamentals 1

Back to the basics

Forecast over 10 years compare current trend vs. possible

Employee Self employed

immediate uncertain

steady irregular

EXPOSURE ON MANY SKILLS

SURROUNDED BY « PREDATORS »

IN AN ENVIRONMENT

WHERE MONEY IS

“A KEY TOOL”

Charles Fouché, ESCP-EAP

Eship fundamentals 1

Back to the basics

Employees

-work load+ salary

European: volatility and versatility of the legal and fiscal framework

always more +++

State

Suppliers

+ charge- provide less

Customersbetter products- expensive

IN A PERMANENT TIME RACE LIFE IN

HOSTILITY

WHAT IS THE WAY TOWARDS SUCCESS ?

Charles Fouché, ESCP-EAP

Eship fundamentals 1

Critical success factors

ONCE YOUR CHOICE IS MADE

WHAT IS

BUT ?(SUCCESS?)Charles Fouché, ESCP-EAP

Eship fundamentals 1

Critical success factors

SUCCESS IS

FOR MOST ENTREPRENEURS

TO EARN THEIR LIVING

Charles Fouché, ESCP-EAP

Eship fundamentals 1

Critical success factors

TO LEARN THEIR JOB

IS BUSINESS CREATION

A PATH! Charles Fouché, ESCP-EAP

A LONG AND DIFFICULT PATH …

Eship fundamentals 1

Critical success factors

« READY TO USE » RECIPIES

DO NOT WORK DO NOT EXIST

HOW TO PROCEED AND SUCCEED ?

Charles Fouché, ESCP-EAP

Eship fundamentals 1

Critical success factors

ONCE YOUR CHOICE IS MADE

DO NOT FOCUS ON INCORPORATING

First thing to start,

Eship fundamentals 1

Critical success factors

(You will incorporate as late as possible)

One of the biggest

misconception !

unique idea is nothingIdea “centered” project are terrible

most of the time !

Your idea !

Eship fundamentals 1

Critical success factors

What is my personal break even ?

Is the business concept solid ?

Do I have the proper execution skills to do it ? Is it possible to find them ?

Your first concerns are:

Eship fundamentals 1

Critical success factors

Viable business concept is identifiable :

Charles Fouché, ESCP-EAP

A new approach to existing business

Real, existing equivalent exist today

The existing market is large

The team has all the execution skills

Eship fundamentals 1

Critical success factors

First, focus on

Eship fundamentals 1

Critical success factors

A) Finding benchmarks and competitors Understand their B.M. , their organization

B) Learning the industryMark the main trade shows, …

once for all, forget about the “no competitor project”

Take your time …

- The idea …

- Formalization of the idea + 1st trials

- Trials development + structure

- Incorporation: “The wick is turned on !”

- 1st actual difficulties

writing

the BP

Take the time to find out how to make money

Eship fundamentals 1

Critical success factors

Then, focus on validating !

Eship fundamentals 1

Critical success factors

A) Formalize : Business Plan writingHow the project generates money !

B) Define : Organize pilotsHow you can actually test you project with minimum investment

Two basic questions to calibrate your project

How much money each unit sold generates?

Eship fundamentals 1

Critical success factors

Contribution =

Selling price* - Cost** Without VAT

How many units do I have to sell to survive?

REMINDER

How many units do I have to sell to live?How many units do I have to sell to grow ?

How can I test my concept ?

Eship fundamentals 1

Critical success factors

CASH IS SCARCE !* With ot Without VAT

REMINDER

… at low costs

Conceive “smart” tests, even if you have money

Take your time …

- The idea …

- Formalization of the idea + 1st trials

- Trials development + structure

- Incorporation: “The wick is turned on !”

- 1st actual difficulties

writing

the BP

Take the time to find out how to make money

Eship fundamentals 1

Critical success factors

1) Use the Sahlman framework to evaluate this new venture.

2) Would you invest in this new venture ? List the reason for your decision.3) What are the purposes of this business plan ?

4) How well does the plan fulfill those purposes ?

5) Can you recommend any improvements to the BP ?

6) Are Elizabeth and Dickon realistic about fund raising ?What might happen if they fail to raise £ 110.000 in the next 30 days ?

Business Case

Beautiful Legs by PostLet’s go into a business plan

Business Case

Beautiful Legs by PostTEAM WORK

You dig in the presented business model

Find the key variables of their business

Their relative sensitivity

What can you conclude ?

The day in a nutshell

1. Do not dream

2. Do not rush

3. Define your personal break even

4. Then your burn rate

5. Focus on your Business Model

6. Organize unofficial series of tests

7. Only you can sell your products

8. Formalize as you go

Suggestions for tomorrow