This document discusses approaches to business planning for new venture creation and new business development. It explains that planning allows entrepreneurs to learn before doing through testing assumptions and reducing risks. While some argue planning is unnecessary or a waste of time, the document reviews learning theory showing that planning facilitates faster decision-making and understanding of the business. It then discusses competitive analysis as an important part of planning, highlighting the need to understand customers, competitors, and partners to develop insights.

3. Planning as a way to
prepare for new venture
creation & new business
development
02-10-2012
Wynand Bodewes

4. Today
4
• 18.00 - 19.00
o To plan a business you need to have identified an
“entrepreneurial opportunity
o What could be reasons to plan
• 19.00 - 20.00
o What could be approaches to plan

5. How can one identify
opportunities?

6. By using patents as inpiration
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7. Patents
• Claim to represent a novel solution to a problem
• Often, a single solution can be used to solve multiple
problems
• Help you focus on problems that you otherwise would not
have known or observed
• May provide an unfair-advantage
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8. It is NOT about the patent, but about the solution that it provides to a PROBLEM.

9. “I invest in management, not ideas.”
EUGENE KLEINER
VENTURE CAPITALIST
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10. Finding Fertile Ground
• Fertile ground = Problem + Solution
• Hence, you have two issues
• what problem?
• what solution?
• Where to start?
o From problems?
• to learn that there is no solution (within reach)?
o From solutions?
• to learn that there is no (REAL) problem?
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11. Finding Fertile Ground
• Over the years I (and others) have learned that student-
teams often have great difficulty finding fertile ground when
they start from problems that they already know.
o Leads to business plans that not only present unattractive
business propositions, but that also trigger too little
learning
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12. Technology = know how to (solve a problem)
For example:
“Natural Sourcing B.V. will deliver a cheaper and
environmentally friendly input material to cardboard
manufacturers, of equal fibre quality, and at a stable price and
supply”
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13. Finding Fertile Ground
• Starting from a technological domain forces you explore new
territory
• Technologies are often patented
o Preferably use a technology for which you can get a
“license to use”, otherwise you will have to try and “invent
around”
o That is why you MUST work with a patent (solely) owned
by a Belgian university, or public research institute
• Use the patent (only) as a source of inspiration
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14. Let’s generate ideas!
Get the picture: read the description of the
patented technology (next slide) and
come up with ideas for its applications.

16. Self-Cleaning Glazing Sheet
• “This invention relates to self-cleaning glazing sheets, to
multiple glazing units or laminates, windows and facades
comprising self- cleaning glazing sheets.”
• “Self-cleaning glazing sheets have a hydrophilic surface.
Rain or other water which contacts the hydrophilic surface
will spread over the surface and wash dirt away from it. It is
beneficial to glaze windows with self-cleaning glazing sheets
because they require less cleaning than ordinary windows.”
• “A particularly useful type of self-cleaning glazing sheet is
one whose hydrophilic coating is photocatalytically active.”
16

17. Let’s generate ideas!
Come up with ideas for its applications.
you have 5 minutes.

18. Generating Ideas
more ideas are generated when
brainstorm individually and in a team
focused ideas are generated when you
put constraints

19. Generating ideas
Come up with ideas for the building
industry
You have 5 minutes

20. Business planning
• Why should you learn how to do proper business planning?
o As soon as they are printed, they are out of date. – They are
founded on endless assumptions.
o Creating them distracts you from "real work"
• Hmm, you may not need to plan to start a business, yet for
novice-entrepreneurs it may be helpful to “think aloud” how a
possible venture would operate.
o Thought experiment
o Motivational device
o Pedagogical instrument 20

21. Finding your opportunity
• We have a few opportunities for you
• NVC: patents from LRD
• NBD: proposals via VKW
• Find your own opportunity
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22. So what about planning?

25. Will business planning help?
• its value varies systematically with
– the type of founding environment,
– the type of activities pursued in planning, and – the effort
devoted to specific activities.
• planning is to be embedded in a founding environment that
determines which rationale should govern planning activities.
– Munificent
– Trade-off (speed versus comprehensiveness)
• planning has an important impact on the achievement of venture
development milestones
• in some contexts, exhaustive planning is inferior to a more
selective planning approach
• Gruber, M. 2007. Uncovering the value of planning in new venture creation: A process and contingency perspective. Journal of Business Venturing,
22(6): 782-807. 25

26. 26

27. Business planning for NVC & NBD
• Presents a credible outlook on what could become profitable
business
o Based on assumptions, informed guesses, and profound
insight on:
• People
• Opportunity
• Context
• Risk & Reward
• Enables learning before doing
– Cheaper, faster and/or safer
• May act as a screening device
– Management (NBD)
– You and your helpers (NVC)
27

28. Course materials
• University library
o Belfirst (Chambers of Commerce info on Belgium firms)
• Toledo/Blackboard
o Sheets
o Course manual
o Links to relevant websites and competitions
o Cases
o Readings
• Book
o Will be available as an eBook
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29. Why engage in business
planning?

30. Reasons to plan
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• Learn before doing
• Reduce likelihood of failure
• Rally support from others
• Mimic successful entrepreneurs
• Behave professionally
• Demanded by stakeholders
• Dampen one’s own overconfidence

31. Reasons not to plan
• Everything is hard to predict, especially the future
• Parralysis by analysis
• Ineffective learning
• Inefficient learning
• Will be outdated the moment you print it
• Does not help
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32. So who is right here?
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33. Learning Theory
• “planning allows people to make faster decisions than they
would with trial-and-error learning by facilitating the rapid
discovery of missing information (Ansoff, 1991)”
• “[some] literature stresses the importance of the business
planning process as it helps in understanding the mechanics of
the intended business and enables learning (Sexton and
Bowman-Upton, 1991).”
• “proactive learning because it expands the founder's
knowledge about the intended business and reduces decision-
making uncertainty (Delmar and Shane, 2003; Armstrong,
1982)”
• “Through learning, entrepreneurs improve their access to
financial capital as well as the effectiveness of business
approach and their chances of founding success
(Castrogiovanni, 1996).” 33

34. Learning through
planning
“By checking the internal consistency of
different assumptions (e.g., is the hiring
plan consistent with the projected level of
sales?), business planning can improve
the accuracy of founders’ assumptions.”

35. Theory of Planned behavior
• “planning facilitates goal attainment in many domains of
human action (Cyert and March, 1964; Simon, 1964; Smith,
Locke, and Barry, 1990)”
• “We find that business planning reduces the hazard of
disbanding, and facilitates both product development and
venture organizing activity.”
• “by setting concrete objectives for the future, planning helps
people develop specific steps for the achievement of their
goals (Brews and Hunt, 1999)
• “self-set goals have greater motivational properties than
relative performance goals (Locke and Latham, 1980).
35

36. Myths debunked
Great entrepreneurs do not need plans
Planning is a waste of time
Investors invest in people, not in plans
Planning increases likelihood of success
We understand the effect of planning

37. Hence, it is not about
whether to plan, but
when to plan and how to
plan

40. Approaches to business
planning

42. How to plan
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• What needs to be learned
o Risk
o Return
o Feasibility
• Technical
• Competitive
• Operational
• Financial
• What needs to be communicated
o Legitimacy
o Understanding
o Professionalism
o Ability

46. Approaches to business
planning:
Let us explore
competitive analysis

47. Why study the competition?
• Competitive strategy
o How will we beat the competition
• Understand how customers choose and what they value
o How will we compare
• How much time did it take them
o What may we expect
• How do they do
o How have their margins developed
• What is the nature of the industry
o Concentration, churn, density
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51. Planning challenge
• Develop the best insight possible
o Put in enough effort
o Know what data to collect
o Know how to use that data to develop insight
o With no budget & limited time
• Important to know what you are doing
o This may signal your qualities
o Garbage in, garbage out
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52. How to study the competition?
• Through the eyes of your customer
o How do [will] they choose
• Competition = competing products
• Through the eyes of your competitor
o How could they react to your value proposition
• Competition = able to change its products to [better] beat you
• Through the eyes of your partners
o Why should they prefer to partner with you
• Competition = understanding what partners appreciate
• Etc.
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53. Business planning
• Assumptions testing
o Primary
o Secondary
• Will they buy
• How much will they buy
• How much will they pay
• What will it cost
• How much will we make (€)
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