ENTREPRENEURSHIP

Steps To Developing A Business

By :

Group 1
Member :
Anak Agung Sagung Putra Pradnya Paramitha

(1306205005)

I Gusti Ngurah Friday Palaguna

(1306205006)

Ni Made Intan Agustina Ariani Darmayasa

(1306205008)

Ni Made Manik Indrayani

(1306205029)

Faculty of Economics And Business

Udayana University
2015
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There are many reason as to why students are interested in entrepreneurship, some of
these reasons are because one of them have worked in one industry for years and want a change.
Some want to push their skills to the maximum and have the biggest impact on the world. Some
want to be their own boss. Some hold patents and are interested in the different ways they can
commercialize them. Some have an idea about how their own life could be improved and they
wonder if that idea is interesting to others. In the next of these six steps based on Disciplined
Entrepreneurship by Bill Autlet, we will explain how to developing your business
Step 1 : Who Is Your Customer?
The market segmentation process identies multiple potential market opportunities. Once
you have a list of potential markets, direct market research-based analysis on a nite number of
market segments will help you determine which markets are best for your idea or technology.
After that you can choose a single market to pursue; then, keep segmenting until you have a
well-dened and homogenous market opportunity that meets the three conditions of a market.
Focus is your ally. Even if your analysis of your target customer is nowhere near complete, but
the End User Prole points you in the right direction for future steps. This is a critical step in
your search for specicity and starting to make your customer concrete and very real. It is also a
critical part of the process to help ingrain the mentality that you should build the company
around the customers needs. After that you can do the process of developing a Persona provides
specic details about the primary customer within your beachhead market. You are now selling
not to some end user prole, but to a specic individual. The better you understand your
Personas needs, behaviors, and motivations, the more successful you will be at making a
product and a new venture to serve them. And the last in this step is to identifying and
interviewing your next 10 Customers. If you have completed this step properly, and made
modications to the other steps from what you learned here, you should have great condence
moving forward to build the plan for your new venture.
Step 2 : What can you do to your customer?
Creating a visual representation of the full life cycle of your product enables you to see
how the product will t into the customers value chain and what barriers to adoption might
arise. Also, visually laying out your product will allow your team and your potential customers to
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converge around an understanding of what the product is and how it benets customers. After
that staying at a high level, without too many details or a physical prototype, allows for rapid
revision without investing too much time and resources this early in the process of creating your
new venture. The next thing you need to do is dening the core, the Core is what you have that
your competitors do not, that you will protect over time above all else, and that you continually
work over time to develop and enhance. Dening your Core is not easy and may seem abstract,
but it is an essential step to maximize the value of your new business. Next is dening your
Competitive Position, its a quick way to validate your product against your competition,
including the customers status quo, based on the top two priorities of the Persona.
Step 3 : How does your customer acquire your product?
Having determined how you create value for the customer, you must now look at how the
customer acquires the product. To successfully sell the product to the customer, you will need to
understand who makes the ultimate decision to purchase, as well as who inuences that decision.
After that you need to determining the process to acquire a paying customer, its about how the
DMU decides to buy the product, and identies other obstacles that may hinder your ability to
sell your product. This step makes sure you have identied all the potential pitfalls in the sales
process. And the next is to mapping the sales process, its a thoughtful rst pass at how you will
enter the market, rene your sales strategy over time, and ultimately establish an inexpensive
long-term strategy for customer acquisition.
Step 4 : How do you make money off your product?
Design A Business Model . The business model is an important decision that you should
spend time focusing on. The decisions you make here will have a significant impact on your
profitability, as measured by two key entrepreneurship variables: the Lifetime Value of an
Acquired Customer (LTV) and Cost of Customer Acquisition (COCA). Do not focus on pricing
in this step, as your choice of business model has a far larger influence on profitability than your
pricing decisions. Once you have established a business model, it is possible but generally not
easy to change to a different model. Therefore, choose a business model that distinguishes you
from competitors and gives you an advantage over them, because they cannot easily change their
business model to match yours. So. In this step, you will examine existing models across
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industries for capturing some of the value your product brings to your customer and Use the
work you have done in other steps to brainstorm an innovative model for your venture. Set Your
Pricing Framework. Pricing is primarily about determining how much value your customer gets
from your product, and capturing a fraction of that value back for your business. Costs are
irrelevant to determining your pricing structure. You will be able to charge a higher price to early
customers as opposed to later customers, but be flexible in offering special, one-time-only
discounts to select early testers and lighthouse customers, as they will be far more beneficial to
your products success than the average early customer. Unlike your business model, pricing will
continually change, both as a result of information you gather and as you progress throughout the
24 Steps, as well as in response to market conditions. In this step, you sill use your Quantified
Value Proposition and Business Model to determine an appropriate firstpass framework for
pricing your product. Calculate the Lifetime Value ( LTV ) of an Acquired Customer. The
Lifetime Value of an Acquired Customer calculation is the profit that a new customer will
provide on average, discounted to reflect the high cost of acquiring capital that a startup faces. It
is important to be realistic, not optimistic, when calculating LTV, and to know the underlying
drivers behind LTV so you can work to increase it. You will be comparing the LTV to COCA. An
LTV: COCA ratio of 3:1 or higher is what you will be aiming for. In this step, you will add up the
revenue that you can expect to receive from an individual customer and discount the revenue
based on how much it will cost you to repay investors over time. Calculate the Cost of
Customer Acquisition (COCA). At this point, you have completed the important steps of
determining whether the financials of your business will work. The LTV and COCA analysis can
kill many new businesses by identifying problems early in the process; but more often it
highlights the importance of keeping an eye on key factors to make the business successful. It
provides a simpler scoreboard than financial statements and allows you to make adjustments and
refine your business. It makes your path to success more transparent. Dont let your optimism
blind you in doing the calculations. Make the numbers real and not what you want them to be. In
this step, you will Determine how much it costs to acquire a customer over the short term,
medium term, and long term, based on your sales process.

Step 5 : How do you design and build your product ?

Identify Key Assumptions. Identifying key assumptions is the first part of the process to
validate your primary market research by looking for customers to take specific actions, which
will happen in the next step. Before the assumptions can be tested, they need to be broken down
into their component parts, so that each assumption represents a specific, narrow idea that can be
empirically tested in the next step using a single experiment design. Do not worry about how you
will design the experiment yet. Focus on breaking out all the key assumptions, because if you
skip over an assumption fearing that testing it is difficult, you will neglect a potentially important
factor in your businesss health. In this step, you will determine which assumptions about your
business have not been thoroughly tested and rank your top 5 to 10 assumptions in order of
importance. Everything is looking and feeling good but before you go and build, step back and
revisit again with the benefit of greater wisdomwhat are the key assumptions that need to go
right for your new venture to work? Test Key Assumptions. Testing key assumptions,
particularly the most significant assumptions, such as cost targets and interest of lighthouse
customers, prepares you well to sell your product because it complements the primary market
researchbased approach you have already taken. The convergence of your market research with
empirical results from your experiments prepares you to put together a first-pass product and sell
to customers. In this step, you will take your list of key assumptions and design empirical tests to
validate or refute them and Perform the empirical tests, moving quickly and efficiently to
decrease the risk of your startup. Define the Minimum Viable Business Product ( MVBP ).
You have previously tested individual elements of your business; however, the Minimum Viable
Business Product (MVBP) represents a systems test of a product that actually provides value to
the customer. The paying customer can use this to start a feedback loop that helps you iterate
better versions of the product. In this step, you will integrate your assumptions into a systems
test, consisting of the minimal product that a customer will still pay for. Show That The Dogs
Will Eat the Dog Food. Take your Minimum Viable Business Product to the customers to see
if they will actually use and pay for the product. Collect data to see if they are really using it and
how engaged they are as users. Determine if they, or someone associated with them, will pay for
it and also if they are advocating for your product with word of mouth. After you collect data
over time, analyze it and especially look for trends and understand underlying drivers. Make sure
you are intellectually honest and rely on realworld data and not abstract logic. In this step, you
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will demonstrate quantitatively that customers will pay for your Minimum Viable Business
Product ( MVBP ) and develop metrics that indicate the level of word of mouth your MVBP is
creating among customers.
Step 6 : How do you scale your business?
You have to following two steps. Calculate The TAM Size For Follow-On Markets.
The Calculation of the Broader TAM should be a quick validation that there is a bigger market
and should reassure team members and investors that your business has great potential in both
the short term and long term. In this step, you will briefly consider which follow-on markets
you will expand to after dominating your beachhead market and Calculate the size of these
follow-on markets. While maintaining a relentless daily focus on your beachhead market, you
should also do some small amount of analysis on what happens if and when you win the
beachhead market; from a general standpoint and without a great deal of detail, what do you
project will be your next markets and how big will they be? Develop a Product Plan.
Establishing a product plan is similar to the step to calculate the broader TAM. The idea is to get
you thinking ahead so you raise your sightlines and dont get too bogged down in your
beachhead market, which is only your first step as a business. You want to expand from the
beachhead. It gives you a long-term vision that keeps you reaching and thinking ahead,
especially in the design of your product and organization. Do not spend too much time here,
though, because you still need to get the dogs to eat the dog food today, or else you will run out
of money long before entering adjacent markets. Plans will change as you learn more from the
beachhead, but to not have a plan is to put yourself in the hands of luck as opposed to your own
methodical process. In this step, you will go beyond the Minimum Viable Business Product
(MVBP) to determine which features you will build out for the beachhead market and determine
which adjacent markets you will sell to after dominating the beachhead market, and how your
product will have to change for each new market.

Meanwhile, based on the book Enterprise: Entrepreneurship dan Innovation by

Robin Lowe and Sue Marriot the first step in developing business is identification of
opportunities, in identification of opportunity there are some steps which are, first is sources of
innovation, Ansoff and McDonnell emphasized the effect of shock events on innovation, when
faced with sudden and unexpected events the entrepreneur are more innovative. Second is
looking for opportunities in the market, entrepreneurs often see opportunities where others do not
and view the opportunities differently from others. And also entrepreneurial businesses
exploiting opportunities that seem very unlikely. And the last is creating customer value, one of
the rules that governs entrepreneurship is that innovations must create added value for the
customers, customer value can be interpreted in many different ways and different organizations
will create different value propositions to exploit the same market opportunity.
And the second step in developing a business is the trigger to the creation of new
business. Bolton and Thompson (2000) note that in identifying the triggers to the creation of a
new business there are a number of recurring themes, such as frustration with existing products
and services, exploiting a hobby, starting young with a simple idea, and responding to a
personal crisis.
The third step is generating new idea. There are many ways in generating new idea, such
as the vital role of information, in here you can use the market information such as demand of
particular product. And then using someone elses ideas, it doesnt mean you stole someones
idea but often someone elses idea is interesting but not commercially exploitable, however, it
can act as a prompt and start a potential entrepreneur thinking about how the idea can be built
upon, developed into a real market opportunity and lead to the creation of a potentially viable
business model. We also can removing unnecessary features, for example, there was a belief that
a hot meal should be provided free on all airline flights. In practice this was extremely expensive
and removal of this service by the low-cost airlines has not damaged their business. We also can
use a creativity and thinking techniques, there are many creativity and thinking technique such as
asking customers or potential customers about possible new product ideas, analysing competitor
product, and analysing customer needs and behavior.

The next step is developmental stages of the business. There are 5 stage in here which
are the business proposition , defining the business model, preparing the business case, forming
the organization and launch, and growing the venture to sustainability
The fifth step in developing a new business is creating a sustainable business model. It is
important to create and define the business model that underpins the business, the cash flow
streams, the customer offer, connection to the market and the place in the supply chain.
The sixth step is make planning and the business plan. Planning is the thinking process
and business plan is the formal written document that records the planning process at one point
in time for a specific purpose. Business plan is necessary to allow who involved in the business
to read the information and understand the link between the analysis, forecasts and assumptions
that have been made and the actions that are intended.
And the seventh step is create a feasibility study because

a new business need a

feasibility study, and it should provide the reality check by concentrating on the validity and the
analysis of the information on which the case is built, anticipating the potential barriers and
pitfalls and preparing to overcome them.
We also need a plan for our business management. Because the internal operational plan
for managing the business during its early and subsequent phases should be based upon a fairly
standard framework.
Next step is getting started: creating the organization, obtaining resources and reaching
break-even.
a.

The organizational form and location of an organization is determined partly by the owners
ambitions and also by the context for the start up.

b.

There is a framework of legislation for organizing the business and protecting stakeholder
interests. In protecting intellectual property there is a framework of, for example, patents,
copyright and trademarks, but in some cases it may not be beneficial to obtain patent
protection.

c.

While the majority of new ventures are financed from informal and personal sources there is
a range of institutional funding for larger projects. In seeking formal funding it is essential
for entrepreneurs to understand the expectations of the funders.

d.

Building a high performing management team and staff is particularly challenging and there
is a danger that the entrepreneur is unwilling or unable to devote sufficient time to managing
and leading the team.

e.

Marketing and sales generate the revenue for the organization and this often presents
challenges both in terms of winning over enough customers quickly enough and negotiating
sales with a high enough margin to generate profits and funds for further investment.

f.

Overall there are many start up obstacles in obtaining, organizing and managing the
resources, but overcoming them is the key to success in entrepreneurship.
And the last step is enterprise strategy and fast growth.

a.

All entrepreneurial organizations should have some kind of strategy to draw together their
long-term vision, aims and objectives.

b.

Strategies in entrepreneurial organizations are needed for the various stages of development,
from start up to consolidating growth to becoming an entrepreneurial, large organization.

c.

Turnaround strategies are also needed for times when an existing strategy fails to deal with
changes in the environment and downturns in demand.

d.

There are significant barriers to be overcome in the pursuit of growth, but entrepreneurial
organizations can develop niche strategies to achieve fast growth.

e.

A key part of the strategy for entrepreneurial organizations is to define their future source of
competitive advantage. Increasingly this will be founded not on tangible assets but on their
reputation, resources and the learning capability of staff.

REFERENCES
Bill Autlet. (2013). Discipline Entrepreneurship. Managing Director, Martin Trust Center For
MIT Entrepreneurship. John Wikey & Sons, Inc, Hoboken, New Jersey
Robin Lowe and Sue Marriott. (2006). Entreprise: Entrepreneurship and Innovation, Concepts,
Contexts and Commercialization. Elsevier Ltd.USA

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