Entrepreneurship

Seminar for I Incoming Entrepreneurs

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

Seite #

Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

The personality of the entrepreneuer

The new Idea

Equilibrium

Market

The economic concept

Liquidity + financial. situation

The functional and legal organization.

Business plan (bp)

bp is the bridge to reality

Reality
14.03.2012

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Prof. Dr. Dietger Mainz

Entrepreneurship bp is the bridge to your supporters

Personality Experience Motivation

Entrepreneur / Founder

Idea

Business plan as an important link

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Plausibility
Personality Experience Motivation

Impression of the entrepreneur / founder

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Banker / Venture Capitalist / Investors

14.03.2012

Entrepreneurship The business model describes the structure of your business idea this is the first check of your chances and risks as an entrepreneur and a precondition for your business plan
Management + Organisation ?
Key ressources ? Value Proposition Customer relations ?

Key Partner ?

Strategic Customer
(In Anlehnung an: Osterwlder+Pigneur, Business Model Generation. 2011)

Customer Segments ?

Product- u. servicefeatures

Key activities ?

Channels ?

Cost structure + stream ?

Revenue structure + stream ?

Stakeholder (=>Shareholder)

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

+ -

Legal declarations / permission/ Approbation

Development in reality time

Plan-Development

Decision for the venture Predecision phase

Start of the venture

Venture consulting ?!

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Venture preparation sphase Startphase

Businessmodell
precondition

Business plan

Venture concept Draft of Contracts Startnegotiation Equity mobilisation

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precondition

Startphase Controlling

Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship The two basic factors of success: the personality and the business plan without any compensation between them!

Business plan

Retention, strong goal orientation, creativity, risk taking (Risk = challenge not a game), organisational skills, optimistic disposition, leadership orientation an overall responsibility, ability to communicate and motivate in all situation?

The personality of the entrepreneur (Psychological, social, cognitive attitudes, experiences and abilities)

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship The function of the business plan Is the central tool to convict and to answer our Partner Bank, Investor, Supplier, Customer etc. Is it affordable and successful to support this venture => What risk we have to take? Should we go ahead with the entrepreneur? Is there a prosperous perspective

=road map to success or to stop

I Business plan

Last check the

point of no return

=> Can we realise our idea with acceptable risk? => How we have to act, to be successful?

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

Business Plan - Ducoment -

Executive summary

Verbale Describtion und Analysis

Personality of the founder product- /service features market analysis marketing plan

Venture accounting
A record over the time of the development about the financability , profitability, liquidity under the condition of the sales, production, investment, employment plans

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship It is necessary to understand that our venture / company can only appropriate be analysed as a network of multiple linked and dependent influences. Unfortunately we could be faced with unstable feedback.

Revenue

Sales

+
Price Product quality

Wages Income

+
I

+
Job satisfaction

+
+
Utilization

+
+

+
Costs of quality Worker capabilty

+
Cost per item
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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship Network basics Driver Price

Conflicting opposite effect

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Simultaneuos effect

Outcome Sales Driver

Advertising Driver

Production volume Outcome

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship It is easier to create four different partial networks than in one step the whole net. When you finisjhed the partial nets than you have to link them together. Before you start with the venture accounting create your nets!

Partial network finance

Partial network market

Partia lnetwork goverment

Partial network company

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship We find normally a specific capital structure in successfull ventures (A big thumb rule)

Own equity
Equity given by other parties

15 %

40 % Equity

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Borrowed Capital

Standard capltal structure

50 % long and medium credits

Current account

10% current acount

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship The system of venture accounting

Balance account Definig the operational fixed and running Assets

Financial account Capital structure (repayment, interest)

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Process of
iteration

Profit and loss aacountg Profitability

Cash Flow Accountg Liquidity

of cash for operations

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Entrepreneurship

Principles of venture accounting

Expenses = Max !

Earnings = Min !

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship Principles of venture accounting = Principle of caution

Ascertainmet of cost

Using in the venture accounting 110 %

Ascertainment of revenues

Using in the venture accounting = 90 %

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship The excel sheets integrated in a work book- of the venture accounting
Sales /revenue plan Personel plan Production plan

Driver-plans

Invest plan

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Cost plan

Depreciation plan

Tax projection

P&L

Running CF Accouting

Fin.Accouting

Balance sheet

Outcome-plans

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship The disadvantage ob our business plan is that we are faced with error propagation, the consequence is that we have to renew our calculation to adapt to realised numbers
Third phase = half-yearly or yearly Second phase = quarterly or half-yearly Line of inaccuracy

First phase = monthly or quarterly

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Planning horizon

time

Beginning of the venture Business creation

End of the plan = sustainable profitability and liquidity max 4 years

Error propagation => e (t) = f (e (t-1)) + De

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

P&L

Running CF Accouting

Fin.Accouting

Balance sheet
Outcome-plans

Profit and loss

Time period Earnings Revenue p1 P1+1 P1+2

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Time period
CF operation result depreciation

CF Statement
p1 P1+1 P1+2

Expenditure
Pers. Cost Depreciation Interest

D payables
D receivables CF financing repayment new loan

..
Result

Finance plan
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CF Invest. CF

.. 14.03.2012

Prof. Dr. Dietger Mainz

Entrepreneurship
Finance plan
Time Loan 1
Amount Interest Repayment

t1

t1+1

t1+2

CF accounting P&L + CF accounting P&L accounting

Loan 2

Amount Interest

Time

Balance sheet accounting

t1 t1+1 t1+2

Repayment

Assets

Machinery
Raw material Receivables Cash

.. S New Loan S Interest S Repayment

..

..

Liabilities

Equity
Provisions Loans Payables

CF Accounting P &L Accounting CF Accounting

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

Estimation of cash for operations 1. Iteration

Raw material
Time of circulation * used raw material in production during this time * price

Other inventory

Time of circulation * used other inventory during this time * price

Other payments for operation Proprietors savings

Time of circulation * monthly payments for employees, Interest, repayment, taxes, telecommunication, rent, leasing etc.during this time Time of circulation * savings per month for living

S Cash or cash equivalents

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Entrepreneurship The time of circulation is the time from the startpoint to the point where the cash inflow is equal the cash requirement of operations

Start of the venture

Revenue plan

Cash-inflow

Cash requirement

time
Time of circulation throughput time (normally in months)

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

A very very simple thumb rule of learning It is not efficient to read all the books you find about business plans as to do in reality so let us start! The profit of learning lays not in speaking about business plans I but in doing / creating a bp

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Prof. Dr. Dietger Mainz

14.03.2012

Entrepreneurship

Reading assigment before you will start with the business plan: Entrepreneurship (Hisrich et al) 6th Edition pages 184 294

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Use the bp-planning tool in the game to create your bp!

Seite #

Prof. Dr. Dietger Mainz

14.03.2012