Finding a business idea

Dr. Saurav Snehvrat

Entrepreneurship and New Ventures (ENV)
Poll: A test for the fainthearted
● Are you comfortable stretching the rules?
● Are you prepared to make powerful enemies?
● Do you have the patience to start small?
● Are you willing to shift strategies quickly?
● Are you a closer?

Source: Test for the Fainthearted By: Walter Kuemmerle, HBSP

Poll: A test for the fainthearted
● If the answer to any one of them is no:
○ Learn traits or

○ Work a few years in a fast growing company ideally in the same industry
in which you want to start your business.

○ Look for a mentor.

○ Look for a partner with complimentary skills.

Reading: What makes entrepreneurs entrepreneurial?

Prof. Saras Sarasvathy

UVA Darden School of Business

Reading: What makes entrepreneurs entrepreneurial?
● Entrepreneurs use effectual reasoning:
○ Opposite of causal reasoning: begins with a predetermined goal, given
set of means and identify an optimal solution.

○ Begins with a set of means and allows goals to emerge contingently over
time
Reading: What makes entrepreneurs entrepreneurial?
● Entrepreneurs use effectual reasoning:
○ Plans are made and unmade daily through action and interaction.

○ Only constant is a common picture, vision or a story.

○ Eventually, certain emerging effects coalesce into clearly achievable and

desirable goals
Reading:
What makes
entrepreneurs
entrepreneurial?
Reading: What makes entrepreneurs entrepreneurial?
● Means available to entrepreneurs
○ Who they are? – Proclivities, passion etc.

○ What they know? – Skills, knowledge

○ Whom they know? – Social Capital

Reading: What makes entrepreneurs entrepreneurial?
● Principles of effectuation:

Causal Reasoning Effectual Reasoning Principle

Begin with given goals Begin with means Bird in Hand

Expected Return Affordable Loss Affordable Loss/ Zero

resources to market

Exploitation of pre-existing Leverage contingencies Lemonade

knowledge,

Competitive Analysis Strategic Partnership Crazy Quilt (jigsaw vs

stitching)

Opportunities exist outside Opportunities can be made Pilot in the plane

of control; can only be found as well as found through
human action
Effect Dependent
People Dependent
Reading: What makes entrepreneurs entrepreneurial?
● Crazy Quilt:
○ Effectual Reasoning more like stitching a quilt rather than a jigsaw puzzle.
○ Creating a growing number of stakeholders each of whom invests only what
he/she can afford to lose.
○ Each of whom shapes the final venture.

● Lemonade:
○ Entrepreneurial firms are built on contingencies.
○ Creating a growing number of stakeholders each of whom invests only what
he/she can afford to lose.
○ Each of whom shapes the final venture.
Some Entrepreneurship Theories
o Richard Cantillon’s approach:
o Entrepreneurs with non-fixed incomes

o and employees with fixed incomes

o Property owners as consumers

o those who undertake to bear and overcome uncertainty by

investing, paying expenses and hoping for a return.
Some Entrepreneurship Theories
o In knowledge driven industries, entrepreneurs act as a
bridge across a structural hole.

Source: Adams, M., Makramalla, M., & Miron, W. (2014). Down the rabbit hole: How structural holes in
entrepreneurs' social networks impact early venture growth. Technology Innovation Management Review, 4(9).
What is Entrepreneurship?
o Entrepreneur as a bridge across a structural hole.

Source: Adams, M., Makramalla, M., & Miron, W. (2014). Down the rabbit hole: How structural holes in
entrepreneurs' social networks impact early venture growth. Technology Innovation Management Review, 4(9).
 1. Ways to start a new venture

Source: Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley & Sons.pg. 16
 1. Ways to start a new venture
Idea sounds like: Technology sounds like: Passion sounds like:

I want to start a firm in I can think of a robotic arm I love coding and I can quickly
India which sustainably that can provide medicines come up with real world
addresses water shortage to COVID patients. applications for various problems
in India via a business
model. I love and am good in cooking.

Still ways to go for an What other benefits can be Personal competitive advantage.
opportunity….. there to the technology? Think of a software startup
Patent/Invention?

Source: Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley & Sons.pg. 17
Sources of Ideas
In a study on technology firms (1989):
● 4% - Conducted extensive research and analysis
● 5% - got swept into the PC revolution
● 20%- Chance/serendipity
● 71% - replicated/modified ideas encountered in previous
employment/experience.
Starting from passion
The Passion Checklist

Source: Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley &
Sons.
Team
Potential

Source: Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley &
Sons.
Team Potential

Source: Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley &
Sons.
Source: Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley &
Sons.
Source: Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley &
Sons.
Team Potential

Source: Aulet, B. (2013). Disciplined entrepreneurship: 24 steps to a successful startup. John Wiley &
Sons.
The Lean Startup
Dr. Saurav Snehvrat
Entrepreneurship and New Ventures (ENV)
Source:Eisenmann, T. R., Ries, E., &
Dillard, S. (2012). Hypothesis-driven
entrepreneurship: The lean
startup. Harvard Business School
Entrepreneurial Management Case,
(812-095).
The
Lean
Startup

Source: Blank, S.
(2013). Why the lean
start-up changes
everything. Harvard
business
review, 91(5), 63-72.
The Business Plan
● Template

This example business plan is provided by the Small Business Administration.

Get help starting and running your small business at SBA.gov.

Wooden Grain Toy Company

Business Plan
Source:
https://www.sba.gov/business-
guide/plan-your-business/write-
your-business-plan

Andrew Robertson, Owner

Created on December 29, 2016
The Business Plan
● Template

This example business plan is provided by the Small Business Administration.

Get help starting and running your small business at SBA.gov.

We Can Do It Consulting
Business Plan Source:
https://www.sba.gov/business-
guide/plan-your-business/write-
your-business-plan

Rebecca Champ, Owner

Created on December 29, 2016
Lean Start Up - Falsifiability
● A hypothesis is falsifiable when it can be rejected through a
decisive experiment.
● “If you cannot fail, you cannot learn”

Example: “Our product will spread through word-of-mouth.”

● As long as marketing trials reveal any non-zero rate of word-of-
mouth referrals, then this vaguely worded statement will prove
true, whether the rate is very low or very high.
● “Our viral coefficient over the next twelve months will exceed
0.5”
● As much as possible, hypothesis should include quantitative
measures.
Lean Start Up – Specify MVP Tests
● Maximize learning per unit of time and effort expended.
● Launch early and often. MVP: the smallest set of features and/or
activities needed to test a business model hypothesis.
● Put a real product in the hands of real customers in a real world context.

Benefits:
● First, entrepreneurs learn about customer requirements before investing
too much time in building features no one will use.
● Second, releasing feature revisions in small batches makes it easier to
interpret test results and to diagnose problems. If only a few aspects of a
product have changed, it is easier to find bugs
Lean Start Up – Specify MVP Tests
● Hypotheses should prioritize three kinds of fit:
Business Model Canvas
.
Lean Canvas
.
Lean Canvas
.
Lean Canvas
.
Summary of Business Model Questions

Source:Eisenmann, T. R., Ries, E., & Dillard, S. (2012). Hypothesis-driven entrepreneurship: The
lean startup. Harvard Business School Entrepreneurial Management Case, (812-095).
Summary of Business Model Questions

Source:Eisenmann, T. R., Ries, E., & Dillard, S. (2012). Hypothesis-driven entrepreneurship: The
lean startup. Harvard Business School Entrepreneurial Management Case, (812-095).
How to prepare tests?
● Qi Framework

Source: Kromer, T. (2019). The question index for real startups. Journal of Business Venturing Insights, 11(C), 1-1.
How to prepare tests?
● Qi Framework

Source: Kromer, T. (2019). The question index for real startups. Journal of Business Venturing Insights, 11(C), 1-1.
How to prepare tests?
● Qi Framework

Source: Kromer, T. (2019). The

question index for real
startups. Journal of Business
Venturing Insights, 11(C), 1-1.