Welcome to the third week of the Tony Elumelu Entrepreneurship Programme!
We hope you are enjoying what you are learning so far. We are excited to begin looking deeper into the individual products and services that you are all seeking to bring to market. This week, you will be considering the additional value that your product brings to consumers beyond what your competitors are already offering, as well as the many individual pieces that are necessary to bring these benefits to the market. Delivering important solutions requires a strong, dedicated team with specific skills directly related to your industry. Production is also a vital component of entrepreneurship: creating a specific product or service that will ultimately be presented to consumers. Finally, we will begin to consider some of the early stages of marketing, which will help you connect your product with your customers.
Some of you may have considerable experience with these topics, while others may be exploring them for the first time. As always, your mentors are available to discuss these topics with you, answer your questions, and consider how what you are learning will help your business succeed. Additionally, you will have the opportunity to explore websites like Quora and LinkedIn, discovering how these tools will inspire further growth. We also invite you all to discuss these challenges and opportunities on the activity tab, bringing together your experience and your questions.
Read the Glossary this week to understand the terminologies!
Project To Dos
Third Survey
Sign up on Quora
Go to www.quora.com and sign in through social media or using an email address. Select 10 topics to follow, but make sure you include: Technology, Business, Design, Marketing, Finance, Startups, Small Businesses, and Entrepreneurship. You do not need to add topics you know about unless you want to. Follow any suggested by Quora. Start to search for topics relevant to your industry. Read through articles that interest you, comment, and answer as appropriate.
Review value proposition from Business Model Canvas
Review and edit the Value Prop, Key Activities, Customer Segments, Customer Relationships, and Channels sections of your Business Model Canvas
Fill out Key Partners and Key Resources section of the Business Model Canvas
Discuss findings with Mentor
Identify at least 3 key partners from your business model canvas that can help develop and maintain your solution
Draft Scope of Work for required product development
Estimate cost for required product development; fill out Cost Estimate Survey
Fill out Cost Estimate Worksheet
Review Scope of Work and Cost Estimate with Mentor
Draft list of hypotheses about the customer problem set
Review Competitors Identification Worksheet
Draft a list of assumptions you are making about your customers and their problem that you are trying to solve; map their solutions against your hypothesis. Review the solutions from your Top Three Competitors (from Module 02) against your assumptions about customer problems - do they match up? A copy of the form from Module 02: [Competitor Identification Worksheet]
Compare the list generated against characteristics your solution offers
Sign up for LinkedIn, if not already a member
Join at least three relevant LinkedIn groups and begin discussion threads about your solution
Search and review Quora answers related to your industry
Paste the one-sentence description of your Value Prop into the Forum topic related to your industry
Comment on at least three other one-sentence Value Props
Record feedback
Discuss the Problem with your Mentor
Schedule a Meeting
Read the product article from Entrepreneurial Insights
Read the article about feature creep from Boundless
Voice Presentation for Week 3
Happy new month everyone. I am excited to do this voice presentation for week 3. My name is Marvels.
For this discussion, I will focus on 5 main points, these are; Key Partners [1], Key Resources [2], Cost Estimation [3], Scope of Work [4], I will also talk about Hypotheses and Data Collection for Product Development [5].
1. Key Partners
These are the people whose inputs will make your business to thrive. These set of partners include your suppliers [raw-materials suppliers, component suppliers, and service providers], your advisers, [Legal Adviser, ICT Adviser, Financial Adviser, Business Development Adviser, Brand Strategy Adviser, etc], your delivery network [Marketers, Distributors and Salesforce]. These are some of the key business partners.
2. Key Resources
I will use an example to describe key resources. If you make popcorn for sale, your key resources include [your stand or your selling space which could be offline in a shopping mall that is very close to your residence in Ajegunle, Lagos state. Your selling space could as well be online, say a Facebook page, a blog or a website].
Raw popcorn is another key resource, without which you cannot make popcorn. The popcorn machine is another key resource. I am sure that you will not want to use anything that is comparatively of a lower efficiency level.
Electricity is another key resource. The question here is how will you ensure that you have consistent electricity supply. Do you think PHCN supply will be sufficient or you want to get a power generator? You can possibly explore the advantages of a solar power generator as well.
Human Resource is another important component to consider as a key resource. Can you handle every aspect of the popcorn business all alone or you will need to employ an assistant?
The points mentioned so far are not the only relevant ones. You have to critically distill your business to understand the key resources that you need. Remember that key business resources are those elements that must be in place for your business to thrive.
3. Cost Estimation
If you can identify your key resources then it will be very easy for you to do cost estimates for your product development. Cost estimation is what you do to ascertain the financial value or the financial cost of your key business resources.
The questions here include;
What will it cost me to get a selling space? [Lock up shop, Facebook page, blog, or website].
What will it cost me to get a reliable supply of electricity?
What will it cost me to get an assistant as staff? [Salaries]
What will it cost me to buy the popcorn machine?
These individual costs and their aggregation make up your cost estimates. This is an important budgeting requirement.
4. The Scope of Work [This is also called The Statement of Work]
I will like you to review the initial scope of work template provided in the tefconnect portal for week 3 project.
In a simple language, the scope of work refers to the extent of work to be done in order to achieve a particular result. This involves goal-setting and targets, and it applies to every area of your business in which you want to achieve specific results.
First, you must set clear and smart business goals. When your goals are smart, you will achieve them with more ease. Next, you must define the activities that you must do to achieve your set business goals. Plus, you must identify the key partners or human resource requirements for you to achieve these goals.
You also need to establish space requirements for, and the location of activities. You need to ask, where exactly will each activity be done and how much space do we need to achieve each activity?
Next to that, you must establish the cost implication of all relevant activities and requirements. In addition, you must establish a schedule or time-budget that details the time requirements for you to accomplish all tasks and achieve your predetermined business goals. And of course, you need to determine the characteristics of the results expected so that when you achieve them you can easily recognize them and present them for approval.
The statement of work is a kind of motivation that helps you to establish business or project expectations in black and white. So, you know what to expect and the timelines. It helps entrepreneurs to be organized. It helps you to be efficient in time management and financial management. The statement of work is an invaluable tool.
5. Hypotheses, and Data Collection for Product Development
Submissions on hypotheses could be divergent, but I will discuss it in general terms as it relates to our discussion focus for week 3. Hypotheses are assumptions that entrepreneurs make prior to product development. A hypothesis could be something you think is true based on observations or feelings, but which you need to verify. This is because your assumptions could be untrue.
The dog food story by Kelechi is very relevant here. The owner of that dog food company assumed he had a recipe that dogs would really love. He made a huge investment into branding and promo, but unfortunately and painfully, his business did not thrive, why? The answer is simple, he did not test his hypotheses. He did not verify the truthfulness and relevance or otherwise of his assumptions and guesses. He did not confirm whether his assumptions were true and relevant or untrue and irrelevant. He felt his hypotheses were true and relevant, but because they were otherwise (untrue), he lost his investment.
This again brings us to problem-centric entrepreneurship. This problem-centric approach to entrepreneurship helps you to get data from the final consumers of your product which could be services or goods. The data collected from your final consumers and prospective paying customers should be used to test whether your hypotheses are true or untrue. I guess I have done something here. Thanks to everyone for this privilege, thanks for listening to this presentation. I am Marvels.
Please send in your questions and let's keep rolling.
Happy new month everyone. I am excited to do this voice presentation for week 3. My name is Marvels.
For this discussion, I will focus on 5 main points, these are; Key Partners [1], Key Resources [2], Cost Estimation [3], Scope of Work [4], I will also talk about Hypotheses and Data Collection for Product Development [5].
1. Key Partners
These are the people whose inputs will make your business to thrive. These set of partners include your suppliers [raw-materials suppliers, component suppliers, and service providers], your advisers, [Legal Adviser, ICT Adviser, Financial Adviser, Business Development Adviser, Brand Strategy Adviser, etc], your delivery network [Marketers, Distributors and Salesforce]. These are some of the key business partners.
2. Key Resources
I will use an example to describe key resources. If you make popcorn for sale, your key resources include [your stand or your selling space which could be offline in a shopping mall that is very close to your residence in Ajegunle, Lagos state. Your selling space could as well be online, say a Facebook page, a blog or a website].
Raw popcorn is another key resource, without which you cannot make popcorn. The popcorn machine is another key resource. I am sure that you will not want to use anything that is comparatively of a lower efficiency level.
Electricity is another key resource. The question here is how will you ensure that you have consistent electricity supply. Do you think PHCN supply will be sufficient or you want to get a power generator? You can possibly explore the advantages of a solar power generator as well.
Human Resource is another important component to consider as a key resource. Can you handle every aspect of the popcorn business all alone or you will need to employ an assistant?
The points mentioned so far are not the only relevant ones. You have to critically distill your business to understand the key resources that you need. Remember that key business resources are those elements that must be in place for your business to thrive.
3. Cost Estimation
If you can identify your key resources then it will be very easy for you to do cost estimates for your product development. Cost estimation is what you do to ascertain the financial value or the financial cost of your key business resources.
The questions here include;
What will it cost me to get a selling space? [Lock up shop, Facebook page, blog, or website].
What will it cost me to get a reliable supply of electricity?
What will it cost me to get an assistant as staff? [Salaries]
What will it cost me to buy the popcorn machine?
These individual costs and their aggregation make up your cost estimates. This is an important budgeting requirement.
4. The Scope of Work [This is also called The Statement of Work]
I will like you to review the initial scope of work template provided in the tefconnect portal for week 3 project.
In a simple language, the scope of work refers to the extent of work to be done in order to achieve a particular result. This involves goal-setting and targets, and it applies to every area of your business in which you want to achieve specific results.
First, you must set clear and smart business goals. When your goals are smart, you will achieve them with more ease. Next, you must define the activities that you must do to achieve your set business goals. Plus, you must identify the key partners or human resource requirements for you to achieve these goals.
You also need to establish space requirements for, and the location of activities. You need to ask, where exactly will each activity be done and how much space do we need to achieve each activity?
Next to that, you must establish the cost implication of all relevant activities and requirements. In addition, you must establish a schedule or time-budget that details the time requirements for you to accomplish all tasks and achieve your predetermined business goals. And of course, you need to determine the characteristics of the results expected so that when you achieve them you can easily recognize them and present them for approval.
The statement of work is a kind of motivation that helps you to establish business or project expectations in black and white. So, you know what to expect and the timelines. It helps entrepreneurs to be organized. It helps you to be efficient in time management and financial management. The statement of work is an invaluable tool.
5. Hypotheses, and Data Collection for Product Development
Submissions on hypotheses could be divergent, but I will discuss it in general terms as it relates to our discussion focus for week 3. Hypotheses are assumptions that entrepreneurs make prior to product development. A hypothesis could be something you think is true based on observations or feelings, but which you need to verify. This is because your assumptions could be untrue.
The dog food story by Kelechi is very relevant here. The owner of that dog food company assumed he had a recipe that dogs would really love. He made a huge investment into branding and promo, but unfortunately and painfully, his business did not thrive, why? The answer is simple, he did not test his hypotheses. He did not verify the truthfulness and relevance or otherwise of his assumptions and guesses. He did not confirm whether his assumptions were true and relevant or untrue and irrelevant. He felt his hypotheses were true and relevant, but because they were otherwise (untrue), he lost his investment.
This again brings us to problem-centric entrepreneurship. This problem-centric approach to entrepreneurship helps you to get data from the final consumers of your product which could be services or goods. The data collected from your final consumers and prospective paying customers should be used to test whether your hypotheses are true or untrue. I guess I have done something here. Thanks to everyone for this privilege, thanks for listening to this presentation. I am Marvels.
Please send in your questions and let's keep rolling.
Glossary of Terms
Key Partners
Key partners help the company develop its product or service. They generally provide complementary services such as distribution or marketing. That lets the company focus on the core elements of the solution that it is building for the customer’s problem.
Key Resources
Key resources are anything that is required for the development of the product or service. These are meant to enable key activities.
Scope of Work
A Scope of Work, or Statement of Work, is a legal document that outlines a specific project, including the cost, the type of work, the approval process, the payment process, and other important considerations.
Period of Performance
A period of performance is the length of time that a project is expected to take.
Place of Performance
A place of performance is the location where a project will take place.
Work Requirements
Work requirements are the stage-by-stage explanation of the things that need to be successfully completed and approved during a project.
Vendors
A vendor is a person or an organization that is being paid by a client. Persons or organizations that are outside of your business and being paid by your business are considered vendors.
Mapping solutions:
Comparing solutions both analytically and graphically against one another.
Improve Your [BMC] Business Model Canvass
[At LEANSTACK]Three Key Partners Worksheet
Building a business requires more than a big problem to solve that a lot of customers share. There are other important elements to consider beyond the customer, the problem, and your solution. Relationships with potential partners is an important one. You may find that there are people in companies, even government organizations who want to work with you.
Partners are very important for entrepreneurs. They provide access to resources that support the key activities of your business. Partners allow you to stay focused on the main features of your solution by relying on them for things that are less critical at an early stage of development. Entrepreneurs tend to overestimate the amount of work that they need to do themselves and the amount of money it will require. Using partners lets you have access to important resources without having to purchase and maintain them yourself.
You have to start thinking about who you want as partners, and why.
Of all the things that your solution will do, what should you be developing on your own?
Contents, Tutorials,
What is something that another company can do for you instead?
Video Editing, Marketing
Even if you think you can build your product without help (either money or some other resource) ask yourself if you are able to market the product effectively to your customers.
How will your customers even know that your solution exists?
Online Target Marketing, Offline Marketing through retail stores
You can always pay for some radio or television ads, or put up signs along the road, but maybe there is a company that is willing to partner with you because they want something new and exciting to offer.
Who would those partners be?
If customers decide to buy your product or service, you will have to figure out the logistics.
Do you already know how to package and ship the product or will you have to pay someone else to do that for you?
Online Delivery
What if someone wants to return a product? How will you collect it?
If it’s a service, will you need employees to help out customers when they are having problems or unsatisfied? What if a retail company was willing to handle those complaints for you?
Online Chat Engine
The best time to start answering these questions is now. It will take a long time to build the relationships with other people or organizations that will let your business sustainably provide a product or service. Partnerships will also help you think about ways to save money and time in these important early stages.
Who are the three best partners you could use in your local community?
1.
2.
3.
Initial Scope of Work Template
At this point in the program, you have thoroughly discussed your customer, the problem that they have, how they are currently solving it, and the main features of your solution. Right now you need to start thinking about how you will build your solution. There are important benefits to this, such as knowing how to proceed after receiving revenue or investment, predicting the sort of skills you will require to build your solution, and estimating how long it will take for you to deliver a solution once a customer agrees to pay you.A Scope of Work is the first step. It is helpful for you to develop one on your own first, so you can understand why a customer or partner will want one developed in detail before proceeding in a formal relationship.
A Scope of Work also called a Statement of Work, is usually written as “SOW” in communications with clients, customers, or partners. It is a formal document that describes the work to be done for a specific project, in this case, building or improving your solution. The point of this document is to provide clarity about a number of important details:
a. the work that will be done
b. who is responsible for each type of work
c. how long the work will take
d. where the work will take place
e. the minimum requirements the work must meet to be considered acceptable
The Scope of Work
What exactly do you need done?
What will your partner do, and what will you do on your own?
How will you know when to move to the next task?
The Period of Performance
When does the work start?
When should it end?
What happens if there is a change or extension needed?
The Place of Performance
Will the work be done remotely, or on a company’s site?
Are there specific in-person meeting requirements?
Will anyone need specific equipment and/or workspace?
The Work Requirements
What are the phases of the work (e.g. project kick off, design, build, implementation, training and handoff) throughout the project?
What will be done at each stage?
The Schedule
What are expected dates for each phase of work (e.g. vendor selection, project kick off, design review, implementation review, training complete, completion review, handoff complete and project archive complete)?
The Acceptance Criteria
Who will be responsible for approving at each stage of the project?
What sort of approval (e.g. written or verbal) is required?
Who will maintain documentation throughout the project?
What happens if there are discrepancies?
Cost Estimate Worksheet
Once you have spent some time scoping the work that you will need to do before proceeding, you can start to estimate the cost of this project. Estimating costs is another important skill for an entrepreneur. If you know how much it will cost to build something new, you can more confidently speak to potential customers and investors.
Many people start by making guesses about what something will cost, and that can lead to serious problems. Guessing is usually way too high or way too low, and either way you are unlikely to find good customers and partners. A good estimate is much better than a guess.
Take the Scope of Work that you just completed. Use the Schedule section as a framework for estimating the cost of each phase of the project. You should be able to speak with people in the local area who perform each of the tasks that you need, and in some cases, you can work online with people, too.
If you are not able to find local options or a suitable online partner, then this is a strong indicator that there will higher-than-expected costs in the development of your solution.
Questions to consider:
Will you manage people directly or will there be another person involved?
How many people will be needed for supporting tasks? How much do these people cost per day? How many days will you need each person?
What sort of materials will you need? How much will they cost? Who will provide them for you?
Will travel be required? How much will that cost?
Will any information technology services be required? How much will that cost?
What additional costs are required? (Rent? Facilities? Related equipment?)
For Entrepreneurial Insight, Read "Product in 4 Ps" Article
[Resource from CLEVERISM]Focus on "Feature Creep", Read "What is a Product" Article
[Resource from LUMEN Boundless Marketing]Competitors Identification Worksheet
Existing businesses already attempt to solve the same problem that your product or service is addressing. By identifying these competitors, you can improve your ability to respond to the problem, recognize the existing solutions that you must be more capable than, and recognize the challenges and opportunities available within the market. Most importantly, identifying competitors helps set the value of your product or service, helping to determine your business’ long-term viability.
How much do customers currently pay for similar products or services? Compare your product to the most popular alternatives available in your local market.
Between N100,000 to N150,000
If there is a difference in price between related products or services, what is the cause of this price difference?
More conducive learning environment.
How much additional value do customers receive by purchasing a more expensive solution?
More conducive learning environment.
Estimate the average (mean) cost of your competitors’ products or services.
Between N40,000 to N200,000.
Third [Week 3] Survey
What is your leadership experience for running the business? (Select all that apply)
No Experience
Previous Experience Founding Company
Former company leader/President/Executive officer
Former management experience
Answer: Former company leader/President/Executive officer.
Cost Estimate Survey
Now that you understand more about estimating costs, its good to get some practice applying them in simple business scenarios. This will help you later on when you are developing products or services, building new features, or competing for proposals or grants.
You are setting up a store to sell car parts at a local market. You need to clean out the store, paint it, set up advertising, purchase the parts, and then stock them. You have two employees to help you, each of whom costs the equivalent of 15 U.S. Dollars per day. It should take you two days to clean out the store, one day to paint it, one day to set up advertising, and two day to stock the new parts. The advertising materials and car parts cost a total of 1,345 U.S. Dollars. How much will it cost to set up the store?
a. 1,450 U.S. Dollars
b. 1,475 U.S. Dollars
c. 1,500 U.S. Dollars
d. 1,525 U.S. Dollars
Answer: d. 1,525 U.S. Dollars
You were selected as one of three finalists for an annual contract to provide fertilizer to a large rural area. You know from previous experience that the total cost is a combination of the number of farms receiving fertilizer and the size of the area that contains the farms. Delivering to each farm costs you about 500 U.S. Dollars per year, and each square kilometer adds 3 U.S. Dollars per year. The contracted area is approximately 10,000 square kilometers with a total of 500 farms. The other contractors submitted bids for 260,000 and 275,000 U.S. Dollars. Assume that each of your businesses has the same reputation for quality and years of experience. Can you profitably work on this contract? If so, what would you submit as a bid?
a. Yes, above 275,000 U.S. Dollars
b. Yes, between 260,000 and 275,000 U.S. Dollars
c. Yes, below 260,000 U.S. Dollars
d. No
Answer: d. No
You are developing a smartphone application. You currently have a budget of 45,000 U.S. Dollars to complete the application. While negotiating with the developers, you accidentally revealed them your budget. Their proposal ended up being exactly 45,000 U.S. Dollars, with the following split: Strategy (10%), Product Development Roadmap (10%), Wireframes (10%), Graphic Design (10%), Product Development (45%), and Quality Assurance Testing (15%). You spoke with several other clients, who told you that their projects ran over budget by at least 10%. What option would you pursue?
a. Negotiate down to 40,000 U.S. Dollars or lower
b. Reduce the Scope of Work
c. Accept the proposal but add a clause that all cost overruns are not your responsibility
d. Negotiate by finding other cost reduction or burden sharing elements
Answer: d. Negotiate by finding other cost reduction or burden sharing elements
