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Mullins Model Notes

Mullins Model Notes

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305 views6 pages

Mullins Model Notes

Mullins Model Notes

Uploaded by

sid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Mullins Model

Most business plans fail to raise any money for the venture. Why? They are written for business
opportunities that are fundamentally flawed. Why write a business plan for a no-hope
opportunity.
Writing business plans gets the writer into an, everything about me is wonderful mode. Most
business plans are idea and entrepreneur-focussed, not customer focussed. We need to
therefore analyse the opportunity before we even put pen to paper on a business plan. And we
need to see the opportunity in a light that says: Why will, this one fail bearing in mind that most
fail.
The model distinguishes between a macro and micro perspective and investigates the industry
(the suppliers) and the market (the customers) for a particular business opportunity. Mullins
makes the point that there is not such a thing like the car market, the hospital market etc.
Instead markets are groups of customers with a common need or desire, which might be
satisfied with a particular product, but not necessarily. In the middle of the model stands the
organisation with its core team that interacts with its environment and needs to have some key
properties in order to function well. In the following the individual parts are described for the
authors product concept.

NEW BUSINESS ROAD TEST SUMMARY QUESTIONS


DOMAIN ONE THE MICRO-MARKET TEST

What customer pain will your offering resolve? How strong an incentive do
customers have to give you their money? Will the fish bite?
Who, precisely, are the customers that have the pain? Do you have detailed,
accurate, and current information about who they are, where they live or do
business, or what they do?
What benefits does your offering provide that other solutions dont?
What evidence do you have that customers will buy what you propose to offer?
What evidence can you provide to show that your target market has the potential to
grow?
What other segments exist that could benefit from a related offering?
Can you develop capabilities that are transferable from one segment to another?

Four crucial micro-level questions about target markets


1. Is there a target market segment where we might enter the market in which we offer
the customer clear and compelling benefits, at a price he or she is willing to pay?
2. Are these benefits, in the customers minds, different from and superior in some way
better, faster, cheaper, or whatever to whats currently offered by other solutions?
3. How large is this segment, and how fast is it growing?
4. Is it likely that our entry into this segment will provide us entry into other segments
that we may wish to target in the future?
DOMAIN TWO THE MACRO-MARKET TEST

What sort of business do you want? One with potential to become a huge business,
or a small lifestyle operation servicing a niche market? Without answering this
question first, you cannot assess for your particular opportunity the meaning of the
others below.
How large is the market you are seeking to serve? In how many ways have you
measured it?
How fast has it grown over the last one/three/five years?
How quickly will it grow in the next six months or two/five/ten years?
What economic, demographic, sociocultural, technological, regulatory, or natural
trends can you identify that will affect your market, and what effect, favorable or
otherwise, will these trends have on your business?
Are you seeking venture capital? Is this realistic for the anticipated growth rate of
your business?

Three crucial questions about markets


1. Is my market large enough today to allow different competitors the opportunity to
serve different segments without getting in each others way?
2. What are the predictions for your markets short-term growth rate? (in the absence
of other information to the contrary, the recent rate of growth in your market may be
the best available predictor fo growth in the near future.)
3. What are the predictions for your markets long-term growth rate? (This is likely to be
influenced heavily by macro-trends: economic, demographic, sociocultural,
technological, regulatory, and/or natural.)

DOMAIN THREE THE MACRO-INDUSTRY TEST

What industry will you compete in? Define it carefully.


Is it easy or difficult for companies to enter this industry?
Do suppliers to this industry have the power to set terms and conditions?
Do buyers have the power to set terms and conditions?
Is it easy or difficult for substitute products to steal your market?
Is competitive rivalry intense or genteel?
Based on all five forces, what is your overall assessment of this industry? Just how
attractive is it?
If your industry is a poor performer overall, are there (based on the lessons of
Chapters 2 and 5) persuasive reasons why youll fare differently? If not, move on.

DOMAIN FOUR MICRO-INDUSTRY TEST

Do you possess proprietary elements patents, trade secrets and so on that other
firms cannot likely duplicate or imitate?
Can your business develop and employ superior organizational processes,
capabilities, or resources that others would have difficulty in duplicating or imitating?
Evidence please.
Is your business model economically viable, i.e. can you show that your company
wont run out of cash quickly? That depends upon the answers to these questions:
o Will your revenue be adequate in relation to the capital investment you need
and the margins you can get?
o How much will it cost you to acquire and retain customers?
o How long will it take you to attract customers?
o Will your gross margins be adequate to cover your necessary costs
structure?
o How much cash must be tied up in working capital (inventory or other), for
how long?
o How quickly will customers pay?
o How slowly will suppliers and employees be paid?

DOMAIN FIVE THE MISSION, ASPIRATIONS, AND RISK PROPENSITY TEST

What is your entrepreneurial mission:


o To serve a particular market?\
o To change a particular industry?
o To market a particular product?
o Is the passion really there?
What level of aspirations do you have for your entrepreneurial dream:
o To work for yourself?
o To build something small or something big?
o To do? To manage? To lead?
o To change the world in some way?
What sorts of risks are you and are you not willing to take:
o Will you risk a secure salary and the things that go along with your current
employment? For how long?
o Will you risk losing control of your business?

o
o
o

Will you put your own money at risk? How much?


Will you risk your home or time with your family or loved ones?
Do those you love accept the risks youll take?

DOMAIN SIX THE CAN YOU EXECUTE? TEST

What are the few - only a handful, please critical success factors (CFSs) in your
industry? What support can you provide to show that youve identified them
correctly?
Can you demonstrate in past deeds, not mere words that your team, taken
together, can execute on each and every one of these CFSs?
Alternatively, have you identified which CSFs your team is not well prepared to meet,
for which you will need help in filling out your team?

DOMAIN SEVEN THE CONNECTEDNESS TEST


Who do you and your team know up the value chain in he companies that are likely
suppliers to your proposed business and to your competitors? In suppliers to
companies in other industries that offer substitute products for yours? Be sure you
have names, titles, and contact info.
Who do you and your team know down the value chain among customers you will
target, both today and tomorrow? Names, titles, and contact info, please.
Who do you and your team know across the value chain among your competitors
and substitutes? Names, titles, and contact info, please.
This resource is taken from the New Business Road Test, by John W. Mullins. Copyright
2003. Published by Financial Times Prentice Hall, an imprint of Pearson Education.

Feasibility Study Outline


1. Executive summary that summarizes what follows
a. tell the audience, yourself and your team what you are going to tell them
2. Micro-level market assessment
a. Target markets pain identified; compelling benefits of your solution identified,
with evidence that those in this segment are willing to pay
b. Target market segment, size, and growth rate
c. Options to grow into other segments.
3. Macro-level market assessment
a. Overall market size and growth rate
b. Macro-trends analysis to assess future market growth and attractiveness
4. Macro-level industry assessment
a. Five forces analysis: make a conclusion on the industry attractiveness
b. Likely changes therein going forward
5. Micro-level industry assessment
a. Proprietary elements
b. Superior organizational processes, capabilities, or resources identifies that are
not easily duplicated or imitated
c. Economic viability of business model established:
i. Revenue forecast
ii. Customer acquisition and retention costs, and time required to obtain a
customer
iii. Gross margin
iv. Capital investment required
v. Operating cash cycle characteristics
6. Teams mission, aspirations, and propensity for risk
7. Teams ability to execute on the CSFs in this industry
a. Team must decide what the Critical Success Factors are
b. Address Fatal Flaws also
8. Teams connectedness up, down, and across the value chain
9. Summary and conclusions (tell the reader(s) the key highlights of what youve told them)
a. Why is or isnt this opportunity attractive? On what one (or at most, two)
domains do you rest your case?

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