1	Entry Strategies Dr. Jeff Shay
2	Entry Strategies In this module we’ll expand your understanding of the different ways in which you can get a business started Many entrepreneurs think that new businesses must start from scratch We’ll provide you with a variety of “Entry Strategies” that you should consider when starting your business
3	Entry Strategies Before getting started in any business it is important to consider the existing players in the market What does a new player represent for existing competitors? Lost potential sales Loss of key employees Lower margins from price cutting Longer hours Etc. Thus, you should realize that your entry into the market will not go unnoticed!
4	Entry Strategies There are a variety of entry strategies, including: Developing a new product or service Entry through parallel contribution Buying a franchise Exploiting partial momentum of an existing product or service Finding a sponsor Acquiring an existing business Now let’s take a look at each of these…
5	Developing a new product or service This type of entry would include: A product or service that no other company has offered on the market For example, computers, Internet stock trading The biggest challenge is determining whether the market is ready for the product/service
6	What are the risks of new product or service introduction? The design may be impossible to complete in a timely fashion The new product may err in design A competitor with greater resources may crush the new venture The entrepreneurs might not be able to convince consumers to purchase How will your team deal with these issues?
7	Entry through parallel competition This type of entry involves entering into a market with a new business that provides products or services that are already available on the market The risk associate with this type of entry include: The financing might not be sufficient for competing with existing players in the market Entrepreneurs might not have the skills to compete with players who already possess experience competing in the industry
8	Buying a Franchise What are the advantages to buying a franchise? Franchisor provides Systems that are already established Advertising expertise Consumer recognition of an established product or service A proven concept and business model What are the disadvantages to buying a franchise? Information regarding success rate is not accurate Entrepreneur might have too little capital to start If the franchiser fails, the entrepreneur fails as well The returns offered by the franchise might not be high enough The entrepreneur might not like the work
9	Exploiting partial momentum from an existing product or service You may choose to transfer an existing business concept to new locations What are the risks? Might be difficult to recognize opportunities in other markets Might be difficult to acquire the capital and talent to pursue Might not have enough expertise to expand
10	Finding a sponsor You may find through your current employment that a supplier, consumer, or investor is willing to take some of the risks In these cases, they make an investment in your new business which can include money or even the facilities to start the business What are the risks? The entrepreneur might not have enough credibility to gain the support of potential sponsors The sponsor might decide to go into business themselves
11	Acquiring an existing business If you are considering acquiring an existing business, you should consider the following: What are the actual assets that will transfer with the acquisition? Direct Facilities, talent, capital Indirect Consumers, suppliers, distribution channels, etc.
12	Here are some important questions that you should ask when acquiring a business Why is seller willing to sell? What assets go with the business? How much would it cost to start on your own? What elements are key to its survival? Cash flow Purchase plan: how much $ and when? How quick will investment be recovered? What is the discounted cash flow and how does this compare to the price of the business? Risks? Competition for buying the business Establishing credibility with seller and why this should be important to the seller
13	Summarizing, there are many entry strategies New product or service Parallel competition Franchise Exploiting momentum of existing product/service Transfer to new locations Meet supply shortage Capitalize on unused resources Find sponsorship Acquisition Your job is to determine which fits best with your goals
14	Next Module In the next module, we’ll introduce you to the market opportunities and marketing