Académique Documents
Professionnel Documents
Culture Documents
(ESAF)
Erol Toker
March 3rd, 2010
ESAF
A framework to gather the data necessary to assess and
profile an early stage company
Customer Market
Company Product
The Problem
What Does the
What is the need being addressed?
Desired State Look Like?
Price Elasticity of Demand
Where does the need fall in the Change Frictions How do We Prove That there is
customer’s list of priorities ? Demand for the Desired State?
Primary/secondary research?
Customer Profile What is the current Existing market? Current
Identify the target customer consumption pattern? revenues?
specifically
What changes in
Customer Decision Process behavior are required
What is the current customer for product adoption?
decision process? (from need
realization to product search and
final evaluation of products)
• Size
• Structure & •Understanding the attractiveness of a market is key when
Dynamic evaluating an early stage company’s strategy
•Market Structure and competitive dynamic provide insights
on the current state of the marketplace.
Market •The ESAF Matrix provides a key question to frame market
research, depending on market characteristics along two key
dimensions: market size and concentration of market share
ESAF Matrix
Market Structure & Concentrated Fragmented
Competitive Dynamic
Key Players
Large Market
Who are the key players in the industry
(market share, profits, infrastructure, etc) Can we Can we
Competitive Analysis
break in? aggregate?
What are the most/least successfully
companies? What are they doing wrong or
right? How can these lesson help build
competitive advantage?
Industry Analysis
Stay
Small Market
Betting on the Betting on the Betting on the Betting on the Betting on Sales
Founding Team Industry Product Business Plan Team
Risk
•An early stage company’s financial projections do not offer much
information, as they are backed with very little market/revenue data.
Company This leads to a great deal of subjective speculation on both the
creator’s /examiner's side of the table
• Achievements •Hence we will first try to disprove the null hypotheses that the
• Business company is not viable and that the desired ROI targets set by the
Model entrepreneur/investor cannot be met (without any scrutiny as to
• Strategy
whether the company has the talent to achieve those numbers)
Testing the Business Model
Identify Key Assumptions of •Build a unit economic model, accounting for all revenues and costs (Variable and OH)
Business Model and Build •Allow for scalability of business (ie: if building a P&L for a fast food restaurant, allow model to
scale to multiple outlets)
P&L
•Determine break-even revenues at the unit economic level. If break-even requires scale,
Break-Even Analysis determine the level of scale required for the company to break-even overall
•Key measure of viability is if break-even revenues fall below the market size. Since viability of
(Test Viability) break-even market share will depend on the industry, we are only concerned with trying to
disprove the null hypothesis that the business is not viable
•Use Crystal Ball analysis to determine sensitivity of inputs and forecast expected profit values
Sensitivity Analysis of model
•Investigate most sensitive drivers and attempt to de-risk model iteratively to see if expected
(Test Business Model) outcomes fall in the desired ROI target range with a high level of confidence
•Having proven that the business model is viable and that
the company could achieve the desired ROI target given the
Company market size, we will now try to see whether the company is
• Achievements
capable of reaching the benchmarks we discovered
• Business previously
Model
• Strategy