Jan 07

Serendipity engineering

Atticus Finch Uploaded on August 21, 2006 by Dunechaser

Atticus Finch - Uploaded on August 21, 2006 by Dunechaser

How valuable is engineered serendipity to your business? On my way back from a meeting in the Watershed I thought I’d stick my head into UWE’s new business incubator facility in Bush House. Only opened just before Christmas they already have a good selection of tenants including the usual scattering of graduate start-ups (such as Carolyn Newton from Whale Bags, a business plan competition winner).

I also bumped into Chris, Dave, and Toby from Evans & Finch. I’d spoke to Dave & Chris last year at OpenCoffee before they’d settled so it’s great to see them finding their feet so quickly. For one thing the holding page they had back in November is now funky showcase of their work.

Chris, Toby and I threw a couple ideas around for some funding they’re thinking about applying for. They had a very strong feature set (not unusual for a software / tech company) and a pretty compelling description of the benefits, which is nice to see. The challenge we were kicking around was how to bring that to bare upon the funding call.

We took a step back from the application itself and looked at the funders as clients. This lead to some great new directions for the proposal. We’ll find out how they get on in a couple of weeks.

So how does that help jbsh? Well in the short term it doesn’t. It does build the relationship with Chris, Dave & Toby (especially if they land the funding ūüôā ) which may lead to some consultancy in the future. More likely, they’ll bump into someone that needs some business planning support and think of me.

Serendipity works like that, so long as the opportunity cost doesn’t outweigh the benefit its always a good investment.

I was in town, I could have gone straight home and sorted a couple emails or helped Chris & Dave and lay the opportunity. I think helping out Chris & Dave was a better use of my time and the emails will get answered in due course.

Oct 30

How Many? Part the Second

Uploaded on April 3, 2008 by BottleLeaf

Uploaded on April 3, 2008 by BottleLeaf

I just posted an example where I’d worked up an Addressable Market calculation based on fairly good data. Of course, this data isn’t usually available; or it’s really expensive.

One of the services that jbsh offer is business consultancy, mainly strategic growth plans and help with the business planning activity. So what’s the addressable market for that?

Well according to the Office for National Statistics there were 2.16 million business enterprises registered for VAT and/or PAYE in March 2008, compared to 2.10 million in March 2007, a 3.0 per cent increase. As an aside, the ONS also report a continued move towards incorporation and away from sole proprietor and partnerships, perhaps reducing personal exposure in the downturn?

VAT is only compulsory when the value of your taxable supplies goes over ¬£67,000 which isn’t that high. The ONS also offer us a cut for businesses between 10 and 50 employees, in fact there are 196,560 such businesses. The number of employees isn’t a great measure of which companies that will engage our services, I’m really more interested in those with a strategic growth challenge, and the revenues to pay our fees.

This information is available in the handy pocket-sized 432 page document that ONS produce on UK Business: Activity, Size & Location 2008 (well I can download the pdf to my phone but I’m not sure I’d want to read it there). On page 172 is the data about geographical regions by turnover.


Turnover in ¬£000’s 0 – 49 50 – 99 100 – 249 250 – 499 500 – 999 1,000 – 4,999 >5000 TOTAL
UNITED KINGDOM 378,930 543,645 600,325 268,540 168,465 155,145 46,505 2,161,555
ENGLAND AND WALES 334,810 494,765 541,430 240,595 151,270 139,560 42,090 1,944,520

Those businesses turning over less that ¬£250k probably can’t afford us. That still leaves 573,515 which is much more attractive than 196,560 so there must be a lot of businesses with under 10 employees and over ¬£250k turnover.

The next 17 pages detail companies by region, so for my local Unitary Authorities:


Turnover in ¬£000’s 0 – 49 50 – 99 100 – 249 250 – 499 500 – 999 1,000 – 4,999 >5,000 TOTAL
Bath and North East Somerset 1,295 1,885 2,095 880 530 435 140 7,260
Bristol, City of 2,205 3,380 3,670 1,690 1,125 1,145 285 13,500
North Somerset 1,380 1,915 2,005 900 510 450 105 7,265

Using the same criteria as above there are 8.195 businesses with a turnover >¬£250k in these three regions of the UK. You can do the same thing for Standard Industry Classification codes (SIC codes) within broad regions (North East, South West, etc). SIC codes don’t work for everyone but we’re not trying to identify specific clients at this point, just gather enough data to be able to say if there is a big enough potential market to sustain the enterprise. If you don’t fit one code exactly, pick a couple that make sense and interpolate.

So it turns out that if you’re selling to businesses, there’s quite a lot of data out there on how big your addressable market is. Of course, that doesn’t mean all 8,195 businesses in this area are looking for a business growth consultant, but if we can make a compelling enough case then they could be.

What markets are you in?

Is there good data?

If you think not, leave a comment and I’ll have a go at finding some sources.

Oct 28

How many? Part the First

Jam at the Floating Market

Uploaded on December 2, 2006 by Stuck in Customs

Something that makes an appearance fairly early in a business plan is the addressable market size. This is usually the point where after some mumbo-jumbo you’d end up with something like “…and thus we only need 1% to secure $100m turnover.”

Mark Davies has a good post on the subject from a VC perspective but I thought I’d add some examples from real life. The first benefits from solid data, the second is more speculative.

An enterprise I’m working with have a new game for the education sector (and several others but for the purposes of this example I’m concentrating on the education sector). Education is great (as are most public sectors) because there’s so much great data out there to use. Tt doesn’t mean they’re any easier to sell into but that’s another post.

So this enterprise happens to be in Canada, and one of their markets is Quebec. Helpfully for me, the Minist√®re de l’√Čducation du Qu√©bec has most of the data I need. With a bit of digging (and guess work, some of the better data is in French) you can find the 9 English School Boards, and 17 French School Boards. Between them there are 512,515 students in Secondary education (enrolled for Academic Year 2007/2008). Which is nice and big.

Trouble is, we’re not selling to all those students. We’re actually only interested (at the moment) in two of their 5 years at Secondary School, so we need to divide that number by 2/5 to get a more accurate number (371,739) which is still nice and big.

The next bit needs a bit more knowledge about the fundamental business model. The game is sold to a school, or school board, on a tired license model. The more licenses you buy, the cheaper the per student price. So one addressable market is to sell a single license to the whole of Quebec, ka-ching!

However, more likely is that we’ll sell to each school board separately (or even each school). Again, data is our friend here as we can find the enrolled student numbers for each School Board. Time to fire up Excel.

Quebec English Board Central Québec School Board Eastern Shores School Board Eastern Townships School Board English Montreal School Board Lester B. Pearson School Board
Secondary 1,905 653 2,704 10,978 11,842
SecI & SecV 762 261 1,082 4,391 4,737

And so on…

Now I can apply our tiered pricing model to each School Board and see what our ‘true’ addressable market is for Quebec. Of course these numbers include special schools that might not purchase a license; equally, it doesn’t include the private school sector which hopefully will.

I could drill down to individual schools (I have the list of schools, sizes, locations, who the Principal is and contact info) but we don’t really want to cold call each school and try to sell them each a separate license as we’re in bootstrap mode and the cost-benefit just isn’t there. Early conversations have indicated that School Boards are the most likely point of purchase so that’s enough detail.

This means I can say with high confidence that our addressable market for Public Schools in Quebec is $350,250. Shake rinse and repeat for the other Provinces and Territories in Canada and (for this business model) the Public Sector education market is $3,415,300.

How confident are you of the numbers behind your addressable market forecast?

What do you do if you don’t have those numbers? Stay tuned for my next post.

May 28

Portfolio business planning

Uploaded by frozenchipmunk on
20 Aug 07.

Not about a portfolio of businesses, but rather for a business to have a portfolio of income streams from a single (or small number) of core products / services.

Several recent conversations in Bristol, Leeds, London and elsewhere have shown that a winning business model could be through diversification of income. A number of excellent projects have been initiated with funding from the Government or charitable foundations. These usually have a section on sustainability, but they tend to be very light.

When the funding ends, the crunch bites. Obviously you don’t want to kill the service, goodwill and community that’s been built up, but without a cash flow, any service will end or at best stagnate.

I’ve found examples of deep community knowledge and solid data even without Facebook / Phorm style tracking. The challenge then becomes how to identify income streams to sustain the service/community once the grant funding runs out.

The models that are intriguing me most at the moment are blending sponsorship models (basically brand association), membership fees, and the possibility of consultancy / expert witness type activity.

If you’re managing a community (however lightly) then you know the demographics, levels of engagement, patterns of engagement, areas of interests, what’s current, what annoys, etc. And that’s valuable knowledge, knowledge that another organisation wishing to work with that group, or develop products/services for that group may pay for. This is not about selling your email list / registration database, there are good data protection laws in place to stop that.

So that’s part of what’s interesting me at the moment; mixed business models blending sponsorship, membership and consultancy. The other two two oft-cited business models (freemium services & advertising) are also of interest for commercial clients, but less so in the situation of many foundation initiated projects.

What are your experiences of transitioning from grant funding to revenue funding?