Ploughshare will provide support in setting up the initial operations of the spin-out venture, liaising with you and all other relevant stakeholders to ensure the business is legally and financially ready to operate. We will work with you and any other founders to see that the relevant contracts are in place, such as employment contracts if they choose to join the spin-out, or any consultancy agreements to support the early phases of the business. Other major areas where we support on spinout operations include setting up:
Such processes can often be a time-consuming process and cause a number of issues later in the spin out’s journey if not set up correctly. We understand the pitfalls and will work quickly to complete the set up so you can focus on running the business.
Devising a clear business plan is essential for you and your fellow founders to articulate their strategy and how they will execute against their goals. A well-articulated plan aligns the spin out’s team and external stakeholders on where the business is going and why.
While there are several methodologies to plan the business, a good starting point is to develop a one-page business plan called a ‘lean canvas’. This represents the experimental nature, iterative processes and customer feedback integration that early-stage businesses need to develop their propositions. Using this model, you can create a clear and concise document that also accommodates for quick evolution of their business.
The lean canvas typically includes the following elements:
The problem and solution: A clear problem statement and how the spin out solves this
The value proposition: The unique value that the spin-out brings to the market summarised in a concise statement
Unfair advantage: How will the business gain competitive advantage? Describes expertise and resources, such as team experience, IP and capital used to create value for the target market and customers
Customer segments and channels: Who is the target audience? Where and how can the business reach them? This includes definition of the market and methods of marketing to stand out and get noticed by the target customers
Key metrics: These are Key Performance Indicators (KPIs) that will be a litmus test for both business and impact and can include measures such as generated leads
Revenue streams and cost structure: A list and explanation of target revenue streams to monetise the business and associated costs to achieve those revenues
Source: Created by Ash Maurya, the Lean Canvas was created for entrepreneurs to help them get a straightforward idea of what they’re doing
A lean canvas can also form a strong foundation for the more detailed business and investment pitch. Detailed business plans will be required for communication to specific stakeholder groups and typically will be included at the spin-out formation phase (step 9 in the spin-out journey map). They will incorporate more detailed information on areas including marketing plans, IP strategy, business model, team expertise, financials, risk and governance.
Ploughshare will guide founders on the right level of detail required, for example, investors or grant providers. Rarely do things go to plan in running any business, but the exercise of writing down both a lean and detailed plan helps to focus the founders to think more critically about how they will achieve their stated goals and to align the various stakeholders involved in the spin-out.
There is increasing pressure on businesses to provide clarity on how they will meet environmental, societal and governance (ESG) criteria. ESG is a set of standards for a business’ operations and protocols broken down into three categories:
Environmental: How a business acts towards the welfare of the planet. What kind of impact does it have on the environment?
Social: How an organisation treats its employees, customers, suppliers and local communities. Includes factors such as racial diversity, inclusiveness and recruitment practices.
Governance: How a business is run, including the way it is audited and the way it administers shareholder rights. This also covers attitudes to executive pay, as well as how a business communicates and interacts with its shareholders.
When planning the business early on, spin-out founders should also consider ESG criteria and how they might communicate their ESG alignment and the impact they aim to make. It is never too early to start thinking about how ESG goals will be embedded into the overall business — indeed many investors view it as a must-have. Below are three key steps you can take to proactively embed ESG criteria into their spin-out from the outset:
One way for you as a founder to start the process of building an ESG framework is to use the ‘Theory of Change’ tool, which looks at the problem being solved, the audience it reaches, the immediate and wider impact of that change, and long-term goals. (See further reading section for more information on the Theory of Change.)
Our approach to capturing ESG data is to ensure that the requirements are as simple, relevant and proportionate to the spin-out as possible. The key data requirements will be directly linked to the impact measures identified in the impact-maturity matrix. Though the data will also be used for government departments and by Ploughshare itself, the priority is that the data captured has greatest use for the spin-out.
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