converting ideas into businesses
TRANSCRIPT
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Prajakt Raut Co-founder - ApplyifiFounder – The Hub for Startups
Converting ideas into businesses
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Idea
Implementation
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Can solve a problem
Improve quality of life
Improve something
Fulfill a need
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Cheaper
Faster
Better
Fuller
Nicer
Nearer
Examples of cheaper:
Lower price 0r accessible to more people e.g .EMI?
Improve something
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Product
Service
Value
Business model
New users
New uses
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Having a good idea is not the same as having a business plan.
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A coffee shop for teens is a cool idea…
…but is not the same as
Setting up a chain of coffee shops.
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A coffee chain requires
• Real estate/franchising
• Brand identity
• Pricing strategy
• Marketing
• Supply chain
• HR, legal, finance
• Training
• MIS• Fund flow/cash flow• ROI & capacity
utilization analysis
• Facilities management
• Processes
• Standardization
• Org structure
• VendorsEtc. etc., etc….
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How much of each of these elements depends on whether you want to have…
A lifestyle business OR
A scale business
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To make a business case around a good idea.
Objective of today’s session
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Fall in love with a PROBLEM. Don’t get infatuated with a solution.
[Allows you to try new solutions if one does not work]
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To have one great idea, have many of them. Thomas Edison
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An idea means nothing. Implementation is everything.
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Plans are useless. Planning is priceless.
Plans change. Planning allows you to adjust your plans in implementing your idea.
Your idea or venture should not fail because your plan failed. Rework your plan. Adjust your solution.
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Exercise 1
Identify the problem or need that you want to own
Present it as:
1. The situation/environment [e.g. accommodation choices in Gurgaon are either too expensive or too basic & dirty]
2. The problem you want to address [e.g. “We want to address the problem of finding smart, cheerful accommodation at reasonable prices]
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Exercise 2
State the ideas that address the problem that you chose
Present all the ideas you considered and explain why you discarded some.
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Evaluating the business potential of an idea
1) Concept
2) What will it take to deliver?
3) Team required for this
4) What is the size of the opportunity
5) Defensible competitive advantage?
6) Business model / financial model
7) Competitive landscape
8) Risk factors
9) Funds required and use of funds
10) Exit potential
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Concept
• No more than one short, unambiguous paragraph– Reader should not need to read it again
to understand– Capture the essence in a one crisp line– Use simple language – Sell the potential
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What does it take to deliver?
Brand Strategy
Value proposition &
positioning
Target Audience
Pricing
Brand Personality
Product
Procurement
Production
Supply chain
Vendor management
Capacity utilization
Portal
Technology Platform
Look & Feel – user experience
Ordering mechanisms – including ‘order on phone’
Payment gateways & methods
Logistics
Delivery & fulfillment
mechanisms
Warehousing
Logistics partners
Order Management
Marketing
Marketing strategy as well as tactical ideas
Media Plan & Budgets
CRM Strategies & Ideas including loyalty programs, referrals, etc.
TeamRoles & Responsibilities identification
HR policies
Team hiring & retention plan
E-commerce
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How many vendors are involved?
Technology & portal development partners
1. E-commerce capable
Technology partners
2. Hosting partner
3. User Interface partner
4. Payment Gateway
5. Testing & bug fixing
experts
Operations partners
1. Packaging & printing partners
2. Logistics partners
3. Recruitment consultants
4. CRM partners/CRM platform
vendors
5. Database vendors
6. Process Training Consultants
7. Soft Skill Training Consultants
8. Outsourced Call Centre
Marketing & Brand Communication partners
1. Brand identity specialists
2. Photographer
3. Direct Marketing agency
4. Social Media Agency
5. Advertising Agency
6. Media Buying agency
19 Partners / Vendors involved in the implementation process
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Team required to deliver
• “VCs prefer A-Class teams with mediocre business plans over B-Class teams with great business plans”
• Diversity of skills, domain expertise critical but with similarity of passion
• Ideally, find partners with similar aspirations, motivations and financial situations
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Size of the opportunity
• Break it down to last detail– Total market size– Addressable market size
• What price point and how does that translate into revenue
• Test the assumptions
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Defensible competitive advantage?
• Uniqueness• Scalability• IP• Replicability
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Business model / financial model
• Three key questions– How much will you sell at
– How many will you sell
– Where will you sell… and how
• Who will pay for it – [user and buyer could be different]
• Translate the above questions into a financial model
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Competition
• Who will you compete with?
• Why would someone choose you over them?
• Why do you have a chance to be a dominant player?
In many cases, status quo [i.e. doing nothing] is the biggest competition
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Risk factors
• Market risks?• Financial risks?• Competitive risks?• Business model risks?• Execution risks?
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Funding needs
• What do you need the money for? – Be specific
• How much do you need? – Be definitive
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Exit potential
• How is the investor going to earn a good return?Sale to a strategic investor
Exit by selling stake to a growth stage investor
IPO?
[Note: Exit does not mean that the entrepreneurs has toExit]
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Exercise 3
Make a business case for your idea
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Evaluating the business potential of an idea
1) Concept
2) What will it take to deliver?
3) Team required for this
4) What is the size of the opportunity
5) Defensible competitive advantage?
6) Business model / financial model
7) Competitive landscape
8) Risk factors
9) Funds required and use of funds
10) Exit potential
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Sleep over your ideas.
More often than not you will get over them.
Dream big. Dream often.