Lecture 1 - New Venture Creation

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Lecture 1 - New Venture Creation

  1. 1. New Venture Creation An Overviewhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  2. 2. The journey to becoming an entrepreneur is easy.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  3. 3. The path to becoming a successful one is filled with heartache, barriers, failure, ridicule, sacrifice and eventually success – if you can stick with it.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  4. 4. The problem that we have in Pakistan is that entrepreneurship is misunderstood and therefore ridiculed by everyone around us.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  5. 5. Our parents tell us that we are wasting our time and education with something that MIGHT earn some moneyhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  6. 6. Our friends tell us that we are wasting our time and starving ourselves when it would be easier to just get a job.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  7. 7. Potential clients don’t take us seriously because we don’t have a huge financial base to work from, so we will probably shut our doors in a few months.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  8. 8. Sadly, all of these things are partly true, but they make our lives harder and more stressful because the approval from our inner circle isn’t there.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  9. 9. People don’t understand entrepreneurship, so they don’t know what to make of it.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  10. 10. But the answer to all these problems are easy, if you know how to handle them.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  11. 11. First objective of the course: To teach you how to explain what you are doing to those around you in small manageable pieces so that you can get their support.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  12. 12. Second objective of this course: To take your idea and show you how to determine if it is viable, feasible and how to make it successful.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  13. 13. Third objective of the course: To teach you how to build a successful businesshttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  14. 14. Entrepreneurship in Pakistan The Great Wasteland of Businesshttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  15. 15. Entrepreneurship in Pakistan is a failure from the word go because of how our culture operates.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  16. 16. In Pakistan, we don’t accept new things with very much ease.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  17. 17. In Pakistan, we like to follow the crowd more than go our own way.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  18. 18. In Pakistan, we would rather be unhappy with our careers than dare to do something that takes hard work but makes us happy – for much less money (in the beginning)http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  19. 19. All of these things make Pakistan a hard place to be an entrepreneur, but there are other things that keep us from succeeding.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  20. 20. Economic  Breakup  -­‐  Pakistan   10%   15%   Wealthy   Middle  Class   Poor   75%  http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  21. 21. Business  Environment  -­‐  Pakistan   12%   Business  Owners   Working  Class   88%  http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  22. 22. Pakistan follow patterns….http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  23. 23. For decades there were only 2 choices when it came to career paths: Doctor Engineerhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  24. 24. Then the software industry in India started to grow and people in Pakistan started opening software houses.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  25. 25. So Pakistanis had a new career choice – computer sciencehttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  26. 26. Then the banks started to grow and hire more and more people….http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  27. 27. Pakistan had another new career choice – MBAhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  28. 28. But when the economy turned south, unemployment went up and people decided to sit at home and do nothing rather than start their own businesses.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  29. 29. Why?http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  30. 30. There are 3 reasons that stop people from starting their own business in Pakistan:http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  31. 31. Reason 1: No support networkhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  32. 32. Around the world, universities encourage their students to be independent and give them the skills to be free thinkershttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  33. 33. With free thinking comes confidencehttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  34. 34. So you are more comfortable taking chances and risk to achieve morehttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  35. 35. But for an entrepreneur to succeed, they must have a support networkhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  36. 36. We need people who understand what we are struggling with to help guide us through the difficult timeshttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  37. 37. We don’t have that in Pakistan.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  38. 38. Reason 2: No financial supporthttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  39. 39. For any venture to succeed, there needs to be somewhere that capital can be sourcedhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  40. 40. In Pakistan, we only have 3 options:Parents (if they are wealthy)Banks (if we have collateral)Sethis (if we are desperate)http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  41. 41. Financing Option 1 – Parents Many of the businesses that are started in Pakistan are funded by the family of the entrepreneur.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  42. 42. While that is a great option, family businesses require lots of money and many members of the family involved to make them successful.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  43. 43. When it’s only one person, the parents give them money so that they have something to do – there are no checks and balances – therefore, no drive to succeed.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  44. 44. But when your parents aren’t loaded,what options do you have?http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  45. 45. Financing Option 2 – Banks Some entrepreneurs in Pakistan get bank loans to start their ventures.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  46. 46. Bank loans require a number of things: Collateral to secure the loan Proof of Concept Past Experiencehttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  47. 47. Most entrepreneurs don’t have the collateral to secure a bank loan.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  48. 48. Most entrepreneurs need capital to be able to provide proof of concept.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  49. 49. Most of your past experience is either in working for others or none at all. Entrepreneurs that have past experience have the capital they need already.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  50. 50. But do you really want a bank loan?http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  51. 51. Bank loans mean that you must make payments whether you have the revenue or not – and when you miss a couple of payments, you lose your businesshttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  52. 52. Also, in our banking culture, loans come with a 22% interest ratehttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  53. 53. In the rest of the world, banks have small business loans with an interest rate between 2 – 10%.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  54. 54. So if you take a bank loan of Rs. 10,000,000 at 22% interesthttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  55. 55. You must be able to pay back Rs. 100,000 each month otherwise your business is at riskhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  56. 56. And Rs. 100,000 in monthly revenue is very difficult – if not impossible for a new business.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  57. 57. Financing Option 3: Sethi The Sethi is one of the worst options for startup financing.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  58. 58. The Sethi sees your business as another investment – like gold and property – and expects returns immediately.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  59. 59. As a result, the investment they make is capitalized an any cost.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  60. 60. That means that you will be selling products or providing services cheaper than market rate so that the Sethi can get their money back and believe that you will succeed.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  61. 61. Reason 3: No credibilityhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  62. 62. New businesses have no credibility in the market because they don’t have the capital to survive.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  63. 63. Because of this most clients will not work with your venture or offer the high value contracts because they don’t believe you will be around in a couple of months.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  64. 64. Additionally, since you don’t have an existing body of work, you don’t have anything to convince the client that you can deliver the work they are expecting.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  65. 65. So you are stuck working with small ventures like yours that have the same capital problems as you do – which creates a vicious cycle that is difficult to get out of.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  66. 66. Third Objective of the Course: To show you how to get through these hard times and give you a support network to share with.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  67. 67. So Where Do We Go? Getting Around the Problemshttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  68. 68. In this course, we will teach you how to build successful businesses by testing and working out the best methods to go to market.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  69. 69. This includes idea generation, model development, operations planning, human resources and a variety of things that will make your new venture successful.http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  70. 70. Our Method of Teachinghttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  71. 71. Financial Plan Growth Strategy Pricing Model Product/ Service Human Development Resources Operations Planning Business ModelIdea GenerationIdentification http://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  72. 72. Next Week’s Lecture: Idea Identificationhttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
  73. 73. Readings for Next Week:From Paycheck to PaydirtCan Entrepreneurs Save The World?How I Did It?100 Brilliant and Insightful Companieshttp://emagine-group.com Brand Focused, Socially Active, Digitally Enabled
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