Are you ready for Scaling Your Business


Published on

90% of start-ups fail while scaling up...this intuitive model helps you check whether you are ready for scaling your business!

Published in: Business

Are you ready for Scaling Your Business

  1. 1. from one orbit to the other…Saarthi Integrated Consulting ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  2. 2. Key Skills – Business Catalyst, Ideation, Technology, Management, Operations  Several years of experience in start-ups as well as established companies like Sling Media, Ittiam Systems & Motorola  On the jury and mentor panel for several business plan competitions e.g. Power Of Ideas (Economic Times), White Knight (IIMK), Eureka (IIT Mumbai)…  Contributed to MPEG-4 standard as a member of MPEG committee  Hold two patents on video technology  B Tech Electrical Engineering IIT Kanpur 1992 @manish_saarthi ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  3. 3.  Building a scalable business Are you really ready for Scaling? Pointers to Scaling ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  4. 4.  Based on experiential learning Typically every business gets fueled by the passion of the entrepreneur; however as time goes by, there is more need for structure Provide a structure for various stages of growth Different sections will be useful for different companies depending the stage they are in ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  5. 5. ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  6. 6.  Started in 2005 Key offering: business class travel on short hauls at the price of economy class Spent huge capital to lease aircrafts and launched operations Closed in 2010 ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  7. 7. ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  8. 8. Customer   Discovery   Pivo%ng  Company  Valida5on   Customer  Valida5on   ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  9. 9.  2005: Based on a personal experience, Phani realized the in-efficiency in booking bus tickets 2006: Developed a software for the bus operators to pool in the vacant seats   No takers! Not even for free… Late 2006: Pivoted the idea from selling software to becoming a sales channel for tickets!  Rs 5 CR in 2008, Rs 30 CR in 2009, Rs 60 CR in 2010… ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  10. 10. “Your  Store,  Your  TV,    Your  Ads”   2010  October     November   December   •  Idea!   •  Func5onal   •  Market  ready   •  Survey   prototype   prototype   •  Business  plan   •  IT  BHU   •  Pilot  –  Khivraj   incuba5on   Bajaj   2011  January   Feb/Mar   May-­‐June   •  SOH    Instore   •  Jugaad  H/w  to   • Remote  Delivery   •  Pilot  –  Lifestyle   demo   • Web  based  control   •  Demo  –  Maru5/ • Paying  customers     •  Legal  Opinion   Hyundai   ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  11. 11. Linear Model Iterative Model Product centric  Customer centric Long product /service  Shorter cycles of build – development without validate – build – real customer touch validate… Lack of on-the-ground  Strong involvement of customer development customer at all stages right from the start from start to finish Typically tends to take  ‘Build the business’ before more capital ‘Build the company’ approach ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  12. 12. ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  13. 13.  1997 - Started with one store in Chennai 2000 - ICICI ventures invest in Subhiksha 2002 - 120 stores across Tamil Nadu 2004 - Changes the mantra from consolidation to scale 2007 - 1000 stores across the country 2009 - in bad shape with dues over 300+ CR ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  14. 14.  Every Business has one or more lines of revenue / offerings.. Each one of them needs to be treated as separate mini-businesses , called Business Lines Please evaluate each Business Line separately with the use of Dip-sticks ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  15. 15. Have you crossed the CHASM? Main Stream Market CEnthusiasts & HEarly Adopters A Laggards S M Product / Service Adoption Lifecycle ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  16. 16. 100 80 60% Leads 40 20 Knowns Known of Unknowns Knowns Business Cycle ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  17. 17. Business Cycle Validation ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  18. 18. 100 80% Customers 60 40 20 Contact Need Proposal Negotiation Fulfillment Support Repeat & Pitch Identification Business Cycle ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  19. 19. Profitability per sale ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  20. 20. % Customers 100 80 60 40 20Substantial Marginal Break Even Marginal Desired Loss Loss Profit Profit Profitability per Sale ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  21. 21. Customer Support Effort ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  22. 22. 100 80 60% Team 40 20 Support for Enhancement of Future Current Offerings Current Offerings Offerings ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  23. 23. Product / Service Digression ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  24. 24. 100 80 Product/ Customer% Customers 60 Service Need 40 20 0 20 40 60 80 100 % Match ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  25. 25. Cash Flow Predictability ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  26. 26. 3Normalized Revenue & Order Book 2 1 Quarter/ 0 Month -1 -2 -3 ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  27. 27. ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  28. 28.   Go To Market Strategy  Building Organization & Processes  Capital Planning  Better money is the Customer ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  29. 29. ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  30. 30.  Phase1.0  You have developed the offerings  Tested their efficacy in the market  Have some paying customers Phase 2.0 Scaling Process  Scaling of the current business  Addition of new business lines  Market Identification for each BL  Identify your target segment for each Market Segment ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  31. 31. New Product Re-invented Product New Market (Re-segmented Market)Old NewMarket Market Re-invented Market Existing Market (Re-segmented market) Old Product ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  32. 32. New Re-segmented Market New Market Product Google+ Facebook, Linkedin, Metro Service in BLR Amazon Online shopping Multiplexes at their launch iPOD / iPAD time Multiplexes Old New Market Market Volvo service in Bangalore Low cost airlines Deccan Airlines (when it TVs/Fridges/Washing started) Machines/White goods Flipkart Existing Market Old Re-invented Market Product*  Some  examples  may  exist  in  mul%ple  quadrants   ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  33. 33. NewRe-segmented Market New Market Product Customer Adaption / Non Competition can catch up fast consumption Staying ahead of the race Other Startups e.g. G+ e.g. Seventymm (online DVD rental)Old NewMarket Market No customer need in the new mkt Crowded Space – Margins & Customer Adaption / Non Market Share always under consumption pressure New products e.g. Mobile carrier / handset, e.g. Kellogs (at launch), Paramount hotels Old airwaysExisting Market Product Re-invented Market ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  34. 34. NewRe-segmented Market New Market Product Clear Distinction for the new Build new use case scenarios and product wrt old ones for gaps evangelize and how it can benefit e.g. G+ created noise around consumer privacy & circles (to distinguish e.g. Facebook showed a way to from FB) connect with people around the world, Linkedin did the same forOld professional network NewMarket Market Typically it is cost / feature race Targeted customer education about GTM is largely based on new possibilities / options communicating differentiation e.g. Deccan introduced Rs 1/- ticket Big ad budgets to appeal to the railway customers e.g. mobile carriers OldExisting Market Product Re-invented Market ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  35. 35. Market Customer Market Positioning Demand Creation RisksType Cost of Create & DriveExisting Known Known Differentiation creation & Sales market entry Customer Long Unknown; Define new Education; evangelismNew Unknown critical to market, need Convert early & education define & solution adaptors into cycle customers Educate users Unknown; Redefining Known what has Market &Reseg- critical to existing (Most changed in the Productmented define market & Likely) market; Drive redefinition differentiation sales ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  36. 36. Price Product Variables Allowances and Deals  Quality Distribution and Retailer  Models & Sizesmark-ups  Packaging Discount Structure  Brands  ServicePromotion Variables Place Variables Advertising  Channels of Distribution Sales Promotion  Outlet Location Personal Setting  Sales Territories Publicity  Warehousing System ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  37. 37.  Identify target customer segment clearly and stick to it for the current product  You cant be everything for everyone  It maybe better to dominate a niche with the given resources Evaluate most cost effective route to the customer  B2B, B2C, B2B2C… Treat existing business units and new businesses as two different companies ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  38. 38.  Build & Leverage your networks  Make LinkedIn and other social business networks work Social Media should be an integral part of your marketing strategy Build & evaluate feedback loops continuously CEO is the best CMO for initial stages of growth ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  39. 39. ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  40. 40. FIRST EMPLOYEES Skilled, Passionate people Common Goals Shared values Build your model CORE TEAM 5-6 key team members Passion, passion passion Common values, Share the goals Ownership, Ready for uncertainty Hire for attitude, Train for skills FOUNDING TEAM Core skills in the team Good advisory board which cares Common values, shared company vision 1+1=11 Do not mix personal/professional relationships©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  41. 41.  Make and BE a good foundation, support everyone.... Communicate Be honest and don’t fake values Meet every person you get in your company Answer difficult questions yourself ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  42. 42.   Almost every start-up has a Functional Structure to begin with   easy to implement & easy to assign team members based on their skills   This model begins to lose its efficiency as different Business Lines begin to mature  Business Unit Structure   Each mature Business Line hived off as a Business Unit headed by the BU-head with P/L responsibility   Shared Services across BUs to serve common needs like HR, Finance etc   Leverage entrepreneurial energy for cross functional initiatives and not for causing diffused ownership ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  43. 43.  Keep processes scalable even in the basic business model Processes are as important as innovation Invest in processes for the next 3 year plan ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  44. 44.  Plan for T+2 for people, process, technology Review and modify your plans rigorously & regularly Do not overinvest in technology while under- investing in people Always overinvest in processes ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  45. 45. ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  46. 46. Source:  Wikipedia  ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  47. 47. Type  of   Advantages   Disadvantages  Funding  FFFF  /   Entrepreneurs  free  to  use   Limited  advisory.  Only  Angel   money.  Typically  the  only   monetary  help.  Equity   risk  capital  available  in  pre-­‐ Dilu5on  can  be  heavy  if  not   revenue  stage   handled  right  VC   Larger  chunks.  Advice   Dilu5on,  Corporate  Structure  Private   Very  large  chunks   Mainly  available  to  large  Equity   businesses  Debt   No  equity  dilu5on   Typically  requires    collaterals;   Ability  to  repay  EMIs  IPO   Typically  highest  valu5on   Equity  dilu5on;  market  risks   ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  48. 48.  Think through on which investment is right for you  Milestone based capital plan •  Raise only as much as you need to get to the next milestone For cash-flow businesses, debt capital is a great option Better money is the customer! ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  49. 49.   All entrepreneurs have to decide what scale of business they want to be in  Scaling up can be designed in from the start, however needs to be focused on at the right stage  With the right model, any business would scale naturally in steps  Scaling up requires three main dimensions  Go To Market Strategy  Building Organization and Processes  Capital Planning •  Best Money is the Customer ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  50. 50. Every business aspires to grow and they will,they only have to find a way of doing it sustainably! ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  51. 51. Enabling Scaling Technology ExecutiveStartups Businesses Advisory Coaching From concepts From talentedFrom Ideas to From one orbit to effective individuals toBusiness to the next solutions inspired achieversLeveraging your The key to scaling is Developing quality There is no dearth ofstrengths, we shape to build sustainable, products requires a talent. The challenge isyour idea to help innovative business balance between to unlock potential andcreate a viable models & features, make it productive tobusiness & execute it continuously improve technology & achieve meaningful on them architecture results ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved  
  52. 52. Can we be your Saarthi? ©  Copyright  Saarthi  Integrated  Consul5ng  LLP.  All  rights  reserved