Converting ideas into businesses

Converting ideas into businesses
MDI, July 9, 2011 | Prajakt Raut

Idea
Implementation

Can
Solve a problem
Fulfill a need
Improve quality of life
Improve something

Examples of cheaper:
Lower price 0r accessible to more people e.g .EMI?
Cheaper
Faster
Better
Fuller
Nicer
Nearer
Improve something

Can be
Product
Service
Value
Business model
New users
New uses

Having a good idea is not the same as having a business plan.

A coffee shop for teens is a cool idea…
…but is not the same as
Setting up a chain of coffee shops.

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
Vendors
Etc. etc., etc….

How much of each of these elements depends on whether you want to have…
A scale business
A lifestyle business
OR

Objective of
today’s session
To make a business case around a good idea.

Fall in love with a PROBLEM.
Don’t get infatuated with a solution.
[Allows you to try new solutions if one does not work]

To have one great idea, have many of them.
Thomas Edison

An idea means nothing.
Implementation is everything.

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.

Exercise 1
Identify the problem or need that you want to own

Exercise 2
Identify as many ideas that address the problem that you chose

Evaluating the business potential of an idea
Concept
What will it take to deliver?
Team required for this
What is the size of the opportunity
Defensible competitive advantage?
Business model / financial model
Competitive landscape
Risk factors
Funds required and use of funds
Exit potential

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

What does it take to deliver?
Lets see one example…
Procurement
Production
Supply chain
Vendor management
Capacity utilization
Portal
Product
Technology Platform
Look & Feel – user experience
Ordering mechanisms – including ‘order on phone’
Payment gateways & methods
E-commerce
Value proposition & positioning
Target Audience
Pricing
Brand Personality
Delivery & fulfillment mechanisms
Warehousing
Logistics partners
Order Management
Brand Strategy
Logistics
Marketing
Team
Marketing strategy as well as tactical ideas
Media Plan & Budgets
CRM Strategies & Ideas including loyalty programs, referrals, etc.
Roles & Responsibilities identification
HR policies
Team hiring & retention plan

How many vendors are involved?
19 Partners / Vendors involved in the implementation process
Operations partners
Packaging & printing partners
Logistics partners
Recruitment consultants
CRM partners/CRM platform vendors
Database vendors
Process Training Consultants
Soft Skill Training Consultants
Outsourced Call Centre
Technology & portal development partners
E-commerce capable Technology partners
Hosting partner
User Interface partner
Payment Gateway
Testing & bug fixing experts
Marketing & Brand Communication partners
Brand identity specialists
Photographer
Direct Marketing agency
Social Media Agency
Advertising Agency
Media Buying agency

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

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

Uniqueness
Scalability
IP
Replicability

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

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

Risk factors
Market risks?
Financial risks?
Competitive risks?
Business model risks?
Execution risks?

Funding needs
What do you need the money for? – Be specific
How much do you need? – Be definitive

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]

Exercise 3
Make a business case for your idea

Evaluating the business potential of an idea
Concept
What will it take to deliver?
Team required for this
What is the size of the opportunity
Competitive landscape
Risk factors
Funds required and use of funds
Exit potential

Sleep over your ideas.
More often than not you will get over them.
Dream big. Dream often.

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Converting ideas into businesses

by Prajakt Raut on Jul 09, 2011

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Converting ideas into businesses — Presentation Transcript