Converting ideas into businesses
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Converting ideas into businesses Converting ideas into businesses Presentation Transcript

  • 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
  • Defensible competitive advantage?
    Uniqueness
    Scalability
    IP
    Replicability
  • 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
  • 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
    Defensible competitive advantage?
    Business model / financial model
    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.