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Scaling up your Business Biz 102 workshop at The Coalition - 2014

Scaling up your business - Prajakt Raut
Founder - The Hub for Startups

Insights on what it takes to plan and scale up a startup

Scaling up your Business Biz 102 workshop at The Coalition - 2014

  1. 1. Scaling Your Business With Startup Weekend Business 102:
  2. 2. 1 Scaling up is not just about more people doing more of the same thing. The entrepreneur’s role changes.
  3. 3. • Proving concept/refining product • Jugaad • Flexibility • Fine-tuning offering • Processes • Focus • Operational efficiencies • Increasing profitability • New markets/new capabilities/new concepts/new products Doer Manager Leader
  4. 4. Startup phase: • Discovering a scalable and repeatable model • Multi tasking – doing multiple functions Scaling up phase: • Executing a scalable and repeatable model • Specialization – hiring subject matter experts
  5. 5. Having a good product does not mean you will have a successful business. 2 A business has to be built around the product.
  6. 6. Setting up a chain of coffee shops is more than just making great coffee.
  7. 7. Building a coffee chain requires the following competencies • Real estate procurement • Facilities management • Brand identity • Marketing • Sales • Food handling • Supply chain / procurement • Processes • Standardization • HR – hiring, training, retention • Service management• Legal, finance, audit • Vendor management • MIS It helps if your coffee is good.
  8. 8. Having a great product helps. But it is certainly not a sufficient condition for the success of a venture.
  9. 9. 3 Are you growth ready? The 10x10 scorecard
  10. 10. Personal readiness Institutional readiness 1. Aspiration 2. Commitment 3. Passion 4. Willingness to delegate 5. Deal with change 6. Financial 7. Time 8. Health 9. Maturity to handle failure 10. Family & friends 1. Products 2. Business model 3. Processes 4. Leadership/Management team 5. Infrastructure 6. Resources / finances 7. People 8. Partnerships 9. Brand / goodwill 10. Plan A and Plan B
  11. 11. Delegating is one of the most difficult things to do for many entrepreneurs. Inability or unwillingness to delegate is the most crucial stumbling block in scaling up a venture. 4
  12. 12. You cannot manage more than 6- 7 people. Ideally 5. If you have too few or too many people reporting to you, you are either not delegating enough or not delegating right.
  13. 13. Hire rockstars 5
  14. 14. Your most important role as the entrepreneur is to identify, excite, hire and retain the smartest people to do the job. Hire people who are better than you. Spend 30% of your time on hiring and motivating people. I M P O R T A N T.
  15. 15. Identify key competencies required… and who in the team will oversee (green = have, orange = could be better, red = don’t have) Technology Marketing Domain Sales Production Supply Chain Logistics Finance Operations Process MIS Relationship
  16. 16. 6 To scale up, first define where you want to go and then plan how to get there. Now you need a business plan.
  17. 17. A business plan is useless product. But it is a priceless process. Provides a structured and logical framework for planning your business It is not an excel sheet or a PowerPoint presentation. It is YOUR plan for your business. It is YOUR story about what you do, how you do it and how you will make more or make impact.
  18. 18. Business planning is nothing but a roadmap for your startup. It’s a little bit like planning a journey When and where do you want to go? Destination or Goal What will be the stops on the way? Milestones What will the journey be like? Operations planning Why do you want to travel? Motivation / reason What do I need for the journey? Resources planning How much will it cost? Financial projections How do you want to travel? Strategic choices
  19. 19. See the film in your mind Think of the long-term and then visualize the mid-term and then the immediate term
  20. 20. 2.5 mn users INR 20 cr revenue 2016 1 mn users INR 5 cr revenue 2015 100,000 users INR 50 lacs revenue 2014
  21. 21. Dec 100,000 50 lacs Nov 80,000 40 lacs Oct 70,000 35 lacs Sept 60,000 30 lacs Aug 40,000 5 lacs July 30,000 0 lacs June 20,000 0 lacs May 15,000 0 lacs April 10,000 0 lacs Mar 8,000 0 lacs Feb 4,000 0 lacs Jan 2,000 0 lacs
  22. 22. A Rs.50 cr business does not require 50 times more infrastructure or capital than a Rs.1cr business But it will certainly require a different plan.
  23. 23. Understand your motivations Why are you doing this venture? This is a more philosophical question rather than a business case question 7
  24. 24. • Fame, money, both? • What is your definition of success? • Local or Global? • Other questions – What is your ability and willingness to sacrifice in case plans do not work well? – If someone offers to buy you out, will you sell? – What is your definition of success? – What is your definition of failure? Are all founders aligned on this?
  25. 25. My goals By 2015 By 2020 I want my networth to be NA __________ My share in my startup __________ __________ My startup’s Revenues __________ __________ My startup’s revenue multiple __________ __________ My startup’s valuation __________ __________ Therefore my networth __________ ___________ Deviation from my goals __________ ___________
  26. 26. Worksheet 1 (example 1) My goals By 2015 By 2020 I want my networth to be NA Rs.100 cr My share in my startup 22% 9% My startup’s Revenues Rs.15cr Rs.250cr My startup’s revenue multiple NA 4 My startup’s valuation NA Rs.1000 cr Therefore my networth NA Rs.90 cr Deviation from my goals NA Rs.10cr.
  27. 27. Worksheet 1 (example 2) My goals By 2015 By 2020 I want my networth to be NA Rs.100 cr My share in my startup 22% 18% My startup’s Revenues Rs.15cr Rs.100cr My startup’s revenue multiple NA 2 My startup’s valuation NA Rs.200 cr Therefore my networth NA Rs.36 cr Deviation from my goals NA Rs.64cr.
  28. 28. [Re]Defining what business you are in opens up new possibilities 8
  29. 29. From… “We run a restaurant that sells healthy food” To… “We make healthy food fun and exciting” _______________ __ Possibilities… • A few more restaurants _________________ Possibilities… • Restaurants/cafes • Cooking classes • Food channel • Food festivals • Packed lunches • Corporate/college catering • Recipe website • …. Much more
  30. 30. Bigger the market you address, higher the possible valuations… and easier to excite employees, partners, employees, customers, and in-laws. But often, it is not about higher valuations alone… it is about survival or relevance
  31. 31. Should they have been in the business of cameras or memories?
  32. 32. What would be Sony’s fate if it had defined itself as the Walkman company?
  33. 33. You probably would have been carrying a Casio phone if only they had not positioned themselves as the calculator company.
  34. 34. Do you depend on Indian Express or Hindustan Times for your news? Would your children do so? Should they have been in the news business or the newspaper business? Would NDTV, TV 18 be dominant media brands if Indian Express, TOI and HT dominated as ‘media’ brands rather than just news paper brands?
  35. 35. Could Olivetti have defined its business beyond typewriters?
  36. 36. Define your market based on ‘core competence’ and not on ‘current activity’ Understand how you will be relevant for 100 years.
  37. 37. Expand scope of business potential… • Does not mean you give up current focus – Expansion could be considered when foundation is strong • Just because the potential exists, does not mean you HAVE to do it – But it gives you scope for higher valuations • Just keep window of opportunity for areas which – Leverage current audience – Are parallel or adjacent concepts / services – Leverage existing competencies, resources, and infrastructure
  38. 38. Define clear, measurable, achievable goals for your company. Visualize them. 9
  39. 39. Worksheet 3c Make a visual representation of revenues potential from the key revenue stream of your business India
  40. 40. Worksheet 3d Then layer it with your goals India
  41. 41. Worksheet 3e Then layer it within the global context Global in 2020
  42. 42. Set SMART goals SMART - Specific, measurable, achievable, realistic, time bound E.g. of goals • By 2015 end become the dominant music distribution platform with revenues of ______ cr and ____ million users E.g. of milestones • Launch by Dec _____2 cr by March 2014 • ______users by March end 2014 • ________ users by Dec 2014 • 1st million users by ________ • ______ million users by Dec 2016
  43. 43. Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Users Rev Buyers Transact ions Then, layer it with monthly revenue/other (e.g users) milestones for a year.. And other parameters are appropriate
  44. 44. Identify 3 key drivers of success in 2015 Example - for online music platform 1. Awesome tech platform with world-class UI 2. 50 bands for launch, 250 bands by year end 3. PR to position as THE MUSIC PLATFORM FOR UPCOMING ARTISTES i.e. acquire customers cheap
  45. 45. Who are the stakeholders? Whom do you need to partner with? Whom do you need to work with? And have a plan to engage them. 10
  46. 46. Identify key stakeholders For the online music platform it could be • Bands • Band managers • Event organizers • Cultural committee presidents • Restaurants, discs, pubs, bars and lounges • Advertising & marketing agencies • Legendary musicians and artistes • Music Channels
  47. 47. Summarizing: 1. Different stages of the venture are fundamentally different. 2. A good product is not the same as a good business 3. Personal readiness and organizational readiness important 4. Delegation is difficult – but critical 5. Spend 30% of your time on HR – hire people smarter than yourself 6. Have a business plan i.e. a plan for your business 7. Clearly identify and align with your motivations 8. Redefining your business opens new possibilities 9. Visualize your goals, milestones and activities – first define them clearly 10. Identify key stakeholders and have a plan to engage them
  48. 48. If you liked what you heard, tell others. If you did not like it, tell me.
  49. 49. Prajakt Raut Founder – The Hub for Startups VP - Indian Angel Network __________________________________ Blog: Twitter: @prajaktraut Facebook