Pitching Business Idea within 3 minutes                                                     Dr. Shridhar Lolla            ...
Once the canvas is filled with key words, a ReadOut of the business model can be prepared bylogically connecting the keywo...
Disclaimer:CVMark Consulting is an independent business-innovation research agency based in Bangalore, INDIA.CVMark Consul...
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Pitching business idea within 3 minutes 1.0 201005

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You do not get more than 3 minutes to make an investor interested in your business idea. And if you are a new entrepreneur it would be vary difficult to precisely articulate your idea in such a short time. Therefore, you need a framework that can help you in jotting down your idea and connecting the dot to make a story that logically appeals not only to the investor but also convinces you and your team that you have thought through the idea very well. This document uses a business model framework to help start-ups in describing their business idea.

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Pitching business idea within 3 minutes 1.0 201005

  1. 1. Pitching Business Idea within 3 minutes Dr. Shridhar Lolla lolla@cvmark.com CVMark ConsultingKeywords: elevator pitch, business model, investor presentation, start ups, business idea, idea readoutInvestors demand that entrepreneurs pitch business idea in 2 to 3 minutes. While investors dohave a long queue of ideas waiting for their attention, they believe that precise articulation of the‘business’ idea is an indication of the rigorousness with which the idea has been developed.Within these 2-3 minutes an entrepreneur must present the most essential parts of the businessidea (without getting into details), that will invoke interest of the investor.Investors are primarily interested in understanding “the rationale of creating, delivering andcapturing value” in a business. And for them to be further interested in the venture, the value hasto be big enough. This ‘rationale’ is what Alex Osterwalder and his over 470 co-creators of bookthe ‘Business Model Generation’, call as Business Model. They have presented a tool that can beemployed to precisely describe business model and quickly win the interest of the investor fornext level of discussion.Since business is a system that comprises interrelated building blocks, it is important that anentrepreneur is able to visualize the blueprint of the system and, while describing the businessidea, be able to interconnect these blocks and clearly articulate the logic of the business.The book proposes 9 building blocks comprising, [1]Customer Segment, [2]Value Proposition,[3]Channels, [4]Revenue, [5]Key Activities/Skills, [6] Key Resources, [7]Key Partners, [8]KeyCosts and [9]Customer Relationship.The process of describing business model starts with identification of precise key words thatdescribe building blocks of the business. Here is an illustration of the process for an ApparelBusiness. The keywords are entered into a template (called canvas) as shown in the below figure. Key Partners Key Activities ValueProposition CustomerRelationship Customer Segment Pool of Designers Design Point of sales relship 1 Showrooms Production 5 A variety of Birthday discount Fabric suppliers Stock management designed garments Personal mailers Smart Buyers available across the 9 demanding latest Transporters year fashionable garments 2 Key Resources Channels 7 Skilled operators & managers Access: Public media Factory & 6 Sales: Showrooms Warehouse Distribution: Warehouse Process: frequent replenishment 3 Key Costs Revenue Raw material Premium price round the year Salary 8 Rent 4Figure: The Business Model Canvas of an innovative Apparel Business.Copyright © 2010, CVMark Consulting, All rights reserved 1
  2. 2. Once the canvas is filled with key words, a ReadOut of the business model can be prepared bylogically connecting the keywords of the building blocks from [1] to [9]. Emphasis can be addedto relevant part of the ReadOut to highlight innovative elements of the Business Model.{Start} IndoFreshGarments (IFG), offers ever availability of a large variety of garments [2] to smartbuyers [1], who aspire for latest designs.In order to ensure high availability at its show rooms, IFG has built a distribution capability toreplenish garments frequently. Overawed by a large variety of designs and sizes[2] available roundthe year, customers [1] willingly pay premium prices [4].In order to create the strong value proposition, IFG needs key skills [5] in garment design,production and stock management and therefore, it engages talented designers, skilled operators anddistribution specialists[6]; and has also made key investment in flexible and high speed machines[6].Further, in order to offer latest designs, it has built a huge library of alternative designs by out-sourcing[7] design work to creative Indian designers.On the cost side [8], its major expenses are in raw materials, salaries and rent.It uses traditional media to access its clients, however, recently, it has embarked upon a uniquecustomer relationship initiative [9] that makes its clients sticky, e.g. it offers special birthday discountsand engages customers in a personalized way.IFG’s innovation in distribution[3] and manufacturing system[6] of supply based on consumptiononly, keeps its inventory levels at less than ½ the industry standard and yet ensures highavailability[1] of garments. This also makes the end of season returns extremely low. Theseinnovations not only gives high growth to its sales and profitability year on year, it also increases itsresponsiveness to market to a remarkable level that no competitor could reach easily. {end}After articulating the business model, a line verbalizing financial numbers and investment offercan be added, e.g. The business is projected to reach a revenue of around $100m with aprofitability above 10% within 3 years and is inviting investment proposals of not less than $15million for a 26% stake.Such a description, exposes the investor to the essential elements of business in a logical way andhighlights the innovation and competitive edge built in the business. The logical connectionsbetween the elements also help the entrepreneur in foreseeing the effect of likely changes inbusiness environment by identifying the sensitive elements and devising corrective strategy wellin time. By mapping the cause&effect of business (architecture and control system) well in theirmind, the entrepreneurs will be able respond to the query of investor better (especially, whathappens if….. type of questions).Where can you get benefited by business model read-out: 1. Presentation in Business Plan Competition 2. Making Elevator Pitches to Investor 3. Making yourself comfortable with articulation of your business idea 4. Sharing business idea within your teamCopyright © 2010, CVMark Consulting, All rights reserved 2
  3. 3. Disclaimer:CVMark Consulting is an independent business-innovation research agency based in Bangalore, INDIA.CVMark Consulting intends to serve business community through advisory, consulting and coachingengagements. As a part of its engagements, it regularly brings out insights, perspectives, research reports,newsletters, issue-oriented reports and other products.This caselet captures description and direction of solution to generic problem faced by business owners. Itis intended to share experience of CVMark with a wider business community. This document in part or fullcan be reproduced subject to a reference to CVMark Consulting and to this document.Factual material contained herein is obtained from sources believed to be reliable, but the publisher is notresponsible for any errors or omissions contained herein. Opinions are those of CVMark and are based onresearch conducted for this report. CVMark holds no responsibility for decisions made on the basis ofcontent of this report.CVMark ConsultingBangalore, INDIAClet:04-10___________________________________________________________________CVMark handholds entrepreneurs in navigating through the dynamics of business.For describing, developing and innovating your business model, call Tel: +91 94480 70081 or Email details to : lolla@cvmark.com .CVMark Consulting, #2304, Nandi Park, Gottegere, Bannergatta Road, Bangalore 560083, INDIA Web: http://www.cvmark.comCopyright © 2010, CVMark Consulting, All rights reserved 3

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