You do not need to be an MBA to make your business grow. A practical guide that will help you audit if you are on the right track. In case you want to know more call me +91 98210 46013 or write to me skpalekar@hotmail.com
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Growing your business
1. Workshop on
"Growing Your Business"
Prof S K Palekar
+91 9821046013
S P Jain Institute of Management & Research
March 2013
skpalekar@hotmail.com
2. Things we must avoid
(Why Do New Businesses Fail?)
Planning Failure
No Plan No Milestones.
Marketing Failure
No need No differentiation No customer
Financial Failure
No cash costs more sells less
No control
Management Failure
No people No competence No organization
4. Result Focused Marketing
1. Series of self-assessments from a marketing perspective
2. Explain and Demonstrate the process of marketing
Remember this is only an introduction ! Market oriented thinking is a process
Of continuous improvement. It is not a one time exercise
5. You & your business are different entities
Your Family
Your Business
Your Time
skpalekar@hotmail.com
6. SELF ASSESSMENT
What is your understanding of Marketing ?
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
7. More Customers / Dealers Being influenced by the
Better Price market BEFORE you influence
More Advertising / Promotion the market
More awareness
Brand Ownership
Interviews in newspapers
sk.palekar@spjimr.org http://marketing-eye.blogspot.com +91 9821046013
8. SELF ASSESSMENT
IN YOUR IMPROVEMENT INITIATIVE YOU WANT
PROFIT FIRST ? OR SCALE FIRST ?
The routes and preparation needed is very different
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
9. In your initiative
Profit First ? Scale First ?
PROFIT FIRST SCALE FIRST
+ Within existing finance + Less chance to others
+ Less fixed cost + Less variable costs (scale)
+ Invest Profits + Big Bang Warning
- Slow : Gives time to others - Upfront losses
Siemens MDP – Feb 2013 – Confidential Material – Please do not copy – Contact Prof S K Palekar – sk.palekar@spjimr.org - 9821046013
10. SELF ASSESSMENT
HOW LONG TO BREAK EVEN
FOR YOUR IMROVEMENT INITIATIVE
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
11. How long will it take for you ?
Depends on
1. How difficult it will be to convince customers
2. How long it will take you to set up the operations
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
12. How Long To Convince Customers ?
Need – Latent
Customer does not know he needs to solve the problem
Need – Surfaced
Customer does not know if solution exists
Want
Customer is aware of solutions but unsure of his actions
Market
Many buyers, sellers, deals, benchmarks
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDP ––Feb 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not copy – Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com
13. How Long To Convince Customers ?
Starting Your Own Game : Rules not known to others
Concept Selling
Need – Latent
Need – Surfaced
Want Category Selling
Market
Product Selling
Playing In An Existing Game : Being Competitive
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDP ––Feb 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not copy – Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com
14. How Long To Set up Your Operations
How to decide what is the specification of your offer (product)
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
15. SELF ASSESSMENT
STAGE OF BUSINESS GROWTH
5 Stage Analysis
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
16. Where are you ?
5 Stages of Business Growth
EARLY STAGES
• Existence
• Survival
HEALTHY BUSINESS
}
GROWTH STAGES
• Take-off
• Mature
17. Early Stages : Exist and Survive
Existence / Experimental / Sputtering operations
Will we find and acquire enough customers ?
Will we be able to deliver to their satisfaction ?
Will it become a viable business?
Do we have enough cash ?
Surviving / Proven / Regular operations
Can we generate enough cash to break even?
Can we generate money for repair/replacement ?
Can we generate enough for scaling up and growth ?
18. Important Stage : Healthy business
Now you have many options
To risk and invest life / time / money in growing it ?
To start planning strategy for growth
Or to keep it as it is – as an income generator ?
To hand over operations to managers
To sell it off and retain association ?
Or to completely withdraw
19. Growing Stages
Take-off stage
Both operational & strategic planning at the same time
Managers are not assistants but real ones
How to construct organization? How to delegate ?
Managing high debt-equity ratio
How not to grow too fast and run out of cash?
Maturity stage
The company has staff and financial resources
Can do both operational and strategic planning
Experienced senior staff + systems are in place
The owner has “separated” financially / operationally.
20. SELF ASSESSMENT
HOW GOOD IS CURRENT REVENUE STREAM?
WHAT ARE THE MAJOR COSTS ?
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
21. Analysis of your last 12 month invoices
Write : your desired level in 3 years. And prioritize them 1,2,3…
Sales level : Rs …..
Geographical breakup
What do you raise invoice for ?
% for products standardized by you : (80/20) Analysis
% for products standardized by others : ( 80/20)
% for custom made products
Whom do you raise invoices on ? Definition ……
Sale to : Middlemen % or end user %
Sale to : Repeat customers %, first time customers %
Price realization per customer : average ? variation ?
# of Customers
Lapsed, passive, active, supportive, loyal ?
22. Analysis of your last 12 month costs
Write : Identify % Variable Costs ? What steps to be taken to reduce top 3 costs?
Begin with the end user and work backwards
( Middlemen commissions : details )
( Taxes )
= Net Realization
( Marketing and Sales expenditures : top 3 ) : People, Facility, travel
( Operations expenditure : top 3 ) : Salaries, Facility, Rent
( Material Purchases : top 3) : Materials, warehousing
(Other : top 3 ) : Interest cost
= Profit
(Tax)
(Dividend )
( Retained )
23. SELF ASSESSMENT
ARE YOU CREATING VALUE
IN ORDER TO GET THE PRICE?
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
24. Value
“Use” Or “Merit”
“To Whom?” : One Person
“Fairness”.
“Exchange” : Two People
Customer Gets “Value”
The Seller Gets “Money”
skpalekar@hotmail.com
25. Value Calculus : CPV Framework
Objective : Planning value addition is such a way that we make adequate
profit and yet keep enough value on the table for the customer to take away
Value
Buyer’s Profit
Value Price
Added
Seller’s Profit
Cost
Cost is objective. Value is subjective. Price is your decision.
skpalekar@hotmail.com
26. 4 Value Creation Moves of a marketing
company - which one is the best ?
Move 1 Move 2 Move 3 Move 4
Benchmark
Utility
Price
Cost
skpalekar@hotmail.com
27. For their Building Management Systems
Honeywell is planning these 4 moves.
Which one will create more value ?
Reduce the box volumes of their products
through R&D / miniaturization
Increase MTBF (Mean Time Between Failures)
using better components
Better after-sales service
Expanding into Phon/ PC/ Audio/ Video systems used in the same
building whose wires and cables run through the same conduits
Train local technicians on their systems
who can be more easily available when the clients need them
Will this matter to the customer? Is this the customer’s priority?
Will the improvement be noticed? Is it excessive improvement ?
28. How to judge
what will create the value for the customer?
By doing 4 comparsions of your offer vis-a-vis
Customer’s Needs
Customer’s Status and Behaviour
Competitors considered by the customer
Price mindset
Pfizer MDP – FebFeb 2013 – Confidential Material – Please notMDPcopy – 2013 Prof S K S K Palekar – sk.palekar@spjimr.org - 9821046013
Siemens MDP – 2013 – Confidential Material – Please Pfizer not ––Feb Contact Prof– Palekar – sk.palekar@spjimr.org - 9821046-13
NovartisBank – do copy York Life July 2012
Axis – Next Max New Contact – MDP Nov 2011
do Destination MDP –
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com
29. Analysis of Needs
Same offer : different benefits to different customers because
the needs of different customers are different.
Hence the willingness to pay for the same product / offering is
different for different customers.
Is this possible ?
To offer only those things that meet the needs of the customers
Not to offer those things that do not meet the needs / priorities
Is it technically / economically possible ?
Practical techniques
What does target customer wants to achieve ? Fix ? Avoid ?
What are his complaints ?
What are his suggestions?
How does the customer differentiate between various offers
30. Analysis of customer status and behaviour
The price is many times decided by the perception of value
you are able to create in the mind of the customer.
They may not even know they need your product
They may not know what they need and specify it
They may not know what value to expect from the product
They may not know how to put a fair price to it
The BANT test
B : Budget ( Means there is some calculation frame/ benchmark)
A : Authority ( Means some people are tasked to purchase)
N : Need ( Means you can avoid, fix, enhance something )
T : Time Limit ( Means there will be no endless wait )
31. Analysis of competitors
All competitors do not compete with you in all markets
Only those competitors who are in the “consideration set” of your
target audience for your target application
Compare competitors
Only using the customer’s needs and priorities
Compare not only the product needs but all needs
32. Price Mindset of the Customers
Purchase Price
Inventory cost
Transaction cost
Maintenance cost
Disposal cost
Waste cost
Operating Cost
Cost inflicted on customer
33
sk.palekar@spjimr.org
33. Price Mindset of the Customers
Are you selling a product or a feature ?
Does the customer articulate what you offer ?
Does he think in terms of your offer or a solution based on it?
HOW DOES HE ARTICULATE HIS “BANT” ?
34. “Value for Money”
Product Money
Product Money
Facility Time
People Risk
Image Hassle
skpalekar@hotmail.com
35. 10 Commandments
Self Audit Questions
External
1. Is the sea of customers big and attractive for you ? or ?
2. Can you connect with these customers attractively ?
3. Will your value network be an advantage in your journey ?
4. How severe is the competition for the customers? or ?
Internal
5. What resources / assets enable you to compete / profit ?
6. What processes / experience enable you to compete / profit ?
7. What focus enables you to compete well ?
8. Will your staff and their skills be an advantage in your journey ?
9. Will your structure and systems be an advantage in your journey ?
10. Will your culture be an advantage in your journey ?
36. Is the “sea” of customers big and attractive?
Is it rising or declining ?
1. Size : # , volume, value
Bigger the better
2. Growth Rate
More the better
3. How ready to buy
Whether they search products or we search customers
4. How diverse are needs
More scope for entry through differentiation
5. How easy to access
if you cannot reach efficiently you cannot sell
37. Can you connect
with these customers attractively?
1. Do you have an insight to acquire customers ?
MARKET KNOWLEDGE
2. For whom do you want to create value ?
TARGET CUSTOMERS
3. What are they doing now ?
YOUR COMPETITORS
4. What is your offer ?
YOUR PRODUCT / SERVICE DEFINITION
5. How is it better ?
YOUR DIFFERENTIATION
6. How to create a marketing mix from it ?
YOUR ACTIONS
38. Value Network
Business Partners : relationship, knowledge, feedback
Supply side : established vendors
Market side : established distributors / retailers / agents
Eco System
collaborators
39. How severe is the competition ?
1. Influence of your rivals
Good : less rivals, each aiming for different customers
2. Influence of your customers
Good : many small customers : cannot threaten you
3. Influence of your vendors
Good : many small vendors / options : less threat
4. Influence of substitute products
Good : no close substitute : to reduce your revenue or profits
5. Influence of new entrants
Good : no new entrants : to reduce your revenue or profits
41. What resources / assets
enable you to compete / profit ?
Financial
Structural
Human
Relational
42. What processes / experience
enables your business model to work?
VALUE : How is value created : for whom and how
Targeted customers / applications / needs / channels ?
What solution provided to which problem of the customer
How is it differentiated ?
REVENUE : How does revenue come in
What gets billed : sale? rental ? lease ? subscription?
ACTIVITY : What Activities, what costs, how priced
What is the cost structure, targeted price and target margins
What activities and related costs it undertakes
What is its position in the industry value chain
ECO SYSTEM : Who are the friends and enemies
who it chooses to compete with and how
How it plans to make profits sustainably
Who does it befriend ?
43. What focus
enables you to compete well ?
Which market are your marketing processes trained ?
Processes
Market Intelligence
Analysis, diagnosis and design : Strategy formulation
Fulfillment
Customer acquisition
Customer satisfaction
44. Will your staff and their skills
be an advantage in your journey ?
ACCOUNTABILITY
Participation in planning, setting output targets,
STANDARDS
Norms of effort and behavior needed to achieve
CONFIDENCE
Done before OR is training needed
CONSISTENT SUPPORT
Would bosses and systems support it
MOTIVATION
personal consequences, periodic reviews and guidance
FEEDBACK
System of target setting, review and correction
45. Will your structure and systems
be an advantage in your journey ?
Market Intelligence
Analysis, diagnosis and design : Strategy formulation
Fulfillment
Customer acquisition
Customer satisfaction
46. Will your culture
be an advantage in your journey ?
Culture : “the way things are done here”
47. Self Audit Questions
1. Is the sea of customers big and attractive? Rising or dying ?
2. Can you connect with these customers attractively ?
3. How severe is the competition for these customers?
4. What resources / assets enable you to compete / profit ?
5. What processes / experience enable you to compete / profit ?
6. What focus enables you to compete well ?
7. In your journey
1. Will your value network be an advantage ?
2. Will your staff and their skills be an advantage ?
3. Will your structure and systems be an advantage in your journey ?
4. Will your culture be an advantage in your journey ?
48. Symptoms of Lack of
A Good Value Proposition
Your product is “me too” as seen by your customers
Customers not clear why should they choose you
Customers not clear where they can apply your product
You cannot get better price than the competition
Your profit margin is less than your competition
Your promotion effort does not seem efficient
Your sales force can convert less calls into sales
Your sales force cannot convince your customers
Your competitors spend less but sell more
49. How Long to become cash positive ?
Ideally you must begin generating revenue in 6 months
Otherwise de-motivation may set in
If you do not meet forecasts for 12 months consistently
you must re-examine
Phased approach is better for start-ups
Trial and error is the way to go
The first point must be reflected in your plan
50. Progress So Far
What Business does not fit with your profile
Begin revenue is 6 months and profit ASAP
My advice : First make profit and then scale up
Go in a phased manner
52. Benefits
Product : Manufacturing and Distribution : Value Chain
Facilitation : Trading : Facilitation : Services
Expertise : Diagnosing and Solutioning : Services
Co-creation : Railway, Telecom, Clubs :
Image :
53. “Value for Money”
Value
Niche / Exclsuive
Premium
Regular
Popular
Price
skpalekar@hotmail.com
54. Thank You
Siemens MDP – Feb 2013 – Confidential Material – Please doMDPcopy – 2013 July 2012 K Palekar – sk.palekar@spjimr.org - 9821046013
NovartisBank – Max New Feb Contact Prof–S
Axis – Next Destination MDP – – MDP Nov 2011
Pfizer not – York Life
skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com