Scaling up your business - Prajakt Raut Founder - The Hub for Startups Insights on what it takes to plan and scale up a startup

1. Scaling Your Business
With Startup Weekend
Business 102:

2. 1
Scaling up is not just about more people doing
more of the same thing. The entrepreneur’s
role changes.

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. 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. Having a good product does not mean you will
have a successful business.
2
A business has to be built around the
product.

6. Setting up a
chain of coffee
shops is more
than just
making great
coffee.

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. Having a great product helps.
But it is certainly not a
sufficient condition for the
success of a venture.

9. 3
Are you growth ready?
The 10x10 scorecard

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

12. 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

13. 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.

14. Hire rockstars
5

15. 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.

16. 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

17. 6
To scale up, first define where you
want to go and then plan how to get
there.
Now you need a business plan.

18. 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.

19. 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

20. See the film in your mind
Think of the long-term and then visualize the
mid-term and then the immediate term

21. 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

22. 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

23. 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.

24. Understand your motivations
Why are you doing this venture?
This is a more philosophical question rather than a business case
question
7

25. • 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?

26. 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 __________ ___________

27. 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.

28. 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.

29. [Re]Defining what business you are in opens up
new possibilities
8

30. 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

31. 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

32. Should they have been in the
business of cameras or memories?

34. What would be Sony’s fate if it had defined
itself as the Walkman company?

35. You probably
would have been
carrying a Casio
phone if only
they had not
positioned
themselves as
the calculator
company.

36. 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?

37. Could Olivetti have defined its business
beyond typewriters?

38. Define your market based on ‘core competence’
and not on ‘current activity’
Understand how you will be relevant for 100 years.

39. 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

40. Define clear, measurable, achievable goals for
your company.
Visualize them.
9

41. Worksheet 3c
Make a visual representation of revenues potential from
the key revenue stream of your business
India

42. Worksheet 3d
Then layer it with your goals
India

43. Worksheet 3e
Then layer it within the global context
Global in 2020

44. 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

45. 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

46. 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

47. 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

48. 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

49. 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

50. If you liked what you heard, tell
others.
If you did not like it, tell me.

51. Prajakt Raut
Founder – The Hub for Startups
VP - Indian Angel Network
__________________________________
Blog: www.thehubforstartups.com
Twitter: @prajaktraut
Facebook
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