converting ideas into businesses

Prajakt Raut Co-founder - ApplyifiFounder – The Hub for Startups

Converting ideas into businesses

Idea

Implementation

Can solve a problem

Improve quality of life

Improve something

Fulfill a need

Cheaper

Faster

Better

Fuller

Nicer

Nearer

Examples of cheaper:

Lower price 0r accessible to more people e.g .EMI?

Improve something

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

• VendorsEtc. etc., etc….

How much of each of these elements depends on whether you want to have…

A lifestyle business OR

A scale business

To make a business case around a good idea.

Objective of today’s session

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

Present it as:

1. The situation/environment [e.g. accommodation choices in Gurgaon are either too expensive or too basic & dirty]

2. The problem you want to address [e.g. “We want to address the problem of finding smart, cheerful accommodation at reasonable prices]

Exercise 2

State the ideas that address the problem that you chose

Present all the ideas you considered and explain why you discarded some.

Evaluating the business potential of an idea

1) Concept

2) What will it take to deliver?

3) Team required for this

4) What is the size of the opportunity

5) Defensible competitive advantage?

6) Business model / financial model

7) Competitive landscape

8) Risk factors

9) Funds required and use of funds

10) 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?

Brand Strategy

Value proposition &

positioning

Target Audience

Pricing

Brand Personality

Product

Procurement

Production

Supply chain

Vendor management

Capacity utilization

Portal

Technology Platform

Look & Feel – user experience

Ordering mechanisms – including ‘order on phone’

Payment gateways & methods

Logistics

Delivery & fulfillment

mechanisms

Warehousing

Logistics partners

Order Management

Marketing

Marketing strategy as well as tactical ideas

Media Plan & Budgets

CRM Strategies & Ideas including loyalty programs, referrals, etc.

TeamRoles & Responsibilities identification

HR policies

Team hiring & retention plan

E-commerce

How many vendors are involved?

Technology & portal development partners

1. E-commerce capable

Technology partners

2. Hosting partner

3. User Interface partner

4. Payment Gateway

5. Testing & bug fixing

experts

Operations partners

1. Packaging & printing partners

2. Logistics partners

3. Recruitment consultants

4. CRM partners/CRM platform

vendors

5. Database vendors

6. Process Training Consultants

7. Soft Skill Training Consultants

8. Outsourced Call Centre

Marketing & Brand Communication partners

1. Brand identity specialists

2. Photographer

3. Direct Marketing agency

4. Social Media Agency

5. Advertising Agency

6. Media Buying agency

19 Partners / Vendors involved in the implementation process

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

1) Concept

2) What will it take to deliver?

3) Team required for this

4) What is the size of the opportunity

5) Defensible competitive advantage?

6) Business model / financial model

7) Competitive landscape

8) Risk factors

9) Funds required and use of funds

10) Exit potential

Sleep over your ideas.

More often than not you will get over them.

Dream big. Dream often.