Scaling Your BusinessWith Startup Weekend
Business 102:
1
Scaling up is not just about more people doing more of the same thing. The entrepreneur’s role changes.
• 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
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
Having a good product does not mean you
will have a successful business.
2
A business has to be built around the product.
Setting up a chain of coffee shops is more than just making great coffee.
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
• MISIt helps if your coffee is good.
Having a great product helps. But it is certainly not a sufficient condition for the success of a venture.
3
Are you growth ready? The 10x10 scorecard
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
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
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.
Hire rockstars
5
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.
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
6
To scale up, first define where you want to go and then plan how to get there.
Now you need a business plan.
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.
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
See the film in your mind
Think of the long-term and then visualize the mid-term and then the immediate term
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
Dec
100,00050 lacs
Nov
80,00040 lacs
Oct
70,00035 lacs
Sept
60,00030 lacs
Aug
40,0005 lacs
July
30,0000 lacs
June
20,0000 lacs
May
15,0000 lacs
April
10,0000 lacs
Mar
8,0000 lacs
Feb
4,0000 lacs
Jan
2,0000 lacs
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.
Understand your motivations
Why are you doing this venture?
This is a more philosophical question rather than a business case question
7
• 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?
My goals
By 2015By 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 mynetworth __________
___________
Deviation from my goals __________
___________
Worksheet 1 (example 1)
My goals
By 2015By 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 mynetworth NA
Rs.90 cr
Deviation from my goals NA
Rs.10cr.
Worksheet 1 (example 2)
My goals
By 2015By 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 mynetworth NA
Rs.36 cr
Deviation from my goals NA
Rs.64cr.
[Re]Defining what business you are in opens up new possibilities
8
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
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
Should they have been in the business of cameras or memories?
What would be Sony’s fate if it had defined itself as the Walkman company?
You probably would have been carrying a Casio phone if only they had not positioned themselves as the calculator company.
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?
Could Olivetti have defined its business beyond typewriters?
Define your market based on ‘core competence’ and not on ‘current activity’ Understand how you will be relevant for 100 years.
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
Define clear, measurable, achievable goals for your company. Visualize them.
9
Worksheet 3c Make a visual representation of revenues potential from the key revenue stream of your business
India
Worksheet 3d Then layer it with your goals
India
Worksheet 3e Then layer it within the global context
Global in 2020
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
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Users
Rev
Buyers
Transactions
Then, layer it with monthly revenue/other (e.g users) milestones for a year.. And other parameters are appropriate
Identify 3 key drivers of success in 2015Example - 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
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
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
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
If you liked what you heard, tell others.
If you did not like it, tell me.
Prajakt Raut
Founder – The Hub for StartupsVP - Indian Angel Network
__________________________________
Blog:www.thehubforstartups.com
Twitter: @prajaktraut
Facebook www.facebook.com/thehubforstartups