With jobs getting scarce, economy stooping down and the entrepreneurial ecosystem developed, there is widespread interest amongst the youngsters to start something on their own. The reality, however, is that 8 out of 10 startups that commence, do not go too far and die within the first three to four years.
While this must be due to the fact that young entrepreneurs do not have the experience of having run a business and hence the intelligence to run a business successfully remains as a bottleneck. It is a fact that failure teaches us a lot of lessons. However, it is wise to seek advice, develop a plan and be prepared for any adverse situations.
The basis of all successful ventures is good planning and of course skilful execution. Most often a formulated and well thought out plan can save you a lot of frustration and disaster in the future.
A business plan, as all the other manuals will essentially answer the following questions:
- What is the product or service your business is promoting?
- What needs does it fulfil?
- Is it unique?
- How is it different from a competitor if one exists (The Product/Service Differentiation)?
- Who will buy your products/service and at what price?
- How many customers will you gather over a period of time and at what price and what volume (Customer Acquisition Cost and Strategy)?
- What will be your strike rate?
- How much revenue will be generated now and from when (Financial Modeling and Future Forecasting)?
In short, this is a process for forming a revenue model. As you can see this is a tall order but it is imperative that you need to work on this.
Let us start with the basic product /service and the need that the product or service satisfies:
- It is always pertinent to look at some success stories and get inspiration (but remember for every success story there is a lot of failure stories as well).
Almost more than a decade ago, two young engineers found it difficult to get a seat in a bus going to Andhra Pradesh during festival time. They went from agency to agency and lost a lot of time! It was frustrating as well.
Being techies they felt that if one could connect all buses going to a destination into a database which updates seat availability across various buses, this would be helpful to all concerned. The business Redbus was born. Initially, they trudged the difficult path of convincing each travel agency to get the software in their computer with a net connection, so that transactions could be updated real-time. Each stakeholder with a vested interest in the company knew instantly about all the data such as – ‘how many seats are filled’, ‘how many vacant and in which bus’ and with online ticketing instant comfort, the business took a flight.
As the business potential was large, rapid scaling up took place. Competitors tried barging in, but since the volume was large there was room for many.
So perhaps, the first phase of the plan is to have a product or service that satisfies a widespread need (addressing a problem) at a reasonable cost – this will make the business scale up at a faster pace., as they say the task of marketing as an extension – “A business, is to uncover a need”.
Look around, get inspirations from success stories, conceive an idea, product or service and step out without a fear!
Stories from such sites as www.yourstory.com should inspire you.
Watch out for the next blog: The gestation period
About the Author: Prof Rajan Lakshmanan, Alumnus of the prestigious Indian Institute of Management Bangalore (IIMB). A former manager at Asian Paints Ltd., General Manager, Pancharathna Industries, Advisor to Maini Group, Advisor to GMCI (The Greater Mysore Chamber of Commerce).
He has designed and conducted more than 100 training programmes and MDPs corporate. He has conducted many case analysis and has written many cases. The case ‘The Dabhol Debacle’ on ‘Enron’s Misadventure’ in Maharashtra was widely acclaimed.