scaling up your business biz 102 workshop at the coalition - 2014

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Scaling Your Business With Startup Weekend Business 102:

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

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Page 1: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

Scaling Your BusinessWith Startup Weekend

Business 102:

Page 2: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

1

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

Page 3: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

• 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

Page 4: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 5: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

Having a good product does not mean you

will have a successful business.

2

A business has to be built around the product.

Page 6: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 7: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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.

Page 8: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 9: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

3

Are you growth ready? The 10x10 scorecard

Page 10: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 11: Scaling up your Business   Biz 102 workshop at The Coalition - 2014
Page 12: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 13: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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.

Page 14: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

Hire rockstars

5

Page 15: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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.

Page 16: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 17: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

6

To scale up, first define where you want to go and then plan how to get there.

Now you need a business plan.

Page 18: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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.

Page 19: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 20: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

See the film in your mind

Think of the long-term and then visualize the mid-term and then the immediate term

Page 21: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 22: Scaling up your Business   Biz 102 workshop at The Coalition - 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

Page 23: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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.

Page 24: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

Understand your motivations

Why are you doing this venture?

This is a more philosophical question rather than a business case question

7

Page 25: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

• 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?

Page 26: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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 __________

___________

Page 27: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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.

Page 28: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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.

Page 29: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

8

Page 30: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 31: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 32: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 33: Scaling up your Business   Biz 102 workshop at The Coalition - 2014
Page 34: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 35: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 36: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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?

Page 37: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

Could Olivetti have defined its business beyond typewriters?

Page 38: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 39: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 40: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

9

Page 41: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

India

Page 42: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

Worksheet 3d Then layer it with your goals

India

Page 43: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

Worksheet 3e Then layer it within the global context

Global in 2020

Page 44: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 45: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 46: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 47: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 48: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 49: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

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

Page 50: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

If you liked what you heard, tell others.

If you did not like it, tell me.

Page 51: Scaling up your Business   Biz 102 workshop at The Coalition - 2014

Prajakt Raut

Founder – The Hub for StartupsVP - Indian Angel Network

__________________________________

Blog:www.thehubforstartups.com

Twitter: @prajaktraut

Facebook www.facebook.com/thehubforstartups