Webinar by The Hatch Institute on MVP – Manish Singhal

According to Start up Genome report‚ almost half the start–ups do not celebrate their first birthdays. Once they are past that hurdle‚ almost 90% of the ventures fail while scaling up!

As an entrepreneur, with limited time & resources at your hand‚ you feel like a pilot trying to take off before you outrun the runway! You have to find who you are as a business & who your customer is quickly and with minimal investments. That is what will give you a significant advantage in the marketplace.

This webinar explores how to use MVP (Minimum Viable Products) as a strategy to ensure your venture’s smooth and safe take–off!

Take aways from the workshop :
1. Concept of MVPs
2. How to apply MVP strategy on your business
3. Fine Tune your MVPs

 

 

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Here’s a look at some of the operational things to be considered for an e-commerce business

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Operations planning for startups

You would have often heard VCs and experienced entrepreneurs say “Ideas don’t mean anything. It is the execution of that plan which makes a good business case.”. Hence, often VCs will be willing to invest in a simple concept with high-quality teams with great implementation plan, rather than weak teams even if they have a great plan.

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Good execution and operations management is a lot about making sure that the many moving parts of the business are in sync with each other.

Most entrepreneurs underestimate the competencies and skill sets required for a venture to be implemented. They detail out the product/concept/service but do not spend adequate time in detailing out the operations plan. It is critical for the entrepreneurs, or the people planning the operations for the startup, identify, discuss and debate every single aspect that will need to be planned for  good implementation.

For example: A startup planning a chain of coffee shops across the country does not need just great coffee and snacks making skills. In fact, that may be the least of the worries in creating a great coffee shops chain.Creating a coffee shops chain will require the following competencies.
  • Real estate management
  • Franchising
  • Brand identity
  • Pricing strategy
  • Marketing
  • Supply chain
  • HR, legal, finance
  • Training
  • MIS
  • Cash management
  • ROI & capacity utilization
  • Facilities management
  • Processes
  • Standardization
  • Org structure
  • Vendors

Admittedly, startups are unlikely to have the full team to manage operations efficiently. However, planning does not require resources…. Investors invest, based on your PLANS for the future, whilst understanding that your current mode of operating is only due to resource constraints.

Especially for startups with a B2C concept, which could have rapid growth, it is important to plan for scale BEFORE the venture is ready for scale. It is almost always impossible to hack together the resources, processes, infrastructure and other elements to scale up quickly… these have to be built well in advance in most cases to be able to scale up smoothly.

What do you prove in pilot phase?

At the pilot phase, or a concept test phase, it is critical to define very clear what is going to be tested and what the parameters of measurement would be. Many of the parameters could be qualitative as there may not be enough data to do a quantitative analysis. But identifying what and how it is going to be measured is critical.

Below are a few things that are tested in a concept test stage/pilot phase:

  • The concept – the power of the idea itself: One of the key things to evaluate in the pilot phase is whether the idea or concept has appeal among the target audience. While research is one way of gauging customer/consumer acceptance of the concept, customers or consumers actually buying/using is a stronger demonstration of the appeal of the concept e.g. for an e-commerce venture selling real gold & diamonds jewellery online, the pilot phase may want to check if customers actually buy jewellery online
  • The business model: Even if the concept rocks, how good and practical the business is will make or break the business case. In many cases, it may not be possible to check the business model in its entirety in the pilot phase. But at least it would give some indicators. E.g. for a company creating advertising platforms on college campuses, the pilot phase may check on whether the revenue split between the company and the colleges is being accepted as they had anticipated or are colleges asking for more or are they not allowing advertising on the campus. Also, things around the business model could be tested in this phase e.g. ‘How long does it take to close a sale? Who decides the pricing – the college, the advertiser or the company?’
  • The assumptions: How good your business case is and how close to reality it is will be entirely dependent on the quality of your assumptions. One of the critical things to test at pilot phase are the assumptions. e.g. For an e-commerce company, the assumptions around conversions from clicks, cost of customer acquisition, average ticket size, repeat purchase rates, etc. are critical factors to be tested.
  • Understanding operational challenges: Actually implementing on the ground highlights some challenges that you would not have anticipated in your planning. These learnings are critical as they help plan resources, processes and infrastructure that would be required to manage the operations. 
  • Testing processes and operational capabilities: As the startup scales up, the dependence on processes will increase. Else scaling up will either not be possible, or will be inefficient. A pilot phase is a good time to draw some basic processes and observe the operations to understand what these basic processes should evolve to.

How important are processes for a startup?

Processes are important even in a startup. However, many entrepreneurs tend to begin operations without even the basic processes, with the assumption that as they learn the dynamics of the business, processes can be formed. In fact, many entrepreneurs feel that processes are too restrictive and are meant only for larger, complex organizations.

However, process need not be complex. Processes are nothing but a standardized way of doing a particular activity or handling a particular situation. In fact, rather than slowing down an organization, processes actually help the startup become more efficient as the basis of decision making is pre-decided as a process. Once some effort has been put into creating and defining processes, founders or leadership team then does not have to get involved in the day-to-day operational level decision making as these can be easily be delegated to the team and monitored through clear measurable goals, milestones and reviews.

In fact, it is at the beginning of the journey that entrepreneurs are likely to find some time to think through the processes. If the startup starts picking up speed and growing, it is always almost impossible to ‘make’ time to invest in processes as at a growth stage there are too many other tempting aspects of managing growth that seem more important.

When you company is growing is almost always the wrong time to plan for growth. You have to plan for growth to the next level when you are at a level below. Else, you will always be in the operational challenge of managing operations instead of driving growth.