Following the investor pitch, their outcome, and subsequent progress of those who receive funding on Shark Tank reiterates some fundamentals of entrepreneurship.
I’ve been an avid follower of Shark Tank. Apart from its entertainment value, I’ve found Shark Tank to be instructive about some fundamentals of entrepreneurship, and of pitching to investors. The deal making and deal structuring also provides us a range of possibilities beyond just equity based venture capital funding for startups.
Here are some things I learnt from Shark Tank:’
Gimmicks and showmanship doesn’t impress investors: Passion, commitment and conviction does.
Setting the context right is super important in helping investors appreciate that what you are doing has a strong market potential. Clarity of communicating what you do gets investor attention.
Having clarity on who you will target as customers (even if your product is relevant for everyone), how you will reach them, what your sales pitch to them will be, how you will deliver the product/service and how you will provide after-sales support are as important, if not more important, than a good product or service
Know your numbers: Entrepreneurs with a good understanding of market dynamics, and what their fully loaded costs will be and how the numbers stack up have a much better chance of getting investor attention…. and better valuation.
Resourcefulness is about leveraging all your current resources to overcome current constraints. Get things done. Somehow.
Apart from other learnings outlined above, one observation that stands out is that good sales numbers shuts everyone up. Else, everyone has an opinion on how you should go about your business.
Having an idea is not the same thing as having a plan. At Applyifi we urge entrepreneurs to develop a comprehensive business plan, and then execute it well.
If someone you know could benefit from what we do, please direct them to www.applyifi.com.
By Prajakt Raut – Founder Applyifi
Applyifi helps startups refine their business plans and investor pitch deck [www.applyifi.com].
I was part of the jury at Conquest 2015, the annual startup fest and B-Plan competition of BITS Pilani. Conquest is perhaps, one of the most meaningful Business Plan competitions in the country. The Conquest team makes efforts to provide mentoring support to shortlisted teams, so that their plans are refined by the time they get to the finals. The program is designed and executed entirely by students.
Continue reading “Some Tips For Startups Presenting In B-Plan Competitions”
Investors will be interested because you have a plan to address an opportunity well, not just because you have identified an opportunity that is interesting. That’s why, while having a good idea is certainly a good starting point, it is not enough for investors to invest.
Most entrepreneurs make the mistake of detailing out their product or service or concept. What most investors are looking for is your plan for building a strong, profitable, scalable, defensible business around that product or concept.
The success of an entrepreneurial venture depends entirely on the quality of execution. Many companies fail to implement their ideas well. Hence what investors seek in the plans they review is evidence that this team will be able to execute well on a concept that appears to address a potentially large market.
What should a business plan cover?
Continue reading “11 components that make up a good business plan”
A business plan is nothing but a plan for your business. It is an articulation of your vision on how the future will play out.
A business plan also articulates how the startup proposes to go from point A to point B, and by when. It also outlines the milestones and other dynamics (costs, resources, revenues, etc.) on the way from point A to point B. I.e. It is a plan of how the concept of your startup will alter the market, and how you intend to implement that disruption.
But at startup stage, there is no past data that can be used to make reasonably dependable predictions. Hence the vision of what might happen in the market with your concept is based on assumptions that you have made based on your conviction and your insights. Even in more established companies, there is only so much predictability you can bring into a business plan based on past data. How in-market dynamics may change is an unknown, and business plans even of larger, established companies can and often do get disrupted.
Some of the assumptions you have made will play out as assumed, others will not. Nothing surprising about that. Why then is it important to make a business plan knowing that what happens in the market is most likely to be very different from what you planned for?
Continue reading “If no business plan works out as planned, why do investors insist on a business plan?”
In my view, easier availability of early-stage capital than ever before, public celebration & adulation of entrepreneurial heroes, a well-deserved respect for entrepreneurism and also society’s willingness to accept failures in entrepreneurial ventures make it easier for younger people to consider entrepreneurship as a career.
I share below some observations that will hopefully provide some food for thought before you embark on your entrepreneurial journey.
A great idea of concept is not the same thing as a great business. Once you identify a concept that has a meaningful value proposition to your potential customers, you have to think of how you can build a strong, sustainable business around that concept. Think hard about concepts like revenue streams, business model, go-to-market strategy, resource requirements, etc. Continue reading “Starting your entrepreneurial journey – some food for thought”
I often get asked this question: “I have an idea. But I just don’t know what to do next. How do I start implementing it?”
It is not unusual to get stuck with the idea without knowing how to take it forward. Often the fear of having to manage operations, finances and staff is what stops people from getting started on their idea.
Having an idea is a good starting point. The first thing to do is to let that idea rest for a few days. Think about it every day. But don’t act on it. Think through all the positives AND all the negatives. Think of how great it can be. And also think about what could go wrong and how worse can it get. You will start seeing different aspects about the idea. Not all will be good. And that’s OK.
Continue reading “Converting an idea into a business”
Angel investors participate in the ‘concept risk’ stage of the venture. i.e. when neither the idea,product/service, business model, operating plans nor the assumptions are proven.
It is also the stage where the startup is most likely to be resource starved.
Angel investors should assist the founders with everything they can, to help the company go past the concept risk stage. Often, this could also be about providing guidance and perspective to help entrepreneurs take the right decisions. In many cases, introductions to potential customers; partners;employees and mentors etc. at this juncture of the journey is invaluable.
Often angel investors have to be the adult supervisors, alerting the founders when they seem to go off the mark( read as ‘ strategy’) or when they are trying to do too many things rather than focusing on what is important.
When a startup is not doing well, angel investors have an enormously important role to play in keeping the founders motivated. Failures and challenges in a startup can be demotivating and challenging, making you feel terribly lonely. A good angel investor can make a big difference by just saying “Its okay.. lets focus on what’s do be done”. Often, testing times are tests of character too.
I often tell entrepreneurs that even when they do not need the money, they should go and raise some funds from good angel investors. Because, it’s not just about the money, it’s about the investor’s involvement in your journey and their support when you need it, that counts and contributes to your success story.
A business plan should essentially cover three aspects – what are you going to do, how are you going to do it and how will you make money. Watch as Prajakt Raut highlights the key components of a good business plan.
How well you are doing as a company is really not dependent on benchmarking versus how others in the same space/stage are doing. Each company may have chosen a different path towards similar goals, or it is also quite possible that the goals and aspirations of the companies could be very different.
Hence, how well you are doing or not doing, is to be evaluated against what your own plans, goals and milestones were when you started the journey.
Not for one moment am I suggesting that you need to look at your original business plans as THE only road to follow. I have rarely seen any startup or early-stage company come even close to what their original milestones were in their business plans. Your original plans are merely a roadmap that you define to think through the different aspects of your startups journey. Once you hit the road, you have to make adjustments according to the weather conditions i.e. market realities. In some cases, the direction itself may have to be altered or changed all together. And it is perfectly all right to do that as long as it is a well-thought out plan, after taking into consideration all factors that may help you take a good and informed decision.
Therefore, if you have a well-defined business plan with your goals and milestones towards those goals well laid out, it should give you an indication of whether you are going in the right direction and at the right pace.
For your business, you need to identify what the key drivers are and that will give you leads on what you should measure your progress or success against. Each business will have its own set of key drivers or aspects on which success or failure will depend. Sales/revenues is usually just one of the indicators to measure the progress of a success of a startup. Other factors could be things like gross margins, employee efficiency, brand equity & brand familiarity within the relevant audiences, cost of customer acquisition, maturity of processes, proving of the business model, organization structure in place (or getting into place), key people on board, attrition rate, quality of contracts and respect of partners/vendors, etc. are all examples of indicators of what can be tracked to check if you are doing well as a business.
Plan B is already built into a good B Plan.
When you are thinking about your venture, you are going to think about multiple scenarios, including very pessimistic ones and what you would do to mitigate the risks and the challenges in the journey. This should include what matrices you would use to track progress, and at stage you would take corrective action, including aborting the journey. It will be important to have an advisory board, or a real board, which will guide you through your decision making in good times as well as tough times.
Anyway, a business plan should take into account possibilities of failure, and hopefully the course correction that you might take in case the journey is not as you plan it to be.
In planning your business, including plan B, it is important to ensure that your assumptions are closer to reality. Wrong assumptions are more likely to kill a business than poor implementation.
A business plan is nothing but a plan for your business. While there are fancy templates, a business plan is nothing more than a story about
(a) what you are going to do i.e. concept
(b) how you are going to do it i.e. operations planning
(c) how you will make money i.e. business model
Of course, each has to be very detailed when thinking through a business plan. The excel sheet is nothing more than a summary of costs and revenues associated with your story. The power-point version of this story includes context i.e. why is there a need for this concept, who is your competition, the team who is doing this, etc.
Also remember that a business plan is a ‘process’ and not a product. And hence, while it provides direction, the route has to be constantly adjusted according to how the venture progresses. This process of evolving the B Plan is in a way also about working on Plan B.