Thursday, March 20, 2008

the opportunity plan leads to a biz plan

once you have validated your opportunity plan and you are convinced that the opportunity can be translated into a viable biz, the next logical step for you is to write the biz plan.

the biz plan is a mission- critical document both for actualizing opportunity and for raising resources. it is also the road map for the entrepreneur to successfully manage the new enterprise, once it is off the ground.

"It is well established that you cant raise money without a business plan… a business plan is a work of art in its own right. Each plan, like every snowflake, must be different. Each is a separate piece of art. Each must be reflective of the individuality of the entrepreneur. Just as you wouldn’t copy someone else’s romancing techniques, so should you seek to distinguish your plan for its differences" – Joseph Mancuso

Joseph Mancuso draws attention to three things - one, that you definitely cant raise funds without a biz plan, because unless you are investing your own money, whichever agency you approach for funds, the first question that you will be asked is 'have you written the biz plan?'.

two, no two biz plans are similar, hence copying somebody else's biz plan defeats the purpose. even within the same industry, biz plans may be different depending on the skill set the entrepreneur brings to the table and the vision that he may have for his organization. hence all biz plans have to originally written documents by the entrepreneur.

three, there are agencies that speicalise in writing biz plans but this is an absolute no no because it is the entrepreneur's responsibility to paint his idea on the canvas as he visualises it and not direct someone else to do the painting for him. as he articulates his idea, not only does clarity emerge, but his passion will also come through and that is the most important entrepreneurial characteristic that needs to shine through the biz plan document.

Wednesday, March 12, 2008

opportunity plan

we have seen that literally anything can throw up new opportunities. but not all opportunities can be converted into profitable biz ideas. therefore it is important to draw up an opportunity plan to see whether the opportunity under consideration is worth pursuing or not.

many times we get carried away by the imagined potential of an opportunity, either because there is some sentiment associated with it or we dont see the downside of it.

whilst evaluating an opportunity plan it is very important to be in possession of all facts pertaining to the biz idea, completely objective in analysing its risks and returns, and make a surgically precise decision without emotional overtones.

a typical opportunity plan should answer the following questions:

what gave rise to the opportunity?

because the answer determines the risk, reward, size of market and life cycle for the opportunity. eg when the Miss World contest was held in Bangalore, India, many years ago, overnight, there was a huge demand for over a 1000 chaueffeur-driven cars for three days. the reward was huge because no price was too high; the paegent organisers were willing to pay whatever was asked. the risk was very high too in that once the service was provided, the organisers would disappear; i know of one company that provided cars and drivers that insisted on payment in advance to mitigate the risk. the life cycle for the opportunity was extremely small and transient and the people willing to exploit this opportunity had to be really sharp on the uptake.

the next obvious question is: what market need does this opportunity fill?

are you the prime mover, in which case, perhaps some amount of educating the market is needed and therefore has to be incorporated into the marketing communication.

are you the second entrant? in which case you have to make sure that you do all the good things the prime mover did, not do any of the mistakes the prime mover did, and above all, offer an impeccable value proposition to make sure customers came to you and didnt stay back with the prime mover.

other questions that you will need to address are, will this opportunity give you a product leadership position or a category leadership position? eg, coke is a product leader, P&G's Pampers is a category leader because it created a market called pampers in the diaper market.

Monday, March 3, 2008

how to write a biz plan

sorry, have not posted any blog for the whole of february, been traveling, am in the thick of the teaching term and a number of interesting clients in different verticals at different stages of incubation have needed my attention, so blogging took a back seat!

before we understand when, how and why one writes a biz plan, lets go back a bit and understand what is the starting point for all entrepreneurs. we have touched upon this already in one of my blogs, the starting point necessarily is ideation.

but strictly speaking ideation is not the starting point. what is the opportunity that gave rise to this ideation, is really the starting point of what may be termed the 'entrepreneurial process'.

opportunities are all out there, all around us, some of us spot them, most of us dont. those of us who do go on to ideate from these opportunities, build a biz around the idea and become entrepreneurs. many of us may be staring at the opportunity, but we dont ideate either because we have developed a 'rhino skin' when it comes to feeling 'opportunity vibes'; or we are too cocooned in our comfort zones to even imagine an entrepreneurial opportunity.

for those of us who can look at opportunity in the eye, there are four distinct steps that need to be followed before the venture is created :

identification of opportunity
evaluation of opportunity
writing of the biz plan
creating the biz enterprise

the first step, which is identification of opportunity, is perhaps the most difficult one. it means that your antenna should be ready to receive the signals, 24/7. because anything may throw up an opportunity.

it could be new technology. eg last year during the cricket world cup, cricinfo developed software whereby they could show cricket in animation as it happened on the field, real time.

it could be on account of market shift. airtel has become the largest retailer of music because more than 60 % of music are mobile downloads. digital music has halved the market for physical music.

it could be a change in government policy. the telecom policy in india for instance made it possible for mobile telephony as well as landline telephony being opened up to the private sector.

it could be competition. a matchstick manufacturing company in brazil wanted to export its products to japan and when they couldn't do it cost competitively in the matchstick market, they entered the japanese market with chopcticks and gave run for the money to local competitors.

it could be change in the consumer need. urbanization and concretisation of living spaces has reduced the greenery one can afford to have around one's homes, but artificial plants have managed to satisy the need for colour and zero maintenance. so a new need for artificial plants has come about and a new opportunity has been created..

in other words, anything can throw up an opportunity; the cause also determines the size of the market.