I remember when I launched my venture six years ago, the most dreaded part of it was the paperwork, the process of registrations, the overlapping categories that completely confused me and the innumerable applications that had to be supported with documents, bills and what have you.
When you're a creative person and all you want to do is put your head down and do some good work, these aspects can sometimes not only put you off, but discourage you totally. The systems in India don't make your life any simpler and this has been echoed by an essay I read in Trak.in which says: “India has been ranked 142nd on the Ease of Doing Business Index and 158th on Ease of Starting a Business.”
But launching a business - anywhere - is never easy. It takes a lot of ideation, planning, testing, finding an office space to work out of, creating a prototype, enlisting vendors, hiring employees, zeroing in on the target audience, building a brand, creating awareness about your enterprise, pricing your product or services and finally starting the business and maintaining good customer relations.
Most of these steps can mean making a lot of tough decisions, they can also mean hours of surfing the internet, educating yourself about systems, doing rounds of government offices, consulting agencies, legal advisors, and basically whatever else it takes to get your idea off the ground. All this can consume time and money, leaving you exhausted with little energy to actually run your enterprise.
Keeping this in mind, Wealth Builders Club started The Business Launchpad series, a collection of essays that will help you decode the various steps that go into starting your venture. Through this series, I will essentially give you a glimpse of several best practices that entrepreneurs and startups have followed which can help you save a lot of time and money.
This series is, in fact, in direct response to WBC Member Akshay Maini's request on Conversations, who said - “More than specific legalities what needs to be done is to help members by suggesting places/sites to check for a topic that you may be discussing or any other information that would help in kickstarting the idea.”
During the course of time I will cover a range of topics, like:
Why you should be an entrepreneur: Of course many of you are reading this because you already want to be an entrepreneur or already are an entrepreneur. But for those of you who are hesitating to take the big leap, I will quickly run you through a list of all the benefits of being an entrepreneur. It's a whole new world of entrepreneurship that is being built out there, an eco-system that is self-sustaining and extremely satisfying.
Testing your idea: Ventures start with one small idea. This idea could have been a passing thought, a Eureka moment, or something you've nurtured for years but just hesitated to put into action. This idea needs to now go beyond being an idea to becoming a profitable business and that process needs various steps like development, testing, checking financial viability etc. This essay will give you some guidelines on what to keep in mind before you start working on your 'big idea'.
Figuring out logistics: As an entrepreneur, there are several things that need to be done. One is locating an office space or if you are into manufacturing something, then finding a workshop and all that it needs to be equipped with. More so, if you set up a regular brick and mortar shop or service, you need to focus out which location has many customers frequenting it and its accessibility. This essay will tell you how to evaluate these aspects and how to choose the perfect place to work from.
Planning the business: A lot needs to be put in place before you decide to start your business. You may have to build a corpus to work with, determine the needs of your enterprise, forecast expenses for the next 3-5 years, the staff you'll need - will you hire people or outsource work, will you start alone or partner with someone. All these require a lot of debate and discussion both with yourself and with the people you will be working with. So here we will give you a list of questions to keep in mind.
Understanding the legalities: This essay will explore the many legal formalities you need to keep in mind before you start a business. For example, you may have to register your firm and the brand name or trademark, start bank accounts, consider if you want it be a proprietorship firm, or a LLP (Limited Liability Partnership) or a corporation with a board of directors. If you're importing or exporting, you may also need to take care of import duties, and if you're a creative firm you may need to ensure copyrights.
Working on a business plan: This is probably one of the most important aspects of any enterprise and it can help you make those ideal pitches to investors. Business plans cover everything from your vision-mission statements to your year-on-year growth projections and your venture's scalability. They also include the resource needs of your firm and the expected revenues. There are various ways to make a business plan and they will be explained here. Also, I will touch upon the one-page pitch that is considered a deal-clincher or deal-breaker for many.
Exploring potential funders: Any business needs some funding. If you don't need to invest in office space or people, you at least need to sustain yourself till you start earning from it. Sometimes small ventures may need limited capital and a little help from friends and family will do the trick. At other times, you may need to actively seek out seed funding or for bigger ventures, venture capital and for creative projects, maybe crowdfunding. This essay will give you ways to seek and approach funders.
Looking at branding and marketing: A brand is known for various things and its values survive long after it. Thus, from choosing your company name to designing a logo, creating an online presence through a website, using social media marketing or traditional advertising, building your brand and its presence requires much thinking and strategy. This essay will give you guidelines on going about it and the pros and cons of the various avenues available.
Starting your business: This is the time when the action starts, when you actually launch, you start working and have to keep at it day after day. You push for leads, build a network, start responding to enquiries and garner all the energy you can to keep going. This stage means immense organization, days of sleepless nights and bundles of motivation for yourself and those working with you. Some tips to keep your head above the water and ensure you get up each day with renewed drive and vigour.
Maintaining customer relations: Your customers are your brand ambassadors. And hence customers need to be treated with utmost care and respect. It is only then that they will become your repeat clients and spread the good word about you and your services/products. This section will explore the complex and constantly evolving subject that is customer relations.
I'm looking forward to working on this series. It will help me learn more about business too as I compile this information for you. I would be happy to know your views on any of the topics in the series and feel free to contribute with any inputs that you already have. It would be great to make this a collaborative effort with WBC members. Write into: firstname.lastname@example.org or discuss your ideas on Conversations.
For many who are entrepreneurs I may be stating the obvious in this essay. You've probably already taken off on your entrepreneurial journey and you just want to get straight to the heart of this series.
But then there are some who are still toying with the idea of entrepreneurship, wondering if at all it is worth their time and money, worth risking their secure job and income.
This brings me to a very important point which Mark Ford reiterates time and again in his concept of 'chicken entrepreneurship' too. Entrepreneurship needn't really be started overnight. It can be a slow and gradual state that you can work toward. You needn't throw away everything you've built for an idea that is still taking shape.
You can continue working at your job, doing what you're doing and still explore other income-generating and creatively-challenging avenues. You will also realise that you don't compromise on your job when you do that. You aid it, because you learn more through your own research and you meet more people while networking… eventually helping you bring many more ideas to the table.
Thus entrepreneurship is essentially a mindset change. It's about pushing yourself to do more and sometimes pushing yourself to do something better.
At some point or the other in our lives, we've all felt we could do something better or we could change a few things that we don't think work that well. For example, create better organisational systems, change buyer patterns or provide better information tools to people. Entrepreneurship starts off similarly - you strongly believe you know something that others don't but could probably benefit from… and that's exactly the service or product you will ultimately provide through your enterprise.
A popular myth about entrepreneurship is that you are “born” not “made” an entrepreneur. But the mindset of an entrepreneur can definitely be acquired over a period of time. And this can be done by plenty of education and awareness as well as your ability to change the questions you ask. When you're ready to move from the “what” to the “why” to the “how-to” of any business, that's when you're ready to become an entrepreneur.
So if you're a curious mind, always figuring out how things are done and trying to make them work better, entrepreneurship is definitely for you.
Of course, being an entrepreneur has more advantages than just feeding your inquisitive mind. Some of which I will now discuss:
It is an opportunity to work for yourself: Being your own boss is not just a fantasy but a necessity for many. Many of us like to have the freedom to live and work the way we wish to. It allows for greater creative and organisational liberties. Entrepreneurship helps you do just that. It allows you to run your show exactly the way you want. You may initially make some mistakes putting systems in place and creating a discipline, but if you are more or less self-motivated, this shouldn't be difficult. As an entrepreneur you're only answerable to your client and this can sometimes be invigorating because you're dealing with the end user of your service or product. But it can also be daunting, because your client may have the strangest demands and may approach you at any hour of the day.
It allows you flexi hours: If the 9-6 rut is not for you, then it's time to change the way you work and earn. When you go the entrepreneurial route, you are at complete liberty to determine the number of hours you wish to work. You can develop your own easy schedule and fit in all the things you love to do. Recently a reader wrote in about his 6-8-10 philosophy, which in his words is 6 hours of work, 8 hours of sleep and 10 hours for recreational activities. So if you don't want to be chained in an office, wondering when is the correct moment to swipe your card and run off, try being an entrepreneur instead. Jokes apart, flexi hours has worked especially well even for women entrepreneurs who need more free time to take care of the home and kids.
It does not put a cap on your earnings: A salary is generally fixed unless of course you have incentives and bonuses and these too are few and far between. This could be true of businesses too, especially if they are seasonal. Your opportunity to earn a lot of money may not come in as regularly you like, but when it does, there is no limit to it. As long as you can cope with the assignments or orders you're getting, you can earn as much, if not more, than on a job. When you start out, your cash flow may not be that great but as the business picks up, aim at creating newer targets and keep increasing your year-on-year profits.
It helps you explore your creativity: The beauty of entrepreneurship is that you can approach work and problems as creatively as you like. You are not confined to work within certain expectations or formats, you can think out-of-the-box and give each project and client a unique approach and solution. Being an entrepreneur also means that the diversity of your work increases, you are no longer just working with one brand or project, but on multiple projects and this often results in you expanding your creative boundaries and exploring newer approaches. The learnings as an entrepreneur thus are many, but this will only happen if you are willing to push yourself, dip into your deep reserves of motivation and keep exceeding yourself, which brings me to the next point…
It makes you a self-starter: Being an entrepreneur essentially means being a self-starter. You've decided to go it alone and you may be in it alone for a long time till you see a ray of light… and any sign of money. But if you can get up each morning and sit on your desk with complete dedication and put your mind to work and business, entrepreneurship will not be that difficult. Entrepreneurship, unlike any job, does not have fixed deliverables and your work day can be much more organic than you envisioned. This demands you to be on your toes and ready to handle any situation. But this is only possible if you are completely committed to your enterprise and motivated to making it work.
It provides networking avenues: The highlight of being an entrepreneur, especially if you're a sociable person, is being able to meet a wide gamut of people. When you're looking for business and pitching your idea, just about any person with a willing ear is enough. Entrepreneurship makes you reach out to people around you for support or for business and this makes networking really fun. You explore avenues for networking, you go out and start talking about your venture and you exchange ideas with other entrepreneurs. Nowadays, with “entrepreneurship” and “startups” being the buzzwords, people always look at you with a lot of awe and interest, they want to hear your story and what you're doing innovatively.
It expands your skillset: We tend to work in silos in organisations, there are different departments handling marketing and sales, or legal issues and customer service. As an independent individual, you have to play many roles. This will require you to read and research more and a lot of what you do will simply be learned on the job. On a job you may have been more of a marketing person instead of an accounts person, but at a venture you have to look at every aspect closely. You're forced to become an all-rounder, but this will only help you grow and move out of your comfort zone. When you begin to juggle many roles, you will feel a greater sense of confidence in yourself and you will gradually overcome your previous apprehensions and self-limiting beliefs.
It increases your capacity for adventure: Yes, entrepreneurship is a lot like an adventure… You step into the unknown with little knowledge of what it will unfold. To be an entrepreneur, you have to be ready to face unforeseen challenges and events. And you're capacity to deal with all sorts of situations and people becomes imperative. Entrepreneurship is about being quick on your feet, being nimble in your approach to people and problems. The unseen can be scary but once you get comfortable with this state, you will actually begin to enjoy the adventure. Because like any other adventure, the reward too is unknown… and sometimes it could beat your expectations.
It helps you leave behind a legacy: When you build an enterprise, you are essentially creating a legacy. A brand and all it stands for that will live on long after you. And for those of you who would like to leave a business to your children or to the stakeholders who have helped you build it, this is the most rewarding aspects of creating a venture. Knowing that you're building something that will continue to serve people even after you, can give your work new meaning and vigour. In today's times, if you want to ensure your brand lives on, even when you decide you can't manage it anymore, you have the option of getting it valued and selling it to the right buyer whose ideologies and ethos match yours.
It's your chance to make a difference: When you create something innovative, something of value and something that people can incorporate into their daily lives, you know you have already made a difference. Entrepreneurship is that chance to leave a lasting impact in the way people think and live. If your product or service can make customers' lives easier, can give them more free time, or simply enhance their personalities, you are being instrumental in creating a larger change. Sometimes, looking at entrepreneurship with this lens is reason enough for you to be an entrepreneur!
Most businesses start with an idea. And that idea could have originated from anywhere. You could be walking down the aisles of a supermarket, looking for a soap in a particular flavour or shape, realising no one makes that kind of soap and bingo! That becomes your product idea.
Ideas are an extension of who you already are; you have an inherent skill and you look at ways of making it a business idea. So for example, if you're one who likes to solve problems and are good with management issues for a certain industry, you may start a consultancy firm catering to that niche. And that's your business idea.
Sometimes, you develop ideas by applying your existing expertise to another industry. For example, a fashion designer can decide she wants to move beyond designing apparel and start designing cellphone covers for the mobile industry.
At other times, ideas are just a result of joining the dots. Take for instance e-commerce platforms, they find a certain potential market or niche, realise there aren't enough players and simply bring together existing vendors and buyers. They use what they know, connect the right people on one platform and that becomes the idea.
Another way of developing ideas is by finding gaps in the market. I saw a TEDx video of a techie developing wearable technology for women who don't like carrying big-sized cellphones everywhere they go. Her product was a ring made with a semi-precious stone and embedded with technology that would connect to the mobile, retrieve data and vibrate on the finger to convey the message to the user… Her idea came into being after she realised that women didn't have fashionable wearable technology that is hands-free and elegant.
How to develop an idea
But how do you develop these ideas? Is there a process or are they just revelations? Are they born out of great research and observation or are they a result of training your mind to search for market gaps and customer woes?
I personally think it's a combination of all these and maybe some more. Some of which, I have listed below:
Identify what is most aligned to your knowledge/skill set: One of the first steps to developing an idea is to first figure out what your own strengths and weaknesses are. If you are an expert at something, taking it forward as a business idea makes it easier. Chances of success in business are greater if it emerges from your own core competence as it means you will already have an edge on the workings of that industry.
Even if you still want to pursue an idea that is out of your area of expertise, your honest assessment of your weaknesses will help you realise the resources you will need to take your idea forward. You will understand the manpower required and the cost of outsourcing services or production. This will automatically give you a clearer picture of the feasibility of your idea. You may also realise you need to acquire domain knowledge of that industry before you dive in the deep end of your idea.
Keep brainstorming and stay objective: Once you have an idea, bring in other people to brainstorm with you. These could be your close trusted friends and associates. Share the idea in detail with them and ask them to give you their honest feedback. It helps to have a few critics in your group too. And if the idea doesn't resonate with even a small minority, you may need to reassess it and come up with something else.
To help brainstorm better, you can use mind-mapping or an online tool like Wazoku.com which allows companies or entrepreneurs to ideate on the software in a collaborative fashion. You can also consult a mentor from the chosen industry you plan to enter and spend some time together analysing the pros and cons of your idea. Additionally, your local chamber of commerce can be approached to see if they already have some know-how on that particular industry.
Find out what solutions people are looking for: An important criteria to keep in mind while developing an idea, is to know exactly how it will serve people, facilitate their lives or give them a better product that replaces the one they used before. In order to do this, you need to first know what it is that they need. For example, if you're looking at serving mothers with newborn babies like the website Babychakra.com does, you will have to first identify exactly what issues mothers are facing and what they need the most help with.
Once research on your target market is complete, you can then begin to ideate on how exactly you will create a product or service that provides solutions to those issues. In the case of Babychakra, it provides mothers with a list of verified names of service providers like photographers, doctors, baby stores etc. And mothers can simply log in and find the best options for those services in their neighbourhood.
Try creating something novel and innovative: Most entrepreneurs are visionaries; they see an idea or need before the world sees it. Ideas which are ahead of their time have better chances of working as they will create whole new market dynamics. And for some time you will also benefit from the first mover advantage, till such a time as other me-too products surface.
An interesting approach to developing such ideas is by keeping track of the market trends in the particular industry you're about to enter. You could probably look at how technology can be incorporated into these industries or how there may be opportunities for newer niches within it. For example, in the case of blogging, there are a lot of sites that tell you how to write well, but what if you decided you just wanted to focus on helping people write university applications, that's a niche that could be distinctly yours. And if you created an app, that updated your clientele with regular tips, you've gone a step further.
Add more value to existing products/services: Many ideas take off from existing products or services. And that's not such a bad thing because in business you ultimately realise that there is really a market for many players, selling similar products. But what your idea should focus on is how to be different from the existing products available in the market.
You can start using products/services from that industry, assess them and understand what they lack and then go on to ideate on a better product. This may be through an added value like some extra features or by offering a similar product at a reduced rate. This is especially seen in electronic products which have more or less similar features but have that one feature that sets them apart. And the Chinese simply make it cheaper and sell more of the same product!
How to test an idea
Research trends, conduct surveys: Research is by far one of the most important tools to use before you start working on any idea. Undertake market research of the industry you're entering, identify its trends, current products and consumer base. Also, figure out the gaps in the market, what you can do better and how you can competitively price your product or service. Research can be done online or offline. You can look up resources on the internet or in business books in a library. Additionally, you can meet with experts and get a more accurate view from those who have experience in that industry.
You can also conduct consumer surveys with the help of tools like Survey Monkey and send them out to a select group of 50-70 people, which should include some from your ideal target audience. So if you are creating a product for working women, ensure you circulate the survey to working women too. Social media works well to get an idea of the likeability of your idea: Put an update on Facebook about your thoughts - without of course giving away too much - and see the responses you get. Don't worry about anyone stealing your idea because an idea by itself is not valuable to anyone, what makes it valuable is how it gets developed.
Assess the viability of your idea: Many entrepreneurs simply run with an idea without having a clear picture of the expenses and logistics involved. But focusing on the time, expenses and resources involved is vital. If you need to collaborate with people to create your product, ask yourself how you will pay them. If you have to invest in an inventory, figure out how long it will be before you start seeing cash flow. And if you're purely banking on providing an individual service, how far will you be able to spread yourself? These are some questions you should ask yourself while testing an idea.
Another aspect is that of profit, most ideas are said to be good if they can instantly translate into profit. This shows the readiness of the market toward the product. In order to assess this aspect, one can determine a timeframe for the expected revenues and if the business idea does not meet this target, you can cut your losses and move to the next idea.
Develop a prototype or mock-up: A good way to test the efficacy of your product or service is by creating a prototype of it. A client I was working with actually created prototypes of activity kits she was making for children, ran them by a few mothers and kids and then went on to print more of them. This gave her instant feedback from the mothers, and also gave her a better idea of the costing and what production expenses she would incur. Finally enabling her to price them correctly, covering her expenses and staying competitive.
Mock-ups also help you save a lot of money. For example, in the case of a website service, before you create a full-fledged website, you can initially test your idea on a blog page or just a single webpage. Once you see your blog or website gain traction, by using analytics, you can then go ahead and create the full website with all its features. For completely new and unseen products, this type of testing becomes imperative as you then realise if the idea has any resonance in the market or not.
Check for scalability and growth: An idea is forever growing and evolving. It will keep changing its shape and form. Iterations are a normal process of ideation and product development. But what is as essential is an idea's ability to scale up and become accessible to many. It's only when you see it being able to meet the numbers criteria and grow exponentially, is when an idea is feasible. In case of services, you may depend on your own skills and time and hence you may not be able to scale up, but that's when you need to explore the possibilities of creating a product around your services.
For instance, if you're a consultant, you may be able to see only a certain number of clients each day, but you could also create a product that helps clients use your services online, maybe a book, a report, or a software that showcases the various aspects of your service. For any idea to be truly profitable, scale and growth are crucial. Thus you may also have to envision right at the start what are the different verticals you can provide. Will you just sell homemade ketchup, or will you later also sell jam and pickle?
Test your own passion for it: This is really the ultimate litmus test for an idea. Is the idea one you can live with for a long period of time? Is it something you can give each waking hour of yours too, and is it something you can invest all your time and energy in? Because to make it a success you will have to first believe in it before anyone else does.
Of course, this does not mean you get too attached to it, lose objectivity and fail to take constructive criticism. It also does not mean you don't see its ability to flop and have Plan B in place. What it essentially means is, are you passionate enough to make it work? Can you garner enough motivation to keep working at it for the next few years, make others work at it and sell it to the world? If your answers to all the questions are yes, go ahead and give it your best shot!
Ideas will be many and you maybe tempted to start working on all of them quickly, but pause a bit, assess their true value and viability and then go ahead and make your enterprise a success.
The place you work from really depends on what your business is. If you are a solopreneur running your own show and working more or less by yourself, any quiet and clean space will do. You can find an empty spot in your home, buy a desk to place there, invest in a laptop and get an internet connection, either a WiFi facility or a dongle. You can also install a dedicated phone connection if you need a landline number or else, your mobile number should do. A printer or scanner may be good investments if your service requires it or you can rent them initially to cut down on your expenses.
A lot of young entrepreneurs also prefer working out of cafes with free WiFi. This keeps them connected to people, allows them to network and gives them a place to go to everyday,
In the event that you don't have extra space at home, or if you think the cafe is too noisy and doesn't give you enough focus or a sense of professionalism, you can opt for using business centres in your city. It's a good idea to choose one preferably closer to home as it will save you the extra time commuting. Most business centres provide a desk, WiFi, an address for all your postal mail to be directed to and the use of conference rooms for meetings.
In India, each city has a host of these business centres and some are especially dedicated to startups and not very heavy on the pocket. The advantage of business centres is that they are completely serviced, maintenance is taken care of and all you need to do is show up and start working. DBS and Regus are some of the common names in business centres that have pan-India operations. You can find other local names by looking up Askme.com.
In the initial stages of an enterprise, when you're still ideating and gauging its efficacy, you may be hesitant to take an office on lease or buy it outright. At such times, business centres can still be used, as most have cabins that accommodate teams of 2-8 people. But once you grow and are surer of your business, it may be more viable to lease or buy an office space as you can then give it your own shape and character and also make it more cost effective in its operations.
The tricky question though for most small and big businesses is whether to lease or buy. And this decision can be made after weighing several factors. Some of them are:
How much capital do you already have: Your existing capital will help you decide whether you can make a downright purchase or small down payment plus the first month's rent that is a general norm in lease arrangements. Even when you buy on mortgage, you may still need to make a larger down payment than while taking a property on lease. And while ownership has fixed interest rates, the rent rates can change every couple of years, depending on the agreement you make with the landlord.
What does your business need immediately: If your business is capital intensive and you need to spend more on research and development, material, machinery or skill, it may be smarter not to purchase an office outright and use that money instead on essentials that are required to start your business. Over a period of time, when your revenues increase, you may then be in a better position to buy an office space.
Is your business prone to mobility: During the early stages of a venture, you may not know your ideal marketplace - you may be testing your product, understanding consumer behaviour, and still getting a fix on the efficacy of the location. This is particularly true for retail stores; they open shop in one location and then decide to move to another location if they don't see many walk-ins. In such a case leasing a shop may be a better option than outright purchase.
How much do you want to modify your workspace: A lot of structural changes may not be possible in a leased office. This however may not be so in ownership properties, if, of course, you comply with all the area-specific municipality norms. Thus if you need to restructure, renovate and redecorate extensively, it may be wiser to invest in the property and gain complete control over it.
How do you see your business expand: If you see scope for your business growing with more people and facilities needed in the future, then leasing is a better option. It helps you grow gradually and take up a larger space as per your changing requirements. Like your business, the space also needs to have a certain organic growth, and leasing provides more scope for that.
When location is paramount: In the case of retail stores, whose fate is largely determined by their location and the number of footfalls, you may need to focus more on grabbing that ideal property, no matter what the cost. So if there are properties only available on lease in that area, the decision to lease may be based on the availability of the location. Conversely, if the property in a commercially-viable area is up for sale, it may be wiser to purchase as you may not want to give up the lease in a few years, because lease extensions are almost always dependent on the property owner.
Is it a good property for investment: Similarly, if you plan to buy an office in a place where real estate values are constantly increasing, then buying the property translates into an added asset for the business. You can also sublet a part of it or rent it out later if the business does not work. If you decide to sell once the property appreciates, you will still be in the green.
Will you take care of the property: An advantage of leasing vis-a-vis buying the property is that the larger tax issues and other structural maintenance of the space is the responsibility of the owner. Besides your own business utilities, you don't have to worry about anything else like fixing roofs or installing new lifts or repairing water leakages. Thus initially leasing may be more effective as it takes away some issues from the long list that you will anyway have as an entrepreneur.
Can you benefit from tax savings: It is essential to weigh tax benefits in the case of buying a property as opposed to leasing it. Right from processing fees to renovation costs and maintenance, a business premise is liable for several benefits. For purchased properties and even those taken on loans, depreciation can also be factored in.
Do you have good credit history: If you need to take a loan from a bank to purchase a property, you will need to have a good credit history and probably already show some success in your business. But this may not be the case if you use the lease option; a property on rent may be given easily to you irrespective of your credit history.
These are just a few of the big questions you must ask yourself before you decide to rent or own a commercial property. Additionally, there are several other factors to keep in mind before signing on the dotted line. Some of them are:
Decide on the size you need: Rental or ownership property is expensive, and hence it is essential to have an accurate estimate of your space needs before you decide on the amount of square feet you need.
Choose location wisely: Keep in mind the accessibility of the place to railway stations and other local transport; this will make it easier for employees to reach work.
Ensure it's approachable: A commercial property should be easily accessible to clients, especially in the case of retail. Shoppers should find parking easily and should enjoy coming to that area. It is also noticed that shops on the ground floor have greater footfalls than those on higher levels.
Do your due diligence: Right from checking on the wear and tear of the property to understanding its past history of tenants/owners and verifying every aspect of the law and taxes, undertake a due diligence with experts.
Assess zonal regulations: If you're into manufacturing, you may need to be in an industrial zone and also double-check what all you can or cannot do in that area. You may have to abide by environmental regulations too.
Get assistance from experts: Involve a real estate broker, lawyer, chartered accountant and insurance agent to cross check all the requirements for property acquisition. And don't sign any agreements without consulting the above.
Don't bank on trends: A particular area may be up and coming currently, but may lose its value if it doesn't grow as projected. So be cautious before making big investments in new localities.
Understand maintenance costs: In addition to the rent, EMI and taxes, you will also need to factor in the other expenses you may need to incur like renovation and redecoration expenses. So have a clear picture of all the recurring costs before you make the big decision and incorporate these in your business plan too.
Leasing or buying a property for business is a big decision and one that needs to be made after carefully considering the pros and cons of what you're doing. Eventually, you will need to gauge for yourself what works best. But it is a significant and bold step, almost like setting the first stone of your business, so take your time and do it right.
There are several decisions that need to be made as an entrepreneur. And many of them are largely dependent on the nature of the business.
You may decide to work as a solopreneur and still have to structure your finances, time and deliverables. You will need to plan the number of hours you will dedicate to one project or client, or how you will create your billing structure: by the hour or by the project. You may even need to decide how you will manage work when away from the city, will you let someone you trust manage it and work out a profit sharing system or will you shut down operations completely during that time.
These may seem like small issues but when you start work and you're confronted with them, they can be very unnerving. Hence it's a good idea to plan the details of your business a little in advance; especially when you're going to build a team and work with a network of people, this clarity of thought will make execution and achieving targets much easier.
A small aside, a blueprint of the business is not the business plan, that is something I will discuss in greater detail in #6 of the series. This is a plan for what you will need to keep ready before you launch your enterprise. Here are some pointers to help you think through the various steps of your business and all that it entails:
What is the objective of your enterprise?
While you may know what you want to do, it becomes very important to clearly state and understand the objectives of your enterprise. For example if you're a management consultant for the pharma industry, you will need to position yourself accordingly and take on projects only related to that industry. Your niche is what you will become known by and you will then slowly build a reputation of being a specialist of that sector; ultimately allowing you to charge more and even scale up operations.
Similarly, if you're starting a bakery and want to focus on innovations in confectionery, make sure that's the core of your business and everything else is in the periphery. You may want to serve coffee and tea too, but the bulk of your research and development should be on making mouth-watering desserts and trying out new trends in confectionery. In the Startup eSeries, I wrote about entrepreneur Kainaz Messman Harchandrai, who runs a chain of bakeries in Mumbai called Theobroma and successfully surprises her clients with something new every season. She travels the world to learn new recipes and localises them to create her own signature creations.
This clarity will help you streamline operations, allocate resources accordingly and give the right focus to your core strengths.
What is your strategy to sell your product/service?
Are you creating a product that you will sell off the counter, in a stand-alone store, or through restaurants and malls? Will you have an e-commerce platform or will you be using the shop-in-shop model? Will you provide consultation services in person or will you also use Skype for clients in different cities and countries? Will you have an inventory ready or will you create on order only?
Such questions will determine how you deliver your final product or service to the customer. Once you have determined the mode of delivery, you will then need to make provisions for implementing them.
For instance, zero-in on the retail chains you would like to be present in, find a distributor, acquire space for a shop if needed, find out which e-commerce platform works best for you or if you should start your own website and sell independently from there. This will require research on the various vendors and service providers available. Determining the best mode of delivery can also be done after gauging what your competition is doing, what's been most effective for them and how you would like to do it differently so that you stand apart.
What processes will help you create your product/service?
Once you have a clear idea about your product or service, you will need to dwell deeper into its workings. For example, you will need to source raw material for manufacturing. In order to do, this you may need to find out which is the best place to source it from. In the case of manufacturing, you will have to particularly keep in mind certain manufacturing standards.
If, for instance, you're in the home decor business, you may want to import goods from Thailand, China or Indonesia and you may need to find out who are the wholesalers out there. This may also require you to take a trip or two before you finalise your merchandise.
In the case of a graphic design house for example, you may need to acquire a set of fonts, buy licensed design software and even start an account for stock images. You'll be surprised that even individual bloggers have something called blog architecture which helps them decide which blog goes next. Everything you do will have a strategy and a certain system to be put in place that will ultimately ensure a smooth process of creation.
How many people will you need to run the show?
Right from whether you will go it alone or partner with someone or form a corporation with a board of directors, you will need to figure exactly how many people you need to run the show. This applies to the strength of your team as well as the number of service providers you need. So breakdown your business and understand what its different function areas are.
For instance, if you're going to start a restaurant, will you have a partner or will you run it alone, will you need a bartender, how many waiters will you need, how many people would you like in the kitchen in addition to the chef, maybe a sous chef, will you need drivers for valet parking etc.
After you decide the number of people you need, determine a criteria for choosing them. Sometimes you will automatically know who is compatible with you and your enterprise. At other times, you may want to partner with someone very creative who can bring a different perspective to your business. In the case of hiring employees, you may actually have to draw up job descriptions so that they are clear about their roles and responsibilities.
How should you finalise on vendors?
Your vendors or service providers are an important part of your business. They will help you keep your commitments with clients and ensure timely delivery. Thus keep a few criteria in mind before you finalise them.
Conduct a simple due diligence by finding out which companies they provided their services to in the past and how happy their clientele was with them. You can ask them to create some samples before you give them a big order; this will save costs and give you a better idea of their style, quality and timeliness.
Also vendors who gives you the truth rather than sell you something expensive or go along with what you say, are generally the ones who will help you save money and teach you a lot about the trade. You may also need to find some vendors who work on a credit basis, as it may take some time for you to get your money from clients and pay them back.
How big should your savings corpus be?
This factor comes into play much before you start planning your business. You may need to start saving months in advance before you decide to become an entrepreneur. An ideal savings for personal expenses is atleast six month of expenses that you and your family will need. The business too must have enough to keep it afloat for a minimum of a year.
The next step is budgeting for all your business needs. This means anything from the cost of building a prototype to sourcing material, paying suppliers in advance, hiring a research or creative team, spending on marketing and advertising, paying rent and salary and any other expenses you will incur till you start seeing cash flow.
This is still not your business plan as it merely means drawing up a list of probable expenses; it's what Candice Landau calls in a blog - a “feasibility plan”. Even before you go out to investors and banks for loans, you need to work out the math for yourself and see if it is, in fact, a lucrative business proposition. Your business may fail too and thus you also need to ask yourself, how much money am I really willing to lose?
How will you build on your resources?
This includes resources like financial, personnel and other domain knowledge you may need. For instance, working on a part-time job and your venture together is one way of ensuring you still have some money coming in before you launch your venture. It may distract you, but if that's the only way you can fulfil your dream, get ready to burn the midnight oil.
You may need to enlist people with your enterprise and this should start a few months before you start working on your plans. Run your idea by the trusted few in your network, help them put you onto the correct connects and then go about building a rapport with them. Additionally, you may want to scout professional platforms like Linkedin for freelancers or other personnel you wish to hire.
You may also have to acquire some new skills and domain knowledge before you start. So take a short course or a refreshers' course and get updated with the industry. You could also attend seminars and trade shows to gauge what the latest trends and best practices are for that particular industry.
Do you need to create a prototype?
A prototype serves many purposes: You know exactly what steps the manufacturing or production process needs; you will get a more accurate ideas of costs and the material involved, you will know how quickly it can be replicated in the future and you will be able to price better, so as to cover costs and still be effective for the consumer.
Especially if you're working with websites or e-commerce platforms, this will give you an idea as to what are the different categories needed, how user-friendly they are and if the audience finds them appealing enough.
Most entrepreneurs create a prototype and test with a small group of people before they launch the service or product. This helps them incorporate feedback in the early stages and make iterations as necessary. A prototype also helps you give a better picture when you present your business plan to funders; they get a more tangible sense of what they will be investing in.
Have you determined your workflow/supply chain?
Once you have all your resources together, you need to know who does what, when and where. Since your start-up is not a full-fledged orgainsation yet, you may not have clearly designated roles and responsibilities, but everyone involved should know what is expected of them, at what point and how they fit into the larger machinery.
This will only be possible if you yourself first chalk out a step-by-step process of how your enterprise will function. If you go back to the restaurant example, there has to be fixed time when supplies reach a restaurant, the restaurant has to be cleaned and ready for clients by a certain time, and the restaurant has to be cleared up and shut at the end of the day. You may have people working in shifts, and people working inside and outside the premise, but all this will have to be well-orchestrated before you start.
If you take the case of a workflow for graphic designing, you will need to figure out if the content and concept comes before the design, if design and content can work independent of each other, or if designs will be created first and a copy person will fill in the gaps later.
Has a billing process been set up?
The giving and receiving of money in a business has to have a streamlined process too. You will have to create invoices, decide on modes of payment and determine a billing cycle. You may pay vendors after every 30, 60 days or a maximum of 90 days (the general credit period), or instantly after the job is over. You may choose to pay in instalments and keep a rolling credit or simply clear your dues right away. Whatever you decide, make it clear to the other parties involved too.
Also, you will need to determine how to bill. For example, if you're a consultant will you bill by the hour or project, if you're a service provider by the month or by taking annual maintenance fees, if you're a designer by the job done or the additional iterations made too. For those running e-commerce websites, you will have to register for a payment gateway for online transactions.
Thus, for any enterprise, having a clear and transparent billing structure is important as it will help you build credibility and transparency in the market.
Planning a business is about many things: defining objectives, putting systems in place, connecting with people and ensuring a smooth workflow… essentially, it's about creating a blueprint of your business even before it's begun. So think through, think deep and use these questions to help you eliminate business glitches in the early stages itself.
This is probably the trickiest part of entrepreneurship, but also the most essential. Because one missed agreement or worse, one overlooked clause and you could be paying lawyers, the government or the offended party thousands and lacs of rupees… something you really don't want before you get started.
While it can be painful, the legal side of a business is one that needs close attention. Moreover, you are the one who has to understand those details being the business owner and liable for most of what happens. You will have lawyers and tax consultants, but you will still need to know the fine print yourself before you sign anything or conduct business with anyone.
An important note: The information provided here is on 'as-is' basis, it is not advice and you will have to take professional help before taking any steps!
Every business brings with it its own set of risks. For example, you could be running a service that cleans glass building across the city and you may need to protect yourself legally in the case of any unforeseen accidents. Likewise, you could be manufacturing food products and you will need to get approval from FDA to ensure it is safe for consumption.
But before you even get to looking at laws specific for your industry, there are certain legal considerations that apply to any business. Some of them are:
Identifying the Company's Objective
First and foremost, you need to decide whether your company is one for profit or not for profit. In the case of a social enterprise, you need to further decide if you will structure it as a trust, which is often a quicker process, or if you will register it as a non-profit company under Section 8 of the Companies Act, 2013 (Source).
Determining the Business Structure
This is largely based on the vision and size of your organisation. Depending on what you're setting out to do, you will understand the number of people you need and the scope for your company's growth. Your own inclination to expand, collaborate and grow will determine these aspects. For example, would you like to work solo or opt for a partnership, would you like partners but still not want to be liable for their deeds (or misdeeds), would you like your entity to stay privately controlled by a few people or will you eventually open it up to shareholders. Depending on which path you decide to take, you will have to incorporate your company accordingly. Find a box below with all the possible options you have as a company in India.
Types of Business Structures
Proprietorship: In this form of business organization, an individual normally uses his own capital, skill and intelligence to carry out some business activity. He is entitled to receive all the profits and gains of his business and also assumes all the risk of ownership. The sole proprietor exercises full control over the affairs of his business. As there is no legal obligation to supply any information regarding his business to anyone, he can maintain maximum secrecy in conducting his business affairs. This type of organization is particularly suitable for businesses which are small in size and where the risk and capital involved are not very large.
Partnership: In this form of organization, few like-minded persons pool up their resources to form a partnership firm. A Partnership is defined as a “relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”. Partnership is an ideal form of organization for medium scale business operations which require greater amount of capital and risks than sole proprietorship.
One Person Company: One Person Company (OPC) is a corporate entity which was introduced for the first time in India by the Companies Act, 2013. OPC means a Company which has only one person as a member. OPC may be registered as a private Company with one member and may also have at least one director. OPC formed under the Act may either be;
A Company limited by shares A Company limited by guarantee An unlimited Company.
Limited Liability Partnership: LLP is an alternative business vehicle that gives the benefits of Limited Liability Company and flexibility of a partnership firm. LLP is a separate legal entity which can continue its existence irrespective of changes in its partners. LLP is an incorporated partnership formed and registered under the Limited Liability Partnership Act, 2008..
Private Limited Company: Private Limited Companies are those types of companies where minimum 2 promoters are required to float the Company and maximum no. of members admitted can be upto 200… such Companies prohibit any invitation to the public to subscribe for any securities of the company. It also restricts the rights of a shareholder to transfer a part or whole of his shareholding. In such companies general public interest is not involved.
Public Limited Company: Any Company which is not a Private Limited Company is a Public Limited Company and requires a minimum of 7 promoters to float the Company with no maximum limit of membership. Also, it requires a Board of Directors consisting of minimum 3 Directors at the time of incorporation. A Public Company could be a listed or unlisted entity.
Unlisted company: These types of Companies do not invite general public to subscribe to their shares and securities and generally the directors, friends, relatives and associates hold all the shares and securities of such companies. Such companies are not required to comply with any requirements of the Stock Exchange and SEBI until and unless it proposes to offer its securities to the general public by way of public issue or otherwise.
Listed Companies: the Company which has any of its securities listed on any recognized Stock Exchanges is a listed Company. Such companies have listing of its securities with one or more Stock Exchanges in the country are required to comply with the requirements of the Listing agreement, depository rules and SEBI regulations as may be notified from time to time.
Sourced from 'Advanced Company Law and Practise study module' and Bharat's 'Company Law Ready Reckoner'
Incorporating the Company
Once you have decided which structure works for your business best, the next step is to incorporate it.This process has many steps, some of which are listed in the box below. An important aspect is also choosing the name of your company and running it by the authorities. As per the Ministry of Corporate Affairs website: “Finalize 6 names for the Company proposed to be formed (in order of preference) and cross check the Ministry of Corporate Affairs (MCA) portal if the name already exists. Also refer Rule 8 of Companies (Incorporation) Rules, 2014 while finalizing upon names for proposed company. Name should coincide with the objects of the Company.“
STEPS FOR FORMATION OF A COMPANY IN INDIA
Pre Incorporation: Application for Director Identification Number (DIN) by persons who propose to act as first Directors of the Company (provided they do not already possess a DIN). Application for DIN can be made either separately for each Director using DIN-3 or in an Integrated Incorporation Form (Eform 29)
Application for Digital Signature (DSC) should also be made preferably for all Directors provided they do not already possess a valid DSC (Since Director has now to affix his own DSC if he resigns from a Company in Eform-11). As name application form for Company's name is to be signed digitally by one applicant (promoter).
Application for name of the Company has to be filed with the ROC along with prescribed non-refundable fees of Rs. 1000/- in form INC-1. The name one approved by ROC shall be available to the promoters, however, such validity is upto 60 days of filing of form (not after approval by ROC).
Once the name has been approved: Drafting of Memorandum of Association (MOA): Tables A,B,C,D & E prescribed in schedule-I of the Companies Act 2013
Drafting of Article of Association (AOA): Tables F,G,H,I & J prescribed in schedule- I of the Companies Act 2013 and forms INC-7, DIR-12 and INC-22 are to be filed (along with attachments as required) with the ROC for the following;
INC-7 Application for Incorporation, containing details of the Company and its proposed business and details of promoters and their capital contribution (if any).
Mandatory attachments of INC-7 are as following: Memorandum of association Articles of association Declaration in Form No. INC-8 (Declaration from Professional like: ( CS-CA-CWA ) Affidavit from each of the subscriber to the memorandum in Form No.INC-9 Proof of residential address Specimen signature in Form No. INC-10 (The Specimen signature and latest photograph duly verified by the Banker or Notary)
DIR-12 application for appointment of Directors of the proposed Company INC-22 application for Notice of situation of registered office of the Company.
These forms are preferably filed together. However, INC-22 can be filed within 15 days of filing of INC-1 and DIR-12 (these two have to be filed together).
Upon filing, the ROC will scrutinize the documents and if all documents are complete in all aspects the ROC will grant a Certificate of Incorporation stating the name of the Company incorporated.
Upon Incorporation your company details will be available on the MCA website. The company can commence its business from its day of Incorporation subject to Compliances as per Companies Act, 2013 and rules made thereunder.
Why Intellectual Property Rights
If you're creating something unique and distinct and would like to protect its duplication or reproduction by anyone else, you may need to ensure you protect yourself legally with the required Intellectual Property Rights (IPR). This is especially true for those who are in the business of information marketing, publishing, music, or any other creative or IT-related field. Manufacturing also requires IPR as you may be using certain processes or raw material that are distinct to you. IPR generally correlate to: Trade Marks, Copyrights, Patents and Designs. The most common registrations that businesses apply for are:
Governing Act: The Trade Marks Act, 1999
Trade mark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours. It's typically a name, word, phrase, logo, symbol, design, image, or a combination of these elements used by the proprietor to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or services from those of other entities.
Trade mark may be designated by the following symbols:
TM (for an unregistered trade mark, that is, a mark used to promote or brand goods) SM (for an unregistered service mark, that is, a mark used to promote or brand services) ® (for a registered trade mark)
Governing Act: Indian Copyright Act, 1957
The Copyright Act, 1957 protects original literary, dramatic, musical and artistic works and cinematograph films and sound recordings from unauthorized uses. Unlike the case with patents, copyright protects the expressions and not the ideas. There is no copyright in an idea. (Source)
Copyrights may be designated by the following symbols:
The copyright symbol, or copyright sign, designated by © (a circled “C”)
Sourced from: http://bruschambers.net/downloads/FAQtrademark.pdf
Procuring Industry-Specific Licences
The Indian law is very strict in this regard and requires multiple licences for multiple reasons. Every business will have its own set of licences; the most generic one being the trade licence or the Shops and Establishment Registration. If you're running a restaurant, you will need a liquor permit, if you're in the event industry, you may need to get zonal permissions before you hold events in a particular area, and if you are in the import-export trade, you may need to apply for various other duties and licences, some of which have been mentioned in a previous report titled Understanding the Export-Import Business in India.
Getting your licences sorted out can help you avoid several fines and even a probable business shutdown. Thus, ensure you have all of them in place before you start out. Compliance of all the various licences required will also help you get investors faster, and help you build credibility in their eyes.
Developing Contracts and Agreements
You may need simple Memorandums of Agreements or MOAs for every small engagement with another party. Some businesses that want to first gauge profitability before they incorporate, also start out with MOAs between the partners.
Other contracts with suppliers or vendors, include rules for disclosure, payments, delivery, quality etc. all this helps put a system in place and makes everyone accountable. It could also prevent certain very confidential information or trade secrets from being leaked out to your competitors in the industry. So safeguard yourself and try and develop water-tight contracts before you partner with anyone.
Understanding Taxation Laws and other Compliance
Taxes are the most important part of a business and if avoided or evaded, could cost you not just heavy fines but some jail time as well. So be very careful about this aspect. Before you get into your respective businesses, understand all the different taxes you will have to pay. For example in the case of an e-commerce website, you may need to collect or pay VAT or Service Taxes for products or services bought or sold through your site, if you start a multiplex or theatre company, you may need to pay entertainment taxes or if you start a café, you may need to show the service charges billed as well.
Similarly, different company structures will come under different tax categories too. Your tax bracket will also change depending on the company turnover and debt. So make sure, you understand all the kinds of taxes involved for your business, pay them on time and keep all the bills and vouchers, salary slips etc. necessary for the same.
The legal issues in a business are many, and probably can't be covered in one report. You will also need to actively consult your legal counsel and tax consultant for greater detail. But this should help you get some ideas for your business.
Additionally, find here a list of links to websites that you may find useful in your research on company laws:
www.vakilsearch.com www.doingbusiness.org www.trak.in www.indiafilings.com www.withstartups.com www.youngisthan.in
Disclaimer: The information provided herein is on an 'as-is' basis. Readers are advised to seek professional help before acting upon any information given in this article.
It is a topic of much interest among management gurus and investors. The business plan is almost always at the heart of a business, an important document that takes you forward in your search for investors and bank loans.
But the business plan can be more than just a tool to woo funding agents, it is one of the most live parts of a business. It will evolve as the business evolves, it will incorporate several facets of the business in one comprehensive whole and it will reflect the uniqueness of the venture and the people behind it.
In simple words, WikiHow says: A business plan helps to define what you think you need to launch your business, large or small. It summarizes the sense of your business in a single document. It also creates a map for investors, bankers, and other interested parties to use when determining how they can best help you and to help them decide whether or not your business is viable.
A business plan takes a lot of thinking and working on. It means closely scrutinizing different aspects of the business and bringing them together in one readable report. A roadmap for your business, it will tell you exactly where you are, where you need to go, in how much time and what you will need to get there.
It may seem like a daunting task, but it can be quite easy if you keep a few pointers in mind before you set out to write it. A good way of developing a plan is by sitting together with your existing team or group of founders and brainstorming on the different aspects of the business. If you're a solopreneur, you can take help from various resources online that will help you calculate your figures and metrics. Some online software also helps you customize the business plan to suit your industry. I will list all these resources below.
None of it, though, takes away from the fact, that the business plan should largely reflect the flavour of the business and the personalities of its founders. Online templates may give you the basic skeleton but that oomph factor will only be achieved by a lot of personalization.
And before I give you the main highlights of a business plan, here are some tips to keep in mind before you get started: Don't let the magnitude of this document intimidate you, everyone you show it to understands that it's a working document and it will see many iterations along the way.
Keep it as easy-to-read as possible, even the lay person should be able to comprehend what you've set out to do. Moreover, prospective investors should not feel alienated by the use of excessive jargon.
Maintain brevity, give only as much information as is needed; you don't want to confuse the reader with too many details. Thus, keep it as short and effective as possible.
Collect whatever substantiating documents you need to go along with it. Affixing copies of agreements with partners, vendors, legal applications that are under process, all help.
Even though it's a business plan, it needn't be boring, you can accentuate it with some design elements - your brand logo and other illustrations.
The process of creating the plan can be fun too: include friends and family for the brainstorming sessions, especially for the marketing and financial sections - it always helps to have more eyes and opinions there.
What often proceeds a business plan is a one-page pitch. This is a concept note of your business, providing in a nutshell brief details on the product, people, processes, target audience and promotional tools involved. A one-page pitch is often used to whet the business idea by an investor through a quick synopsis. This can eventually be fleshed out into a full-fledged business plan.
And now for the business plan - it comprises some salient features, which I will take you through in a step-by-step process:
Executive Summary: This is a quick summary of your business idea in 1-2 pages. Since it is the first part of your business plan, it needs to be extremely engaging and should keep the person hooked to read the rest of the plan. Sometimes, investors only read the executive summary and ask for the rest of the business plan only if this part interests them.
Many consultants also recommend you write it at the end as you will then have a complete picture of the business and you will be able to present it more clearly. Either way, don't forget to highlight a few basic points of your business: the basic idea, what solution your product/ service is providing, is it filling any gap in the market; how will you go about achieving it (the production process), its unique features - how it will stand apart in the market, does it have any competition or are you the first mover? If you've already started testing your product and received positive feedback, you can add that in too. Also mention the addressable target audience, the team size, estimated expenses and how much funding you are seeking.
Company Overview: Every entity or company has a history and it has been formed keeping certain objectives in mind. Even as a startup, while founders may have not run a company in the past, they do come with a lot of experience and some idea of why they're in this together. As an individual, you can build credibility by highlighting past professional achievements here. A company overview essentially states why a company came into being, what kind of structure it follows - a private limited one, an LLP etc - the people behind it and where it will operate from or how far its reach and presence will be, i.e. national, global etc.
An important part of this section is the mission statement. This is a one-line description of the main objective of a company and how it will go about achieving it. So, for instance, if you are a research house, you may say “We bring path-breaking research to our clients through fair and unbiased practices.” Keep it simple and clear!
Product/Service: This is a more elaborate version of the executive summary with a lot more details on exactly what your product or service is. This section should touch upon the gaps you notice in the market and how your product tackles those gaps, essentially the problem and solution part of your business plan. You may also want to bring out your product's USP or if it is more cost-effective than those that are already available in the same category.
If you have conducted any surveys, the findings could be included here too, stating what customers are facing currently and what their views are about existing products in that category. The product section should also include the various modes of delivery of your product, how the user will access the product and how it will enhance his life experience. Additionally, you could also mention what it will take to create the product, how you will source or manufacture the product service, what technology you will use and what kind of expertise is involved in building it. If there is something in the process of being patented, you can include that too.
Market Analysis: This section describes who your product will address. It is an in-depth study of the current market of your particular sector and how you fit into it. So, for example if you're in the skincare industry and if you're making a product to cure acne, essentially anyone suffering from this condition is your potential customer. But you will need to further segment the market. Say, for instance, you decide only to target teens with acne issues, you will then need to assess what the teens currently use, are they satisfied with them, how much they pay for such products, how often they purchase them etc.
You will also need to understand the potential size of your market and how much of it you can directly address and start selling your product to in the immediate future. If, for instance, 50% of all sales in the cosmetic category are acne related, then that 50% is your addressable market. Further, if out of that 50%, 25% make up teens and the rest are adults, that 25% is your ideal target audience, and out of that 25%, if you can reach 10-15% successfully that is your share of the market.
An article on Bplans.com explains this well:
TAM = your Total Available or Addressable Market (everyone you wish to reach with your product)
SAM = your Segmented Addressable Market or Served Available Market (the portion of TAM you will target)
SOM = your Share of the Market (the subset of your SAM that you will realistically reach-particularly in the first few years of your business)
Excerpted from: How to Write a Business Plan by Noah Parsons.
Competitive Analysis: This is a complete survey of your industry that lists all your competition and how you stand vis-vis-them. You will have to highlight all products being sold in your category of products, mention their strengths and weaknesses and how your product will have a competitive advantage over them - either in terms of pricing or in terms of features. Competition is generally of two kinds: direct competition and indirect competition. If we continue with the acne-free product example, all products in this category are direct competition, while other skincare products are indirect competition.
In terms of competition, as an individual entrepreneur or service provider, you can list what others are doing currently and what is it that you will do differently. It is basically a SWOT analysis, bringing out the strengths, weaknesses, opportunities and threats, of both you and your competition, ultimately determining how you position yourself in the industry.
Marketing and Sales Plan: This will be determined by the 5Ps of marketing, viz: product, position, price, promotion and place. The product and its unique positioning will determine its competitive advantage and consequently its pricing. Thus after a market analysis, you will know exactly how premium your product is as well as how much customers would pay for the product. You will understand whether to make it more exclusive and place it at the top of the spectrum or make it more accessible and place it lower down in the spectrum.
The next step then is to bring the product to the awareness of the customer. This will mean promoting your product or service to the right target audience. This could happen through various channels like direct marketing, advertising, public relations, social media etc. You can get more details on the different channels of marketing through a previous report authored by me - Marketing Basics For Your Small Business. Also, don't forget to add the distribution process in this section or the places through which you will sell. For example: through retail malls or standalone stores, from other e-commerce portals or from your own website.
Operations Plan: This includes all the processes involved on a day-to-day basis as well as those involved in delivering the final product/service to the consumer. It chalks out all the different function areas needed in your enterprise. For example, in a content marketing house it could mean: a creative team, marketing personnel, a customer service team and writer or editors. It will also include all those you collaborate with to create your product, like freelancers, graphic designer or any other external vendors your service uses.
The operations plan also details the complete supply chain of a product - from where you will source raw material, how many suppliers you will need, how you will ensure you check for quality, what all your production process requires: machinery, manpower etc, and finally who will distribute those products to the end user. Investors will be happy to see if you already have people enlisted with your enterprise and if you are in fact ready to serve the consumer.
Management Team: These are the people who will manage the operations and be the face of the company for the investor and for consumers. You may already have a CEO or CFO in place or for now you may be juggling all the roles yourself… no problem. Most enterprises start small, and people come on board over a period of time. The fact that you can visualize a need for certain positions and how they will benefit the company shows prospective investors your vision for growth.
In this section, mention all the different management positions you foresee and project their estimated costs to company. For those with an existing management team, mention their current roles in the company and how you see them taking the enterprise forward. Also, here is where you can mention if you need a board of directors or if you are in the process of creating one.
Financial Plan: This is the most crucial part of your business plan and needs utmost focus and attention. Any glitch in the numbers and you may not be able to prove your credibility to that investor ever again. So look through it with a fine comb, get all the expertise you can, rope in a financial advisor or tax consultant and ensure you have a water-tight plan of all the financials involved in running your enterprise.
To briefly summarise what your financial plan should include: the revenue model - how you will generate sales, a sales forecast - the expected revenue for the next 3-5 years, the cost of personnel - staff salaries etc, Cost of Goods Sold (COGS) - how much it costs to create the product and keep the show running, the profits and losses - how much you have made after deducting costs, the cash flow - how much surplus you have above the profit and loss of the company, and finally a balance sheet that determines the net worth of your enterprise after considering the liabilities and assets etc. If you have an exit strategy, this could be mentioned here too, specifying what you hope to gain from selling your venture and listing probable acquirers.
Appendix: This is the final section that includes all your supporting documentation. Anything that you think will help substantiate your business plan should be included here. Right from lease agreements to partnership deeds and vendor contracts, you can attach just about anything to corroborate the success of your enterprise.
You could also include charts, graphs or any other data which felt like too much detail in the other sections. If some of your documentation is in process, you could attach the applications here too. And if your enterprise is already up and running, the income sheet should be added. Basically, add what you can to help build the credibility of your venture.
I hope this essay on developing a business plan was insightful enough and I hope it urges you to spend more time on your own plan when launching. The sections in a business plan seem vast, but if you look at them systematically, it shouldn't take you that long. If you need additional help you can look at readymade templates that are freely available online or alternately look at procuring software or other online products that will aid this process. Find below a list resources that you may find useful:
Online Software available at: Enloop BusinessPlanPro LivePlan
Business plan templates available at: BPlan.com's free downloadable business template Growthink's Ultimate Business Plan Template
Some additional reading material: How to Write a Business Plan The Different Types of Business Plans How To Write A Business Plan by Forbes.com Business Plan Outline - 23 Point Checklist For Success
A great business idea by itself is not enough. You need to support it with execution, and execution needs money. Sometimes your business may need investors before it even takes off. At other times, investors may come in at a later stage when you need to scale up. Either way, money is an extremely important resource to kickstart and sustain any venture.
Money or funding for startups can come from various sources. The easiest and oft-taken route is by investing your own funds in your enterprise.
At the start of any venture, it's about you and only you. And you may have to look into your own pockets to get through the early stages of ideation and planning. A wise way to meet your expenses is by planning well in advance. You could start building your corpus while saving at your job, or you could start investing actively so that your funds give you a substantial amount to work with. Many entrepreneurs also continue to work part-time at a job to support their ventures.
Funding your own enterprise comes with its own set of pitfalls. If you don't have enough, you might have to cut down on making your idea as grand as it should be, or you might have to juggle many functions yourself leading to fatigue and poor execution. You will finally realize you need to bring in a team and pay not just yourself but others too.
An individual corpus can seldom take care of expansion plans, unless you're dipping into an inheritance, which is not wise because almost 90 percent of all startups fail and losing your family wealth on experiments may not be a good idea. The next option then is to bank on the success of your venture and hope it generates enough revenues to sustain itself.
If your business is already showing great sales and making revenue, then your funding is taken care of for a while. This is also called bootstrapping, where the profit of a company is put back into a company to keep it going. A track record of good sales will also make later funding easier as you have already shown the success of your idea and its ready market of customers. Many ventures have successfully survived bootstrapping. Several consultants still believe it's an effective path for entrepreneurs to take, as it helps them retain control and brings in self-reliance.
The flipside of bootstrapping is that you will always be on guard about superfluous expenses, possibly limiting growth and ideation. The growth of your venture may be slower and funds for new ideas or verticals may be scarce. You will continue with tried and tested products and keep replicating the same business model to ensure sales don't dip. Revenues work up to a point, after which expansion will require a fresh infusion of funds from the outside.
If you decide not to go it alone, you can rope in partners and each of you can decide to come in with some funding. Depending on the amount each invests, the percentage of profits can be determined. Partnerships ensure faster execution and a greater pool of resources. Each partner brings in his own unique skills and taps into his network to help the venture grow. One of the advantages of founders investing their own monies in the enterprise is that future investors get more convinced of the team's faith and commitment to the idea.
Thank you so much for authoring 'The Business Launchpad Series'. They are wonderfully written, sure to inspire budding entrepreneurs… So far I've been enjoying your business launchpad and am waiting for more.
- WBC Member Jaishankar Jayaraman But like in some relationships, co-founders may fall apart. In such cases it then becomes necessary for the team to find an investor from the outside who can put in money quickly so as not to halt the venture's operations. Like the previous funding options too, there may come a time when internal funding may not be enough to grow, especially when the gestation time for a venture is long and revenues are not coming in fast enough.
Friends and family
This is a funding option that is often exercised because friends and family are easily accessible, already know your capabilities, and have some amount of faith in you. All you need to do is sit them down, tell them your idea, how much you expect to make, and how much you need to get started. Many Indian businesses have started with small amounts of Rs 5- 10 lacs loaned or given by family, in return for a small stake in the business or with an expectation of return over a period of time with a mutually decided interest rate.
But it's no secret that money has been the cause of many relationships going sour. Hence, if you decide to take this route, get prepared for some awkward moments in the family, especially if your venture fails and you are unable to return the funds. Family can also become interfering and give you suggestions when not needed, curbing your autonomy to some extent. Later on, if you wish to bring in bigger investors, they may not exit or hamper the process of acquisition. Most people believe mixing business and family or friends is a mistake, but as an early stage entrepreneur it may be your only option. Find a middle path by drawing up necessary paperwork and forewarn them of all possible scenarios.
Prizes are generally acquired by participating in competitions for startups where you can pitch to a group of investors along with other entrepreneurs. These events are organized by companies who want to encourage entrepreneurship rather than looking at it just as a profit-making initiative. They don't expect anything in return for the amount given but may determine where and how the funds should be used. Occasionally, they will monitor the progress of the enterprise.
Similarly, you can apply for grants from foundations. This is particularly true for social enterprises, which use grants purely for operational reasons to aid their beneficiaries.
The cons of grants/prizes are that there may be many rounds of the competition to be won before you actually gain the desired amount. Similarly, it is just one round of funding and in case you need more, you will still have to look elsewhere.
Crowdfunding has become an extremely popular phenomenon and most entrepreneurs see it as a platform to raise the initial round of funding that takes their idea to execution stage. Crowdfunding brings your business idea to a whole pool of people, largely through online portals, but also offline through startup events.
Crowdfunding has been prevalent in India in an unstructured form for a long time, but it is only recently that the online medium has gained traction. Some of the popular Indian crowdfunding websites are: Ketto PikAVenture The Crowd Cafe Fund Dreams India Catapoolt Start51 Wishberry Ignite Intent Here, an entrepreneur needs to present his idea as a story, focusing on its impact, rather than merely speaking of numbers. Crowdfunding is popular with creative entrepreneurs who pitch one-time projects and repay the funders with a mention in the credits or free copies of their album, book etc.
One of the disadvantages of crowdfunding is that it is very crowded place. There are too many projects vying for the crowd's attention and if you don't strategize well on how you design and present your story, you get lost in the clutter. You need to use attractive images and make the pitch as effective as possible. It tends to be a one-time funding and as expansion takes place, funding too will need to get more institutionalized.
This is another option in case you want to retain autonomy in your enterprise and refrain from partnering with investors who come with the threat of a takeover and diluting your original vision. Banks provide business loans to individuals with a good credit history but like all investment processes, this one too is extremely stringent, with immense paperwork and the need to show some prior success in your venture.
Banks, of course, will have their own interest rates and criteria based on which they will provide loans, and often these are difficult to meet. Moreover, it doesn't make sense to take personal loans as they will attach some asset of yours as collateral, which means when you fail at the venture you also forego your assets - an extremely risky factor. Though banks in India have been encouraging startups through new schemes due to governmental policies, their efficacy is still to be gauged.
These investors are extremely useful at the stage of the business where you are making some profits but need extra money to take it to the next level. So, for example, your profits may cover your operational costs but may not be enough to start a marketing campaign or reach another city. Angel investors could be people from professional fields like doctors, lawyers, etc or anyone who is excited by the startup space and wants a piece of the action.
There are different kinds of angel investors. Some invest individually and you may get introduced to them through your network or you may meet them at startup events scouting for promising entrepreneurs. The second kind work as angel investor groups or ‘angel networks', and collectively invest in enterprises.
Entrepreneurs typically make pitches to them and present their plans. India has many angel investor groups like Mumbai Angels, Hyderabad Angels, Harvard Angels and Innovation Angels (Source).
Angel investors definitely want more than just the startup fun. They want a share of your pie and depending on how much they bring to the table, they can look at anything from a 20-50 percent stake in your company. Angels tend to look at getting their returns in a short timeframe of 1-2 years and hence require entrepreneurs to have a clear exit strategy. This option may not work for entrepreneurs who want to be in their venture till the end. Angels also have a keen eye on the direction of the company and can often interfere in its working. But when it's time to scale, this round of funding sure helps!
Seed funding, or Micro VC as it's called, is a stepping stone to the venture capital phase of an enterprise and is particularly popular in the internet sector. It is the first stage of institutional investors. Seed funds generally invest in ventures in the early stages and make investment decisions much quicker as funds are readily available. The people managing seed funds often have some experience of scaling up startups and can act as good mentors in addition to being investors. Once you have seed funding, the chance of VCs coming in becomes easier.
Blume Ventures and Unitus Seed Fund are some of the popular names in India (Source). Others are Nexus, 5 Ideas and Angel Prime (Source).
Seed funds like all investors need to show returns to their investors and hence have high targets for returns and focus on aggressive growth. Additionally, since they have scattered investments with multiple startups, they may not be able to give you the next round of funding.
This comes from professional investors with deep pockets of institutional money. They look at investing large sums of money in proven business models that are ready to scale. Most of the top names in industry and banking would have such venture capital.
Venture capitalists participate in different rounds of funding called Series A or Series B. These rounds are largely dependent on the quantum of money needed for funding an enterprise at different stages.
Venture capital comes at a much later stage in your enterprise, when it has grown so big that you can efficiently use the large amounts of funding coming in. Beyond venture capital is probably only acquisition by a bigger entity or launching an IPO.
An IPO opens up your company to multiple investors. It is called ‘going public' because you are selling stock to anyone who may want to invest in the company. IPOs also give previous investors, and yourself, a chance to liquidate stakes in the company for cash by selling stock to investors. Listing your company has multiple processes that need to be in compliance with governmental policies.
These are the many ways startups approach funding. However, the route you take will be largely determined by how you envision the growth of your enterprise, how much risk you wish to take and how much you want to share your pie. Funding has its pros and its cons, but sometimes it's the necessary evil to make your startup dream come true!
Resources: http://www.siliconindia.com/news/startups/5-Ways-for-Startups-to-Get-Seed-Funding-in-India-nid-136731-cid-100.html http://www.inc.com/adam-heitzman/5-best-ways-for-funding-a-startup.html http://www.forbes.com/sites/drewhendricks/2013/10/31/4-great-tips-for-finding-funding-for-your-startup/2/ http://fundersandfounders.com/how-funding-works-splitting-equity/ http://www.forbes.com/sites/dailymuse/2013/02/13/5-steps-to-finding-investors-for-your-start-up/ http://www.quora.com/Crowdfunding/Are-there-any-crowd-funding-platforms-in-india http://www.quora.com/What-are-some-emerging-crowdfunding-websites-in-India
Disclaimer: The information provided herein is on an 'as-is' basis. Readers are advised to seek professional help before acting upon any information given in this article.
What comes to mind when you think of the brand Apple? Do you think of its late visionary founder Steve Jobs, or the apple-shaped logo with a small bite cut off, or the ubiquitous iPhone and the brand's commitment to innovation? Do you “think different”? Because that's what the singular mission and tagline of the brand Apple is!
Branding is essentially that. It's about creating an identity, something an entity or company stands for. A brand is imbued with several characteristics; it's almost a walking-talking persona. And till you don't give it a clear voice and shape, you have not done justice to your enterprise and its vision.
In today's times, for small businesses especially, carving out your own brand identity is crucial. Because if you fail to do this, your product or service will get lost in the clutter, with little recall value in the minds of consumers who are constantly bombarded by visuals and stories of other products and services.
Moreover, the current generation is endorsing brands in an unprecedented way, and when they promote those products and create word of mouth, it can trigger loads of good will, increasing your sales and enhancing your brand image. A brand that has built equity also commands a premium for its products and is more alluring for acquisition.
Thus, a sound brand strategy has a close correlation with the success of your enterprise. And it is no longer the privilege of big companies who collaborate with ad agencies and determine what logo and font to use. Branding is an exercise that is done at an individual level too, even as a solopreneur, working under your own name.
Rituparna Ghosh, an entrepreneur we featured in the Startup eSeries, talks about how you can build a personal brand in the video below. She brings out the fact that all brands are essentially a story well-told. And the story that you tell as a solopreneur or a company has to be well-thought out, has to have a past, present and future and has to clearly show how it adds value to the customer's life experience. You can listen to her views here:
Rituparna Ghosh on Personal Branding through Storytelling
Additionally, it may be useful to keep these tips in mind while building your brand identity and story:
Brainstorm brand values: Your brand will have a personality of its own, and it will eventually be known to reflect certain values. So before you develop a name or logo or anything else, first decide what your brand will stand for and what it won't stand for. This will ultimately help you translate your brand and its mission-vision to people you work with internally and externally, and to the consumer. So, for instance, if you believe strongly in incorporating cutting-edge technology into your enterprise, or if you stand for effective customer service, or if you decide to work only with eco-friendly vendors, build those aspects into your brand's value charter.
Focus on design: A brand is not just a name, it includes a complete look and feel which needs to be designed so as to have instant and lasting appeal. This most often begins with your brand logo, which is best outsourced to a small or medium-sized advertising agency or design house. The logo should then be incorporated on to your visiting cards, stationery, packaging, advertising and even power point presentations or proposals. Create templates with your branding for all the communication you send out. The design sensibilities you adopt as a brand will also get reflected in your product, for example the colours of your website or the shape and style of your product.
Think of a tagline: If you notice some of the most successful companies are remembered not just by their logos but also their taglines. Think “Volkswagen”, think “Das Auto” - literally translating to “car of the people”. Or the erstwhile phone brand Nokia whose tagline “Connecting People” succinctly conveyed how its technology would bring people together. Or Nike's “Just Do It” which now is used in every motivational speech, and not just for sportspersons. Coining a catchy tagline, that neatly describes your company's vision, helps take your brand a lot further in the minds of consumers.
Communicate consistently: A brand is built by communicating your story, and this story that you tell has to be consistent. For this to happen, it's imperative that all those who collaborate with you are on the same page. Partners or employees should be briefed on your brand story, which normally comprises the brand's history, why it originated, the people behind the brand and how it wishes to serve the consumer. It could also include the brand's future plans for expansion. Brand-building exercises undertaken by companies essentially bring all employees together and empower them as brand ambassadors to go out and spread the same message or “talk the same language”.
Stay authentic: As a brand you don't want to blindly copy what bigger brands or more established companies are doing. If you feel loud and ostentatious is not for you, stay understated and elegant; if you think expensive advertising is not for you, try direct marketing or social media. While as a business it's tempting to get carried away by the herd, stay true to your own ethos. This will ensure consistency in both the messaging and execution of your branding exercises. Also, don't constantly stress about branding, it's a natural process that gets internalised over a period of time… all it needs is for you to walk the talk and keep projecting your service or product as effectively as possible!
Marketing your business is the next important step. It essentially comprises any exercise that makes the consumer aware of your product or service. It could involve a range of aspects, like: conducting surveys, developing PR activities, using traditional advertising methods like TV or print ads, or alternately using SEO (Search Engine Optimisation) on social media platforms. It could also include participating in offline events like trade fairs or exhibitions, direct marketing techniques like handing out brochures at a mall or sending e-mailers to your database of clients.
Marketing involves a close understanding of the 7Ps of marketing, viz. - product, people, promotion, price, place, process and physical evidence. These 7Ps cover everything from your customer type, to the ideal location to be present in, to the kind of promotions you should undertake, to testimonials of satisfied clients. I have discussed these aspects in greater detail in a report called Marketing Basics for Your Small Business.
Once you have understood the 7Ps of your business, you can then ideate on a marketing plan by identifying which channels of marketing work best for your enterprise. For example, if you're a website, you may start out using only low-cost direct marketing methods like e-mailers, or you may even decide to showcase your expertise on a blog. Later on, you may spend money on placing ads on other similar websites or doing cross-promotions with other brands.
Thus, each business will have its own needs and own marketing spend depending on what it sets out to do. Here I shortlist some easy and cost-efficient marketing tools to help you spread the word on your own new business:
Create a website: A website is a ready reference for any consumer; it's your virtual address. It displays everything your company stands for and what it does. Web designers and developers are easily available and will help you set up and design your site. Make sure it's attractive, easy to read and has complete information on the company, its founders, products and testimonials from existing clients. Put up all your material from videos to press coverage to certifications that would help in the sales of your product. Additionally, if you sell from your website, register with a bank for a payment gateway.
Alternately, if you're an expert and presenting your opinions can spread the word on your business, start a blog and regularly disseminate it to your database and followers on social media platforms. You can get more tips on blogging in this report - Blogging Basics for Beginners.
Use social media: Creating a presence on social media has become the most cost-effective way to make customers aware of your products and services, because it's mostly free, unless you opt for adwords and direct them to a particular target audience. It's easy to start business pages on Facebook, Twitter, Linkedin or Google Plus and share pictures of new products, conduct contests or online surveys. Moreover, social media puts you directly in touch with the user giving you instant feedback. Communication on these platforms happens directly and casually, enabling a closer relationship with the consumer. But one needs to be cautious about the messages you're putting out about your brand, because social media is a double-edged sword. Learn more about how businesses can use social media in WBC India's Report on Social Media.
Work with a PR agency: Public relations consultants or firms do a good job of making a PR plan for your company, telling you exactly how your brand can be positioned to the media and which publications - both online and offline - work best for your business. They are in direct contact with journalists and bloggers and use their goodwill to ensure you get featured in the right places. PR exercises come at a much cheaper cost than traditional advertising and tend to look more credible because someone is endorsing you vis-à-vis you promoting your own business through ads.
Include some giveaways: Most entrepreneurs have realised that you need to give away something for free before people begin to pay for it. And these freebies needn't be too costly or time-consuming; they also shouldn't be boring and inconsequential, read bookmarks. What you give free too has to be an experience. For example, a free consultation, where the person actually experiences what your service is about and can pass the word around. Or maybe you can conduct a contest themed around your business that has an attractive prize attached to it - this way you will also educate the consumer about your brand.
Network as much as you can: This aids both branding and business. Networking at the right places with the right people helps spread the word on your business. As a startup, you shouldn't miss important opportunities to network. You can be a part of trade events or startup groups in your city or through platforms like Linkedin and Twitter. In order to be more effective, keep a pitch ready for your business. Decide what you need to say about it, what words you should use and what your ‘ask' is before you enter any forum. Networking will not only help build your business, but it will also help people put a face to the brand and make you more approachable as a business owner.
Launch your brand with a bang: A grand opening always creates a stir and some news in the media, and among friends and family. Especially for restaurants or cafés, a launch showcases your specialties among people who matter. For most big brands, you will notice a celebrity inaugurate the occasion, this brings credibility and press coverage. For a retail store, or even an e-commerce platform, plan something around the launch like discounts for the first few customers or throw in some added benefits if they register early, etc. Even if you're running a business from home, mark the day in some significant way, so that you can celebrate its success in the coming years.
Branding and marketing is a lifelong process. As long as you are in business, you have to keep sending out the right messages to the right people. Marketing is at the heart of any venture, evolving and growing as the company evolves and grows. Thus it needs constant focus and improvisation. So put on your marketing cap and get started on your blitzkrieg!
Disclaimer: The information provided herein is on an 'as-is' basis. Readers are advised to seek professional help before acting upon any information given in this article.
Starting a business is like the courting phase of a relationship: it's full of excitement and enthusiasm, you're working toward something new and you do all it takes to ensure you get it right. But once you've launched the business, it's like a marriage, a full-time commitment that needs working on day after day. And the romance… well, it may just take a small hit!
Once you've opened your doors for business, it's the real thing and there's no time for any slackness, negligence or procrastination… If it has to grow, you have to be on your toes, all the time.
When you become a business owner you realise that absolutely nothing can be overlooked. Every minute detail has to be taken care of. Because every minute detail plays a role in the smooth functioning of the larger machinery.
Daily administrative issues may take up quite a bit of time but once you get them organized, you will be able to work much better. So spend some time taking care of the things that ensure your office or workspace has all the amenities that are needed to work efficiently.
Small issues like no internet connectivity for a few hours can affect your deliveries and work flow. Even your printing machine needs to have regular ink cartridge refills, as your coffee machine needs to be replenished with beans. Having phone numbers of service providers handy and keeping back-up options helps. If you have support staff, you can delegate some of these chores to them, but if not, be organized by making checklists to ensure you've taken care of things.
In terms of running a full-fledged business with employees, walk-in clients and every day sales, you need to get prepared to face more issues than just administrative ones.
Each new day will bring with it a whole new set of challenges and solutions. You will need to become a quick thinker and get nimble on your feet to firefight unforeseen crises.
Following a routine and making daily checks will give you an added advantage. It will also help you create systems and processes that can run independent of you. Here are some ways to stay on top of your day and pre-empt the needs of your customers:
Work on sales
Sales is not a one-time plan. It's a daily effort. Many companies try to reach out to a certain number of people each day to ensure they meet their targets. This used to be particularly true of methods such as cold calling. Now direct marketers reach out to multiple consumers through emailers, newsletters, flyers, pamphlets and other communication materials.
Ensure you're working on marketing each day, in some small or big way. Big brands always have a marketing campaign in place for the year, which projects how frequently they will be present in newspapers, on TV or through social media platforms. They realise that they have to constantly be visible to the consumer. Try this approach in your own small business too. Every day create a target of the number of people you will reach out to. Even if you meet half that target, you will have made progress.
Once you have launched your business and see some footfalls in your store, or some user hits on your website, analyse the data you receive. You may find that you see maximum footfalls at around 6pm, when people leave from work. In such a case, you will have to make sure you have more hands at that time of the day, and that you yourself are present to ensure you can close the sales. In the case of online portals, you may see more traction from older users rather than the youth, and you may have to tweak your product to suit this age group. Either way, use data to help you understand your market better, iterate on the product or service as needed, as well as optimize your own services to serve your consumers better.
Respond to enquiries
This is one area in which you just can't afford to be lax. There are loads of suppliers in the market and, however niche your services or product may be, enquiring clients will find someone else if they don't get a prompt response from you. The first time consumers notice whether you care enough or not, is when they make their first enquiry. So don't be late in answering emails or returning calls. Always be available, or ensure that someone in your team with adequate knowledge can get back to the client on time and answer their queries. If it is impossible to respond instantly, give them something else to work with in the meanwhile. For example, direct them to your website or install an auto-responder which talks a little more about your products and gives them some ready information.
Keep information ready
It helps to handout the information a client needs instantly. To do this keep materials ready much in advance. For instance, you can create rate cards for your services or products; this also saves time haggling with clients. While you may want to keep the option of negotiating open, it's a good idea that the client realises what type of service he's paying for - premium and high quality, or cost-effective and mass-produced. Physical or online PDF brochures also help to display your product without having to describe it to each client. Your company's website could be the best repository of information for any new user; so fill it in with all the details, FAQs, pictures, testimonials, etc. If you're a solopreneur with a body of work that you want to share selectively, design a special portfolio for clients.
Create a billing system
I remember a time when I used to visit exhibitions and sellers used to resist keeping a card swiping machine and insist on cash, eventually losing out on a lot of walk-in sales from people who wished to pay by credit card. Today, even the smallest retail outlet will have a card swiping machine. It's important to understand what billing systems you will need as an entrepreneur to optimize sales. In the case of e-commerce portals, ensuring your payment gateway is always functional is imperative.
Billing also comprises the credit period you give clients or the amount of advance you will work with. Additionally, you should also determine how quickly you will pay your vendors, so as not to create any ill feelings.
Meet with your team
If you're working with a team, it's a good idea to have regularly scheduled meetings that bring everyone on the same page. Use this time together to brainstorm and come up with ideas, or discuss things that went wrong and how you can address them better. Also, assess the targets you have set and how you can get closer to reaching them. Team meetings always bring a greater bonding and help everyone air their views and grievances. But make sure that as a team leader you give everyone a chance to talk, and that the meeting ends with some conclusive steps to be worked on. Most people, come out of meetings wondering what happened and if it was a waste of time, so try to bring out concrete action points that give the team something to do each time. Having an agenda before the meeting starts and sticking to a fixed time also brings more professionalism to this practice.
Communicate with collaborators
If you're working with a set of vendors, freelance service providers, partners or financial investors, schedule regular reporting sessions with them. Brief them on what went well and what didn't. Even though they are working from the outside, use ways to get them more involved in the growth of your entity. Make all the attempts you can to help them feel as equal stakeholders in your venture. Tap into their networks, get feedback and see how they can contribute in a bigger way. Collaboration in today's times happens at multiple levels, within an organization and outside of it; thus constantly work at keeping dialogues open with everyone.
Set timely targets
Setting a figure on the number of users you wish to reach or working toward a particular revenue target helps keep the focus in a new enterprise. It will stop you from slipping into inertia, as you realise you still have a long way to go. Give yourself and your team an incentive to reach it, and put in certain timelines to make it more effective. Additionally, be realistic, and if a particular target is impossible to achieve, move on to the next. Changing the goalpost is an important aspect of goal-setting. For more clarity, use the age-old management fundamental by creating SMART goals that are: Specific, Measurable, Attainable, Realistic and Time-bound.
Read about your industry
You may have done a lot of research before launching, and now are too consumed in the execution phase of your venture to keep up with the research. But remember to never stop reading about your trade. Innovations and market dynamics are taking place at a rapid rate. So be on top of your industry by constantly reading up on it. Following competitors and understanding the strategies they are using is another way of staying abreast with trends. Additionally, track consumer behaviour, notice when they are spending and saving, and what makes them change their patterns. Set time aside each day to add to your knowledge base.
Entrepreneurship is seldom smooth sailing. You will go through moments of feeling low and moments of feeling high. You will be drained of energy at times and full of exuberance at others. It will require you to dip into your deep reserves of motivation to motivate yourself and those working with you. Do what it takes - read self-help books, be a part of entrepreneurial networks to feel supported and discuss your dilemmas and emotions with close friends and family. And more than anything stick to your daily routine, get enough exercise and sleep, eat a good balanced diet - in short, keep the adrenaline high. And keep the faith… being an entrepreneur is like being a warrior… but you will find your victory!
I read an interesting line in a blog by Shep Hyken, a specialist in the area of customer service - Everyone always has two jobs: to do the job they were hired to do and to take care of the customer.
Going by this fundamental, one can deduce how important the focus on customer service should be for both business owners and professionals. Customer satisfaction is key for all businesses and some even rank it higher than marketing, insisting that if more resources were used here, it would lead to greater retention of existing clients, eventually more cost-effective than acquiring new ones.
Customer relations is a vast topic and a constantly evolving one. As businesses change and newer modes of delivery and service come in to play, the demands of today's customers also see a dramatic shift. Moreover, the glut of service providers in every sector is making it easier for customers to switch loyalties on the slightest pretext.
A comprehensive understanding of customer relations is thus the need of the hour for startups. Let's start with what essentially comprises customer service.
What is customer service?
Study.com describes customer service as “the act of taking care of the customer's needs by providing and delivering professional, helpful, high quality service and assistance before, during, and after the customer's requirements are met.” If you break this up, you realise that customer service comprises of several aspects, which are:
It takes care of “customer needs”: This is the starting point of all customer service - it is for and about the customer. And this often requires companies and entrepreneurs to put their needs aside when taking care of customers. The general motto, should be: If the customer is happy, you are happy.
It should be “professional”: In order for it to be professional, it needs to be studied and executed professionally like any other aspect of the business. It will also require professional processes of execution, reporting and analytics.
It should be “helpful”: Customer service should aid the customer in the use of your product or service. You should always be available to provide the required guidance in any area that he has trouble with.
It should be of “high quality”: There's a reason that every call that goes out of a company's customer service centre is recorded and reviewed. Companies ensure that their customer service team is following set practices that conform to their idea of “quality”. This could include anything from language delivery to successfully resolving a customer's problems in a timely manner.
It could be “before, during and after” the sale: Customer service could be a requirement at any point in the sale. A dissatisfied customer could come back two months after buying a particular product but still requires the same attention and quality of customer care that you would give to a new sale.
Why focus on customer service in a business
The advantages of having an effective customer relationship strategy are many. Some of them are that it:
Connects you to the customer: Customer service is your most direct link to the consumer. It provides instant feedback on the product or the user experience. In the early stages of a venture, this can be very useful as you can then change the product or service as necessary. Good customer service is a way to stay connected to your client and ensure the channels for conversation are always open.
Ensures repeat clientele: If the customer is satisfied with his experience, he will come back for more. And nothing beats a repeat client, in fact it's one of the markers of success for your enterprise. You may think that if clients come to you atleast once it's enough, but in a business that accounts for short-sightedness. True success is when you can offer different products to the same set of clients and optimise your existing client-base.
Brings good word of mouth: Happy clients are happy to spread the good word. They will tell their friends and family about the great experience they've had. When that happens, you know they've become your brand ambassadors. Most entrepreneurs consider word of mouth as their number one tool for promotions and success. And needless to say, a good customer experience is always backed by good customer service - before, during and after the sale.
Prevents extra damage: Just in case you've messed up, the customer can spread the not-so-good word on your company too and bring it bad publicity. This is particularly getting rampant on social media platforms, where negligent and politically incorrect behaviour of brands is being brought to light by disgruntled users. It's also believed that people are twice as likely to talk about a bad experience rather than a good one. Good customer relations should ensure the customer talks to you first and you do your best to resolve the issue to prevent him from telling the world.
Increases sales: Good customer relations almost always translates into better sales for a company. Not only will your existing list of clients use your product or service more but by word of mouth, they will also help you grow and draw in more customers. Very often, it is also observed that when brands offer more or less similar products or services, what sets one apart from another is good customer relations.
Nurtures brand loyalty: The better a rapport you build with the customer and involve him in the growth of the company, the stronger is his loyalty to the brand. A customer who repeatedly chooses your brand or service over another, is indeed going to keep your brand and entity alive for a much longer time.
The 7 'P'illars of customer care
Customer care has varied requirements and all of them go into making a memorable and positive customer experience. Below I list some of the issues that could form the backbone of your approach to customer service.
Promptness: Delayed communication is as good as no communication. In customer relations, it's always wise to feel a sense of urgency and get back to the customer as soon as possible. Even while talking to a customer on the phone, don't keep the person on hold for too long. If working as a solopreneur, and on vacation, turn on your auto-responder. And when you return, make replying to enquiries your first task.
Politeness: This should be the underlying factor in every communication with the client. However irritable and angry the client is, remember you always have to be polite. The customer is like a guest at your home, no matter what he says or does you have to be gracious, put on your best smile and make him feel comfortable till he's there. So be polite and always make the customer feel that you are there to help serve him better.
Patience: Sometimes clients can be annoying, they can trouble you with one issue or they can harass you with incessant complaints. It's human to respond with equal irritation… but resist that. Be patient, there is a reason the person wants to state an issue, understand it, even if it takes a lot of time. Avoid upsetting him as it may amount to losing business. Moreover, a client will value the fact that you are taking time out to hear him through.
Personalisation: It's a good idea to know more about your list of customers, their preferences, past experiences with your company etc. Many companies keep detailed reports on the customers and make it a point to include that knowledge in their interactions with them. This can be done through various means, by giving them customer loyalty points or by upgrading them, like airlines do, or sending a gift voucher on their birthdays etc. These small gestures of personalisation go a long way in building a brand and business.
Product knowledge: A customer service team or even a solopreneur should have complete knowledge of the products or services offered. Sometimes clients may make a request for what you don't offer, but you can still give them some basic knowledge on the subject, and tell them you'll get back with more details later. Additionally, you should be clear as to how much you will stretch to accommodate the customer. If you believe it's clearly not your area of expertise, you can direct them to relevant sources instead.
Problem-solving: Customers essentially come to you with a problem they need solved. And this should be the targeted outcome of all your interactions with them. You should do all you can to aid the customer in using your product or service better. Many a time, customers are simply more at peace when they know you can take care of a particular matter. This confidence in your abilities comes largely from how you communicate with them.
Proper communication: Communication skills take centre stage in customer relations. How the customer is greeted, what words of reassurance are used, how politeness is added to your tone, how a conversation is closed, all make up its various facets. For the customer, your every interaction with him is a reflection of what you stand for as a brand. And, if customer service is one of the values your brand stands for, it needs to be successfully conveyed and experienced by the consumer in your communications. Here's how…
Tips to communicate better with the customer
Smile a lot: Be it in person or on the phone, a smile instantly puts the customer at ease and makes you seem more approachable. So throw in as many smiles as you can, it lends warmth and hope to a conversation.
Use greetings: Common greetings like 'Good Day', 'Welcome to so & so company', even a simple 'Hello', all work effectively in setting the stage for a conversation. It shows you're not just doing a robotic job but putting life into the conversation.
Add 'thank you' and 'please': It helps to dot your conversation with the necessary courtesies. For example, “Thank you for waiting, we appreciate your patience.” Or, “Can you spell out your name again for us please.” Niceties go a long way in showing respect to the other.
Apologise when necessary: You may have made a mistake and you need to be honest about it. Simply say, “My apologies about the issue, we will look into it,” etc. Conversation etiquette holds, “my apologies” as more professional than a “sorry” because it shows you are taking responsibility for the matter.
Say the person's name: This forms the basis of personalisation and helps build a rapport instantly. When the person knows you know his name, he gets reassured that you know him personally and will take care of his issues. Of course don't use the name excessively, it may show too much familiarity, intersperse it sporadically.
Use positive words: It's easy to say “I don't know” but what you should say instead is, “I currently don't know the exact status, but I could find out for you shortly.” This extra line keeps the channel of communication open and shows you care. Consciously try to replace all your negative words with positive ones in your communications with clients.
Listen patiently: There's a tendency to interrupt and say something before the other person states his case completely. But as in any conversation etiquette, hear out your customer first. You can use active listening methods like nodding occasionally, taking notes, or paraphrasing when needed. Only once done listening, should you respond with your own inputs.
Fill up blank spaces: This applies to customer service personnel who are looking for information while the client is still on the call. This could also happen to solopreneurs who are finding a file to refer to while their client is on the line. A good way to avoid the awkward pauses, is to start some polite conversation on topics like the weather, something topical like movies or generally ask how their day has been going so far.
Be honest: You may get carried away and want to promise the client a lot more than you can deliver. But be wary of this approach, it can eventually make you lose credibility. Also, admit to something that has gone wrong. There's no point concealing or denying a mistake, the sooner you acknowledge it, the faster will you earn the client's trust.
Make it memorable: End your conversation on a happy and positive note too. Make the customer feel good about having spoken to you and make him want to come back for more. Moreover, give him a sense that he can come back for anything and at any point… Your channels of communication, as the doors of your company, will always be open to him.
These were some guidelines of customer service. Of course, it's a dynamic subject and requires plenty of customisation and improvisation depending on your industry and service. But keep working on building good customer relations as you would on building a sound product… both are - as I often say - two sides of the same coin!
This brings me to the end of my 10-part Business Launchpad Series. I'm eagerly waiting to know what you thought of it. Was it useful? Did I miss anything? Would you like me to continue the Series or would you rather we looked into some other wealth-building subject instead…