Intro to ent
View more presentations from rajeev roy.
Thursday, November 18, 2010
Wednesday, November 17, 2010
Best country to start a business
Yet one more report which reiterates what several other reports have been saying. Most emerging economies, including the BRIC countries, are great entrepreneurial opportunities but certainly not easy places to start a business in.
Start up costs, red tape, lack of capital are just some of the problems that entrepreneurs are likely to face while starting up. A synopsis of the report can be seen at
http://online.wsj.com/article/SB10001424052748703859204575525883366862428.html?KEYWORDS=Best+country+to+start+a+business#articleTabs%3Darticle
Start up costs, red tape, lack of capital are just some of the problems that entrepreneurs are likely to face while starting up. A synopsis of the report can be seen at
http://online.wsj.com/article/SB10001424052748703859204575525883366862428.html?KEYWORDS=Best+country+to+start+a+business#articleTabs%3Darticle
Wednesday, November 10, 2010
Friday, March 20, 2009
10 Steps to Entrepreneurial Success
Not as easy as it sounds. Nevertheless, here are ten things one can do to increase the chance of entrepreneurial success:
- Know the business well - Knowing the business by working in the sector or by being connected to it for a long time, will result in valuable insights and invaluable contacts.
- Plan - Not to be confused with making a business plan. Before you start the venture , the process of venture creation has to be planned out, risks and bottlenecks have to be identified and resources have to be organised.
- Start small but scalable - Even if you can start big; start small, learn from things that go right and wrong and then expand.
- Arrange for the money - Do not make assumptions regarding availability of money. Have it on call before you plan on spending it. Also arrange for sufficient money.
- Burn your bridges - Make the business your sole professional activity; do not have any back up plans in life. That is the way to get hungry for success
- Hire well - Hire people you need; do not settle for the people available. Sometimes the best way to hire the best talent is to part with a share of your venture.
- Differentiate - The best way to compete with established players is to have products and services that are sufficiently differentiated from the other offerings in the market.
- Focus - Everything will seem like a great opportunity but too many products, branches, etc will not be good for the business
- Persevere - there are likely to be set backs in business, take it in your stride and stick with your business
- If you fail try again - An out of job software engineer can leverage his experience best by looking for a job in the IT sector. Similarly an entrepreneur can leverage his experience best by starting another venture.
Monday, March 9, 2009
Distribution Models for the Entrepreneur
Distribution refers to all the activities undertaken to transfer the product from the manufacturer to the consumer. The distribution channel is made up of various kinds of intermediaries like retailers, distributors, wholesalers and agents. These intermediaries fulfill a variety of functions. The structure of the distribution channel has to be decided first and foremost.
Go directly to the consumer
As it is, there is a huge tendency on the part of entrepreneurs to bypass all and reach the customer directly. With the advent of the net, this has become a very popular alternative. Using the net is a natural choice if your product can be digitized and distributed, for example, music, books and software; but that does not mean that this alternative is restricted to these categories. Michael Dell used a business model dependant on reaching the customer directly and was able to grow Dell computers into one of the leading PC manufacturers and he is now among the wealthiest people in the world.
Going direct to the customer is feasible in the case of many high value items. Consumer durables, custom made sports gear and real estate are some big ticket items which are routinely sold directly by the producers.
Another category that uses the direct route is services. For example, Café Coffee Day does not franchise its operations. All outlets are company owned and company operated. That is a very effective way of maintaining high service standards.
Reaching the customer directly means that all the activities that were the responsibility of the distribution channel are now your direct responsibility. Sometimes new ventures can start off with a strategy involving going direct to the consumer and then as sales volume increase, bringing in intermediaries.
Go directly to the retailer: bypass distributor
A traditional distribution system will have super-stockists, distributors and retailers. Many entrepreneurs find it profitable to bypass the distributor and go directly to the retailer. This is a sustainable strategy, especially in the light of the current crop of retailers coming into the market.
Ordinarily, there is no major scope of a distributor till a certain volume is achieved. So an effective strategy could be to go directly to the retailer and once there is a certain volume of sales, an independent distributor can be contacted to take over the distribution. Naturally, it will be cheaper and easier to convince a distributor to take on a product that is currently selling in the market than trying to convince him to sell a new untried product totally new to the consumer.
Use sales agents
It is more appropriate to use agents when selling to businesses. Till volumes pick up, it will be costlier to rely on your own sales force. Even in the long term, many firms have found it profitable to have a company sales force that works in tandem with sales agents. Sales agents are valuable because of their specialized knowledge on certain sector or certain regions. Also in the case of B2B sales, losing one customer can make a huge difference to total sales.
The use of agents to sell high value items in the consumer market is also very prevalent. It is common to see agents in dealing in real estate, travel packages and costly educational products.
Participate in establisher channel structure
Each region is likely to have many established distributors. These distributors have been dealing with retailers for a long time and have developed a working relationship with them. Some of these distributors will have specialized in certain product categories but many others would be dealing with varied products. Many of them would have grown big and now would also be providing carry and forward services.
Making use of their services is a tempting alternative. It would immediately allow you to access a number of retail outlets and you would be associating with an experienced intermediary.
There can be a number of disadvantages in tapping existing established intermediaries. They would be willing to take on your product but that would cause decrease in sales of their existing brands. For example, if you go to a distributor of P&G and ask him to stock your shampoo he will be immediately concerned that the sales of Pantene (a P&G product) will get affected. An alternative could be to go to a distributor who does not stock a similar product. For example you could go with your shampoo to a Britannia distributor. This is a better strategy but the established distributor will always place very stringent conditions while dealing with a new inexperienced manufacturer. Usually he may ask for higher margins, longer period of credit, free samples and for reimbursement of some market related expenses.
Set up your own intermediaries
A very good alternative is to set up your own intermediaries. It can even be friends and relatives. There will be some people known to you who wish to get into the distribution business, they can be persuaded to start with your product. Now it should be kept in mind that if you have encouraged someone to start his business dependant on you, your responsibility towards that person is more. Practically speaking, if anything goes wrong, he is going to lay the blame on you.
Another way of doing this is if you have started by going directly to retailers, in time one of the retailers can be persuaded to take up the distribution function. This will work much better than bringing in an absolute novice.
Go directly to the consumer
As it is, there is a huge tendency on the part of entrepreneurs to bypass all and reach the customer directly. With the advent of the net, this has become a very popular alternative. Using the net is a natural choice if your product can be digitized and distributed, for example, music, books and software; but that does not mean that this alternative is restricted to these categories. Michael Dell used a business model dependant on reaching the customer directly and was able to grow Dell computers into one of the leading PC manufacturers and he is now among the wealthiest people in the world.
Going direct to the customer is feasible in the case of many high value items. Consumer durables, custom made sports gear and real estate are some big ticket items which are routinely sold directly by the producers.
Another category that uses the direct route is services. For example, Café Coffee Day does not franchise its operations. All outlets are company owned and company operated. That is a very effective way of maintaining high service standards.
Reaching the customer directly means that all the activities that were the responsibility of the distribution channel are now your direct responsibility. Sometimes new ventures can start off with a strategy involving going direct to the consumer and then as sales volume increase, bringing in intermediaries.
Go directly to the retailer: bypass distributor
A traditional distribution system will have super-stockists, distributors and retailers. Many entrepreneurs find it profitable to bypass the distributor and go directly to the retailer. This is a sustainable strategy, especially in the light of the current crop of retailers coming into the market.
Ordinarily, there is no major scope of a distributor till a certain volume is achieved. So an effective strategy could be to go directly to the retailer and once there is a certain volume of sales, an independent distributor can be contacted to take over the distribution. Naturally, it will be cheaper and easier to convince a distributor to take on a product that is currently selling in the market than trying to convince him to sell a new untried product totally new to the consumer.
Use sales agents
It is more appropriate to use agents when selling to businesses. Till volumes pick up, it will be costlier to rely on your own sales force. Even in the long term, many firms have found it profitable to have a company sales force that works in tandem with sales agents. Sales agents are valuable because of their specialized knowledge on certain sector or certain regions. Also in the case of B2B sales, losing one customer can make a huge difference to total sales.
The use of agents to sell high value items in the consumer market is also very prevalent. It is common to see agents in dealing in real estate, travel packages and costly educational products.
Participate in establisher channel structure
Each region is likely to have many established distributors. These distributors have been dealing with retailers for a long time and have developed a working relationship with them. Some of these distributors will have specialized in certain product categories but many others would be dealing with varied products. Many of them would have grown big and now would also be providing carry and forward services.
Making use of their services is a tempting alternative. It would immediately allow you to access a number of retail outlets and you would be associating with an experienced intermediary.
There can be a number of disadvantages in tapping existing established intermediaries. They would be willing to take on your product but that would cause decrease in sales of their existing brands. For example, if you go to a distributor of P&G and ask him to stock your shampoo he will be immediately concerned that the sales of Pantene (a P&G product) will get affected. An alternative could be to go to a distributor who does not stock a similar product. For example you could go with your shampoo to a Britannia distributor. This is a better strategy but the established distributor will always place very stringent conditions while dealing with a new inexperienced manufacturer. Usually he may ask for higher margins, longer period of credit, free samples and for reimbursement of some market related expenses.
Set up your own intermediaries
A very good alternative is to set up your own intermediaries. It can even be friends and relatives. There will be some people known to you who wish to get into the distribution business, they can be persuaded to start with your product. Now it should be kept in mind that if you have encouraged someone to start his business dependant on you, your responsibility towards that person is more. Practically speaking, if anything goes wrong, he is going to lay the blame on you.
Another way of doing this is if you have started by going directly to retailers, in time one of the retailers can be persuaded to take up the distribution function. This will work much better than bringing in an absolute novice.
Tuesday, February 17, 2009
Marketing section in a b-plan
Marketing is of critical importance to the success of entrepreneurial ventures. Marketing in a small, new venture is very different compared to marketing practices in a larger firm. Marketing in a small firm is not just the scaled down version of how it is done in a large firm. This difference is even wider in the case of entrepreneurial ventures as they are small as well as new. Very often, marketing mistakes are the reason a small, new firm might fail. There can be no marketing guide that can precisely prescribe the right marketing formula for a venture.
Also, what works for one firm may not work for another. Even if they are addressing the same markets. There are bound to be several differences which would necessiate a customized marketing plan.
In most B-Plan competitions I have judged, the marketing section is usually the most neglected, ill-thought out part. The following are the most common mistakes made by the would be entrepreneurs:
- Not enough money has been allocated for marketing activities
- The marketing activities mirror what they see other companies doing, without thought to addressing their chosen segments with meaningful message.
- The marketing strategies are unnecessarily innovative and are unlikely to strike a chord with the customers.
I have reason to believe that even 'real' entrepreneurs ( as opposed to the b-plan competition pretenders) also make the same mistakes.
Wednesday, January 14, 2009
Weekend Entrepreneurs
There is a growing trend amongst young professionals to become a 'weekend' entrepreneur. They are working fulltime for a Microsoft, Unilever, etc and also have a start-up on the side. I don't know if I should be happy about this trend or should I be worried. There are a lot of students who want to be entrepreneurs but end up taking a middle path. It is a way of checking out a biz opportunity and reducing the risk by not commiting fully. They have a wish to start their own enterprise but they do not want to take the plunge by giving up their secure jobs.
I have certain misgivings about such businesses:
1. Usually, it goes against your employment contract
2. Attention gets divided between job and venture and you end up doing a bad job with both.
3. Most new business manage to survive only because of the immense effort and drive of the entrepreneur. You don't see such commitment in part-time entrepreneurs.
On the other hand, it is probably more encouraging that they started a business rather than investing their surplus in the stock market. After all, it is a start of some sort.
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