Reality Check - Before You Invest, Before You Spend!!!

Ashwin Merchant

A young enterprising client visited my MARKETING KLINIC with an idea to install mineral water mini bottling plant in a distant western suburban of Mumbai wherein he was having his ancestor’s property. He had not worked out seriously execution and management of business functions. He knew that the investment size will be anywhere between 10-15L rupees and had no issue with this. He was fascinated by the huge market potential and economics of business as profit to cost. The fact he was not aware of was about the logistics & distribution, cost of marketing, sales promotion, branding building and economies of scale for future expansion.

In simple words, he had no idea about where his product market may exist in competition with MNC brands established since decade and more in city like Mumbai, and positioning his product v/s others. He was only concerned about affordability while pricing his brand at lower price in competition to popular brands and that he believed will be a great idea!

Another client, entirely in contrast to the first case, was a successful business couple (60M/55F) with no children. They had a successful bulk drug manufacturing unit in central part of Mumbai and had a sizeable turnover of 75Cr plus. The client was OEM supplier to leading Indian pharmaceutical brands company. The SME owners felt that they too should start their brand and distribute in competition with the OEM buyers. But, they were not aware about the general cost of marketing in open market, i.e. minimum 15%, and time it may take to brand his products. With no one to inherit his business it was a difficult proposition for a family owned SME business. His idea of marketing was not a reality!

A young student in family owned business certificate course presented a high powered plan of mobile hand driven vans to sell chats in different societies in Mumbai under a branded chat name. Idea was to go to customers instead of customers going to a joint to eat tasty chat of their age old taste – a proven local phenomenon that persists in consumer mind. Idea lacked the basic buyers’ behaviour factor!

A computer programmer with 5-year experience came with an idea to start a website for match making site catering to particular community and demographics. Idea was a niche to wide based dot com companies in the business today with high degree of success. Going niche may not attract large database for match making and revenue cycle was a challenge. Sponsorship and advertising revenue are not great idea for starting yet another ‘me too’ enterprising business!

Lots of young entrepreneurs visit MARKETING KLINIC with ideas, but, majority of them in ‘e’ segment, where one believes it’s always a great idea, do not need large capital (less risk), self skilled (man power no big deal), on-line marketing (low cost, no cost), upgradable, scalable (technology friendly) and more. But, all till last year eyeing into same segment, chances of success is 1:1, 00,000 perhaps. Even valuation of the idea into project now simply does not depend on how new, innovative and novel concept it is but whether and how idea will be implemented and executed for results in short term and long term. Only ideas do not attract VCs, PEs and private investors because reality is totally different than executive summary and presentation. Everyone wants powerful ideas to produce powerful returns, results, response.

Ideas can be innovative concept, based on innovative technology platform, transformation of current system into new system with / without use of technology, new type of service, old wine presented in new bottle for new market, change of behavioural science as the base or catalyst of acceptance of new idea, doing things differently, doing things out of the box, positive look out to change the way things, people, system works now and will work based on idea....there are numerous ways where one call his or her idea as the most powerful. Yes, there is a success story for each of above but that required efforts, dedication, focus, consistency, competency, passion, patience besides one’s own personality and circumstances.

Management theories of SWOT, PEST, Regression analysis, Extrapolation works, but what works above all is entrepreneurship. Confidence in you, “I will, I can”, “Why not?” make the big difference between dreamers and achievers. Thinking ahead of time is good but time management and timing are too important. Today, unlike in the past when we entered into entrepreneurial challenge started with own saving, funds and often found suffocating time period when you cannot grow due to lack of finance. Now, start-ups and small entrepreneurs not only get fund from private to institutional investors but also lots of assistance and benefits from state government and central government. There are host of schemes and policies laid down to help budding entrepreneurs for successful enterprising career. Knowledge of these resources will help young entrepreneurs a great deal. Think Big, but start with a small idea, go slow, bring confidence, plan for scalability, expansion, investment etc. phase wise and I am sure start-ups will soon become SME and by 2020 one of you will be in India’s Top 10 comp anies.

So, young entrepreneurs Wake Up! Get Up!! Check Up!!! – Go for Reality Check before you GO!

Published in Dare Edition Nov, 2010