The main difference I saw was in the approach, Entrepreneur would jump into action with little analysis, and make the market carve out a roadmap, there is not a huge timelag or investment that is put in before entering the market, whereas an MBA typically spends a lot of time and effort into market research, competition analysis and logically designs the best possible product.

The difference is the cost of failure. Entrepreneurial thinking reduces the cost of failure and at the same time tries to create blue oceans. Blue oceans, cannot help but be a result of entrepreneurial thinking.

Of course for the success of a venture, experience and technical knowledge is a must, be an entrepreneur or a MBA!

Check out this paper on “What makes entrepreneurs entrepreneurial?” by Dr.Saras D. Sarasvathy.

Every industry has four types of customers:

1. Loyal Customers
2. Soon-to-be Non-Customers
3. “Refusing” Non-Customers
4. “Unexplored” Non-Customers

You can gain a lot from each type of customer, if used properly. If one adds to your revenue stream, the other helps improve your product and strategy. You will need to concentrate different activities on each type of customer. This saves your effort from getting diluted, at the same time helps gets maximum out of every effort you put in.

Loyal Customers are the ones who are happy with your product/service and whom you can safely assume to stick on to your product in the future. Little effort is needed to retain them, but needed never the less. These customers can easily be encouraged to be your ambassadors and are the the ones who play crucial role in viral marketing.

“Soon-to-be” Non-Customers are the ones who are sticking on to you just because they haven’t found a an alternative yet. They will jump out once they spot an alternative. You will need to put effort to satisfy and retain these customers. As these customers are usually unhappy with certain features of your product/services, getting their feedback about your product/service will prove to be very valuable.

“Refusing” Non-Customers are the ones who refuse to buy your product. Eg: People refusing to buy mobile phones are refusing non-customer of the Mobile phone industry. Knowing why these set of people are refusing to buy your product/services can give key inputs to improve your product/services. Eg: People maybe refusing to buy mobile phones due to bad network. Solving the problem (improving the network) will help convert these “Refusing” non-customers into Loyal customers.

“Unexplored” Non-Customers are the ones, whom your have neglected or conciously not targetted. Eg: IBM thinking common man as a non-customer and not targetting them at all (in late 1979). By tweaking your product, and changing the brand image, sometimes you will be able to target this BIG market of “Unexplored” Non-Customers.

For a Business plan to be successful in real world, there are a few areas that you need to concentrate on irrespective of the sector of operation. In a bplan competition you will judged on the very same criteria. I will be talking on these few key areas in this post.

Say, you go to a investor asking him to invest in your company. What are the things he will see before investing in your company?

He would evaluate:

• your knowledge of the market and competition
• demand and need for a product such as yours in the market
• how you distinguish yourself from competitors
• strength of the core team
• how feasible your plan is
• how much investment is needed
• what is the ROI(return on investment)
• how much time will it take to break even.

Hence, you need to focus on the areas which will answer the above questions. Below are few key area that are a must to have in your bplan:

• Market Research
• Competition analysis
• Problem that your product will solve
• Need for your product in the market
• USP
• Team
• Finance

Market Research

Have already blogged about how important market research is. Market Research must, at the minimum, contain:

• market size
• projections on market growth
• competitors and their market share

Competition Analysis

You should not only know who your competitors are, but also their strength and weakness. Make a thorough analysis of all your competitors. Know why customers are choosing a particular competitor over others. Drawbacks of each of them. And compare your product with these. This will not only help you decide if you need to proceed further with the venture or go back to the drawing room, but also helps make projections.

Problem that your product will solve

Every product in the market tries to solve some problem or the other, so should yours. Be clear on what problem you are trying to solve. It can be something which the customers are already facing, or something they will face in the near future. If yours is a value add company i.e your product is not a must for them to have, but help cut costs, improves performance etc.

Need for your product in the market

Find out if there is already a demand for a product such as yours. Sometimes, there might not be any existing demand for your product. In that case, you will have to create the demand. Knowing the demand for your product also helps you to price your product appropriately.

USP (Unique Selling Proposal)

Its good to have something unique about your product, which your competitors cannot easily mimic. Of course this “unique thing” should add value to the product from customers point of view. It can be anything: getting a patent for your product, building a network that helps provide better service, getting exclusive deals etc

Team

This is one of the most important, at the same time, the most ignored section in a Bplan. You might have an ordinary idea, but if the team is good, the chances of it working is more. You might have identified the right market, right product and even got investment, but if the team is not competent, all the effort you have put in goes waste. Have already blogged about choosing the right partner for your venture.

Finance

Finance section of your Bplan must give an idea of

• how much investment is needed
• when you’ll break even

Always put cost on the higher side and sales projection on the lower side. Try to give capital flow(projection) for 2-3 yrs.

You might have to touch upon other things like market acceptance, legalities etc depending on the type of sector you are in.

You can download the presentation here : kick-starting-a-venture.ppt

Hubert Chang claims that as an NYU Ph.D student in 1997 he was introduced to Google founders Larry Page and Sergey Brin by Stanford professor Rajeev Motwani. He claims that he came up with the pagerank concept, developed a part of Business Plan and even the company name – Google!

When asked why he wasnt mentioned on the original Pagerank paper? He says, he chose to pursue his Ph.D instead (Note: Larry and Sergey decided dropped out of college to start Google)

When Google was asked about this, they did not deny nor call him fake. Instead they replied -Though many people were involved with Google in its early days, it has been well-documented over the past decade that Larry Page and Sergey Brin founded the company in September 1998.

Google truth, the truth of Google’s birth from googletruth

When starting a company, we take help from numerous people, but cannot call them all as co-founders. Even here, it may be the same case. But here(after seeing google’s reply) looks like Hubert Chang was involved.

Is something fishy here? We may never know. Having seen people who wont acknowledge their co-founders for stupid reasons like “inconvenience to mention”, I wont be surprised if what Hubert Chang says is true and Page/Sergy outright deny it!

Update: Techcrunch followed up on this, click here see the updates

When we hire people, we need to choose those who have the right skills and attitude. Any business, especially a startup, cannot afford to hire someone who does not fit in. It is the team that matters more than the brilliant B-Plan you have. I can go on and on about how important it is to get the right people in, and build the right team.

With resources running low and lot of things to do, it is the belief in the idea/product that can push anyone to give their best. It is very important to see that, the one you hire initially (at-least) understands what you are doing and believe that it can work.

Some of the qualities you must look into when hiring for your startup:

• Required Skill-set
  This is obviously the first thing you need to check – Does he have the required skill-set to do what he is being hired for.
• Proactive
  With resources being scanty, you can’t afford to have someone monitoring each and every employee. They must be proactive and resposible.
• Jack of all
  They must be able flexible and be ready to do whatever is required. As you wont be able to have different people for each and every task, the people on board must be ready to multi-task whenever required.
• Believe in the Product/Idea
  To give 100%, to get those creative juices flowing, to be able to do what it takes, he must believe that your product/idea can work. Without this, he can just be another employee; Not, the employee, you were looking for.

Hire a guy who has a balance of above qualities.

One problem you will face is – You may not be able to afford this guy! There are many ways you can get him on board without spending every last of your penny. Will post on that shortly.

A wrong choice here might prove is fatal. You choose a wrong partner and certainly you are on your way to the doom-land.

Ask yourself the following questions:

• Is he trust worthy?
• Is he valuable to the company?
• Is he as hardworking as you?
• Is he worthy enough(contribute enough) to own a part of your company?

If the answer to all the above questions is “YES“, then you may proceed. If answer is “NO” to any of the above questions, then it is a strict “NO” for making him/her your partner.

If he is bring in money, contacts and other resources which have value to the company and help it grow. You may consider him after a check on his attitude.

It is better to choose someone who compliments your skill set, than someone who is exactly like you, even though we might be choose the latter. Complimentary skill set goes a long way in helping you concentrate more on your core and directly results in the quality of the output.

One of the common mistake we do when choosing a partner is to choose someone who we think will listen to us and assist us rather than someone who is equal or better than us, maybe because of insecurity. Do not do this.

Think twice before you choose your Boy Friend/ Girl Friend as your partner, unless they have a degree from Standford or Harvard.

Having a backup plan helps you to come out of the situation without hurting yourself too much. Backup plan helps you to be up and running before you loose it all.

First of all, we need to avoid getting into these kind of situations. A proper market research will go a long way. I had stressed how crucial research is in one of my previous posts – “Starting a Business: Research before jumping in“.

Even if you did research thoroughly, sometimes things do go wrong due to various uncertainties.

Always keep a check on activities. If things are not working as expected, make adjustments to the plan and try it out, before thinking of making a radical change. Most of the time this should work.

Many a times we face situation where we have to choose between, high risk-high paying or not so high risk-paying. Have tracking points with the minimum return you expect by that time, evaluate yourself and if things are not working as expected by that time, then think over of making adjustments to your initial plan.

One more advantage of having a backup plan is the thought process that goes to create it itself. It prepares you well for the times ahead.

We tend to get our priorities wrong and spend too much money and time on things like, Big Office space, logo, fancy web template, going for a costly web server, luxury to mention a few. Instead of which, you need to be spending your resources on product development, market research, sales.

Drive your resources on activities/infrastructure which will help your company to go to the next level.

Below is the list of things you can save cash/resources on atleast in the early stage of your startup

• No to costly Logo : Do not spend a zillion dollars and time on choosing your logo, you can always change it when you have resources. An awesome logo with a mediocre product won’t do good in any way
• No to Fancy website design : A simple website will do, don’t spend too much on a web designer.
• No to Big Office space : Even a garage will do for a startup, do not spend on big office space at posh locations. This is totally unnecessary
• No to Hiring accountants/lawyers : Try to outsource your work. Hiring will eat up into your time as well.
• Rent instead of buying : Rent equipment where ever you can. As today’s need might not be of tomorrow’s, spending money on some equipment might turn out to be a total wastage of investment.

Always remember, your product must be your USP, not the website/ office where you sell them.
It is very important to concentrate on product than anything else.

Some of the common expenditures are:

• Man Power
• Equipment/Infrastructure
• Softwares, Hosting
• Marketing and Sales expenditure
• Misc – Stationary, Food/Snacks etc

Above is just the list common expenditures. Depending on your type of business and how you operate you may have to add/remove to the above list.

Even if you think you have taken all expenditures into account, I must stress, there will be some unforeseen expenditure coming your way. It is always a better idea to add buffer money to your budget, so that you won’t have to panic later on.

One mistake, we passionate entrepreneurs do, is to add small expenditures to our personal budget. “Why not? Its our company anyway!” – you might think. This is a very bad attitude and will eat up your savings before you even realise as most of the small expenditures are recurring.

Try to avoid projected sales revenue into the current budget. This is a very dangerous mistake and will prove fatal if the sales doesn’t happen. Do not do this ever, unless you have drained all your other sources and have no other way to go.

Having an idea of how much you need, to get your company up and running must be an integral part of the decision making process. It makes you concious of the monetary condition and prepares you for the times ahead.