8 things you must watch out before starting a business #business #earnmoney #personalgrowth

Reading time – 2 minutes
Category – Business

.

If you have caught the bug to be enterpreneur; you must start understanding business world’s inner workings.

First of all you should see the market in which you want to enter.

Before you start working on prototype, it is better to analyse product on strict criteria.

Here are few things that you should look out for.

1. Investment –

How much capital will you need. It depends on business. If you do electricity repair few instruments needed, but to build a factory much larger dough is needed.

2. Market size –

how many people use your product.

Everybody wears clothes but very few people purchase personal Jets.

3. Price of item –

How much can you charge for your product.

A pen is very cheap and a smartphone is costly.

4. Cost of delivery

How much will it cost to deliver the product or service.

Sending software is easy, while delivering food needs store and employees.

5. Cost of customer acquisition –

Amount of money you need to spend on finding customers.

A hospital on busy road gets automatic customers. But to sell a new FMCG product you need tv ads.

6. Uniqueness –

How unique is your product or service.

A pizza restaurant is common, while a private rocket ( Spacex) is rare.

7. Time in starting

How much time it will take to serve your first customer.

While coaching online is fast, but starting a hospital takes time.

8. Lifetime of product or service –

If you teach you have to teach everytime to get paid, while an app once famous can generate disproportionate revenues.

So after analysing these criteria further planning becomes easier.

Enter a niche which has demand and try to acquire it’s major stack.

Things to know before starting a startup #zerotoone #business #peterthiel

Category- Business Reading time – 5 minutes

Photo by fauxels on Pexels.com

A startup should focus on vertical growth in which new technology is produced. This is called zero to one concept. This happens in great startups. You don’t just increase a bit but you add a whole unit.

Hence startups work on modern rules

1. Sales matters alongwith product.

2. Take risks

3. Try to capture small niche and try monopoly.

Incremental improvement in existing technology is horizontal progress. As happens when we copy or slightly improve existing technology. This is seen during globalisation. Whatever new comes you can see a Chinese made copy of that.

Competition is two types

1. Perfect-

It depends on demand supply. Competitors wipe out profits of each other. Like most of the commodities. But paradoxically little successful players here show themselves as greatly positioned. Competition creates losses for both parties and opportunities for new disrupter like Apple against microsoft and Google.

2. Monopoly– Provides such service that no one can compete like Google in search engine business. But these companies generally hide the fact that they have monopoly. They show themselves being small part of big market.

So focus on monopoly by solving a unique problem. This drives progress and create profits.

See what is future cash flow of an Idea. Most of tech companies become profitable after 10-15 years. Like PayPal, LinkedIn, twitter are still to become profitable. But they provide value.

Ask if this business will be around after 10 years.

How to get monopoly in a sector

1 . Proprietary technology– At least 10 times better than closest competition. Otherwise it will be hard to attract customers.

Like books on Amazon were many folds better due to large inventory and ease of selecting. ipad was ten times better than hand held computers before it.

2. Network effect– It helps in rapid spread of a new idea. It also makes products of company available universally. Like Facebook has everyone we know on its list hence we stay with it..

3. Scalability– When fixed costs lead to exponential sales. Like Twitter, softwares. See if your business is scalable.

4. Brand– Brands attract premium from customers. Like Apple

Photo by Moose Photos on Pexels.com

So little bit about steps of doing it- Getting your Idea above the floor.

1.Start in a small market. Like PayPal connected with ebay sellers before it spread elsewhere.

2. After successful start expand your market laterally. add new categories and products.

3. Don’t disrupt. Stay humble and work on improvement. Don’t try to hunt down big players When Napster wanted to disrupt music industry single handedly, it was destined to fail.

4. Be last mover or create last improvement in a specific market.

5. Be indefinite optimist who believes future will be better but not sure how.

Always keep Power law in mind. Few things are more important than others and these should not be missed.

6. Look for secrets that are still to be discovered. Don’t loose faith in secrets like HP who instead of focusing on innovation; focused on affordable printers and lost its future growth in tge process.

If Andrew Wiles could solve Fermat’s theorem, 358 years of its creation; more things are possible.

Look how world works like Airbnb. Uber saw unmet opportunities. See where no-one is looking.

7. Good foundation is must as it can’t be changed later.partners should be happy to work with each other and it’s better if they have complimentary skills.

Ownership should be specified.

Possession means who runs day to day.

Control means normally a board. These things should be clear.

All should be full time.CEO should not overpay himself. Give equity to staff.

Specify work of everyone.

8. Customer life time value must be more than customer acquisition cost. See type of sales you need.

Personal sales or traditional advertising. Refferal program for existing customers helps.

Green tech companies like solar failed in 2012 because they didn’t see these basics.

Tesla succeed because it got these basics right.

Summary-

Before you start up ask these questions-

1. Engineering – can you get next breakthrough technology which is 10 times better.

2. Timing– Is time right for your product.

3. Monopoly– Can you get big share of a small market.

4. Do you have right team.

5. Your delivery system is ok.

6. Can you last 10 to 20 years.

7. Have you identified a unique problem to solve.

One side note- Founders are at extremes of normality.

Inspiration- Zero to one by Peter Thiel.

Get your copy

Currently Peter Thiel is heading Planatir which studies big data to find patterns and hence helps in identifying frauds, terror attracts, Infections etc.

How innovation works- part 4 – structure of innovation #business #money

Reading time – 3 minutes
Category – Business

It is last part of series of four posts about innovation and it’s inner life.

Part 1-3 can be read here –

1. Innovation and it’s inner workings part 1

2. innovation and it’s inner workings part 2

3. innovation and it’s inner workings part 3

When ever somebody decides to do something, it is a daunting task.

If he can workout a plan then it’s better.

It is easier for brain to act, if it has a plan to act upon, instead of wriggling blindly in the universe

So if you are convinced that innovation is necessary, then dear you need to make a blueprint, a structure which can facilitate innovation.

.

Here is a rough idea.

.

1. Ask why innovate?

well if you want your company to grow white beard someday and grow wrinkled old, you need to innovate regularly.

2. Set precise vision

What you want to do in future?

3. your mission

What you want to do now?

.

Define- what you want.

A service or a product or both.

Prepare pipeline of products.

That depends on what your company does

.

Assess readiness….

.

Train people

Tell them about innovation.

Invite new ideas from everyone in company.

Your people act as spark generator.

Promote cross department sharing of ideas.

Hire risk taking young talent.

Give them space to fail.

In short, be the non irritating sober boss.

.

.

Now when you have got few ideas.

It’s time to filter them.

Do it fast.

Take into consideration future technology advances and public behaviour.

.

.

Possible incremental innovation may be possible in your already available products.

.

.

You can see these opportunities in your existing business and your new ventures

1. Plus –

Add one feature to your already successful product.

Like roof window in a car or new component in tooth paste or new colors in a device.

2. Digitalise it

Make a magazine available digitally.

E book of a paperback.

Online services of a bank.

Shop physical to online.

Library online from college.

Classess online by good teachers like Udemy, byjus.

3. Dynamic

New flavours of a good product.

New additions to already available services like Amazon started as online store. Now it has business in online payment, music, content streaming and Amazon Web services.

4. Minus-

reduce size and parts of a or complexities.

Like reduces size of recent hard disks and pen drives by SanDisk.

Thinner computer and tv monitors by computer makers.

Ear pods which are free of wires.

There are many opportunities available.

5. Connect-

One business is connected to other.

Like after a successful film earnings from merchandise and toys. I love those avengers merchandise.

Movie and games.

Cricket and virtual games.

Footballers and t-shirts.

6. Collobrative:-

It is quite common when two businesses coollobrate.

Like free bowl with Maggie noodles.

Free Paytm cash with commodities.

New product with already famous product.

Book authors generally promote each other by giving assertive statements on new book’s covers.

After all this research try to prepare a final plan.

There is a lot of space for tinkering and experimenting.

Inspiration- Innovation mandate by Nicholas Webb.

get your copy here

How innovation works- part 3 – Things needed to encourage innovation in your business #money #business

Reading time – 2 minutes

Category – Business

.

You know that innovation is cool.

You and your boss both know it.

You even discuss it in your meetings.

You have read about it.

Then what to do next?

How to get started.

What are raw ingredients as we try to achieve some new innovation.

With eye in your next year promotion and to halt the fall in performance of your department in company, you should try to invest these things on your quest.

1. Time –

Dedicated time simplifies and accelerates chances of innovation.

During your routine which we circumvent using only automatic part of our brain, dedicated time hastens productivity for seeking innovation.

Big companies give time for working on new ideas. It is called self time.

3 M and Google give time for self projects each week.

This has lead to great benefits.

Gmail, Adsense and Google Earth started as side projects!

There should be area in company where employees should be squeezing brain to generate new ideas.

2. Finances

If innovations do arrive; they need money to feed them to survive.

Drug companies invest large part of revenues to search for next products.

Volkswagen invests 6% of its revenues on research.

All big companies dedicate large sums for research.

3. Managerial support-

Commonly even if big idea comes, it is not supported by authorities. It may be due to lack of clarity or idea may be ahead of time.

A strong leader at top with promot decisive approach, helps in increasing output of ideas.

Failures should not be ostracized.

Successful ideas should be appreciated and rewarded.

A visionary manager like Steve jobs could see potential and future in a new idea.

Managers at kodak could not see use of digital camera invented by their engineer Steven Sesson.

General motors started working on electric car in 1996, but killed it’s idea.

GE delayed it’s exit from incandescent bulb business leading to losses.

Similarly Nokia could not see future of smartphones.

Traditional news media could not see power of internet news.

4. Spirit-

Some companies are innovation dependent. They must innovate or have to die.

Like drug manufacturers.

Spacex needs to innovate regularly or it would have fizzle out.

Smartphone makers have to produce ever improving products to keep customers engaged.

Movie makers have to improve with time.

This is both scary as well as liberating.

.

One criteria with which companies can judge their innovation success.

Innovation scale rate ( ISR) – It denotes percentage of sales made by new product.

3 M has 30% of its sales in new products.

Similar data is there for Gillette.

.

There should be an innovation pipeline for big companies.

Inspiration – The Innovation mandate by Nicholas Webb

Get your copy

#innovation

#business

#money

#personalgrowth

How innovation works- part 2- Sources of innovation #business #startup #personalgrowth

Reading time- 3 minutes.

Category – Business

Innovation is elixir of life of any business.

It keeps organization young and kicking.

What is innovation?

It is anything that adds value to organisation in terms of money or services.

.

.

So where does it arise.

Does it arise after efforts or spontaneously.

.

1. Lab –

R and D labs are the places supposed to churn out frequent innovations. Big corporations have dedicated labs with significant financial inputs. They are not very highly productive but they produce great things sometimes.

All important drugs for treating diseases come out of these labs.

Rockets out of Spacex lab.

New LED from Cree laboratory.

Vaccines from Pasteur institute.

2. Accidents

Hit and trial is the mother of significant number of inventions. It happens everywhere, all the time. It happens even in highly sophisticated labs. Trick is to catch idea flowing out of these mistakes.

.

There are so many accidental discoveries.

Pfizer company made drug for heart which dilated heart vessels. But it prolonged erections as a side effect. This was noted and used with great success to treat erectile dysfunction.

Spencer Silver worked at 3 M lab. He made glue that was less sticky and of no use at first glance. His boss didn’t like it and asked him to tidy up.

But after few years he realised it’s possible use and made highly successful stick it notes.

Story of accidental discovery of Penicillin is widely known. In contaminated culture plates fungus grew and it inhibited growth of bacteria. This was picked up by Sir Alexander Fleming. And this started new era in medicine.

3. Customer

Sometimes companies innovate to fit their product into the comfort level of customer.

IKEA built big business of home furniture which was based on cheaper furniture which was to be assembled by buyer. It gave customer feeling of accomplishment, when they joined furniture parts. It saved costs for IKEA and made furniture more affordable.

Readymade cake mixtures, noodles voluntarily leave few steps on customers end, to increase interest in the process and final product.

4. Complimentary collaboration-

A business needs many small ones to complete it. Big company cannot make everything. Somebody has to made accessories, apps, decorations and protection in form of covers and product Insurance.

Examples are Car and phone accessories.

Apps for Google Play Store and Apple store.

Bluetooth speakers for music apps and movies.

Ebooks for kindle readers.

Phone damage protection insurance covers.

5. Community-

Sometimes whole community can participate in innovative ideas.

Example is Wikipedia which is open platform where common people can contribute articles. It is very useful and very big.

Tiktok video maker. Anybody can make and edit small videos on tiktok app. This has led to production of many videos ( mostly irritating) but people love it. ( Before Covid lead to widespread backlash on Chinese products

Similar thing happens on Instagram and wordpress blogs. Company provides a platform where massess innovate and contribute.

6. Open end –

When many organisations work together to furthur enhance a discovery.

Like outsourcing or buying patents from others.

Tesla recently made its electric car patents available for other car makers, so that non polluted future can be accelerated.

Open source softwares which anybody can modify and code like twitter and APIs – Application programming interface.

Finnish student Todvalds started building Linux as s project in 1991, which is general public accessible and programmable computer language. It became very large by contributing coders from all over the world.

So, what are you looking for.

Innovation can occur anywhere.

Inspiration – Innovation mandate by Nicholas Webb

Get your copy