Thursday, June 23, 2016

Young Dreams - Finding Opportunities in Solving Small Problems

Hello Sir, how are you ? He asked me in a cheerful and familiar tone, the moment I sat in the cab.  
I had hired a private cab ride from Hauz Khas to my home and was in little surprise. 
Though I replied, " Hi, I am perfectly fine, aap kaise hain ? ( How are you ?). Before he could speak, I asked in continuity, " Kya ek swaal pooch sakta hain aapse ? ( May I ask you a question?). 
With his very brief affirmative answer, I said, "Shayd aap ko thoda azeeb lage, par kya ham ek doosre ko jaante hain. App ne jaise poocha, How Am I, usse lagaa. " (It might sound strange, but do we know each other? The way you asked, how am I, I felt, if you know me.)
"Yes Sir, its quite a co-incidence that via this cab hiring app, you have hired me 5 times in last 2 months, from the same place. So, I recognized you." he replied in fluent english, to my surprise. 
"That's a co-incidence." I replied.  Any idea how so ?
"None, other than just Luck By Chance," he chuckled. 
I had a long journey ahead in Delhi Traffic, and suddenly we were talking. I was more interested in him now after understanding that, he was well educated, good in remembering faces and yet driving a cab. 
After asking, he told that he was 26, an MBA from a well-known B-School in Noida. He had been recruited in an MNC after completing his MBA via campus placement, things didn't go well in the company so he left the job within 6 months. After that, he joined some other firms but couldn't find a better or equivalent job and decided to follow this path for some time. He hand changed 3 jobs in last 5 years. 
I wasn't surprised, I had seen enough cases like this, though he was one of the few, who chose to do better than compromising with the situation. 
He had been driving cab for last 1 year, though he had his different goals ahead. He was looking ahead to start his own business and needed to some time to do market research and make business plan. SO he took this path, considering it a flexible option. 
I asked him, if he could be specific about the reasons to leave jobs. He told that, most of those firms were too crowded that there was hardly a space for new talents. Also, all those seniors were too occupied in internal politics and long pending projects to mentor new recruits. In this case, recruits like him had to deal with nothing but being a data entry operator or assistant executives. There were huge opportunities in the organizations but anyone hardly had anytime to recognize and grab them. He always felt like being a brick in the wall and kept on switching but everywhere the story was same. So finally he decided to take time and start his own business. 

"If all goes well, I will be starting my business by end of this year. I will be opening a flowers and cake store." he said. 
"What's new in it?" I asked...
"No doubt there are plenty of them, but there is a window of budget here. The cakes from premium shops are delicious but are too pricey for middle class people. And, the cakes from average shops are not good enough to fulfill the desires. I want to open stores lower cost suburbs of Delhi, providing the cakes and bouquets like premium cakes from premium shops but in budget prices. 
Also, people always get confused about the type of cake and bouquets for different occasions.  
I would make it easy for them." He explained. 
After observing all these start-ups, one can easily conclude that, this younger generation is focused on setting up business to solve small problems and finding opportunity there, risking a steady income, but are enthused by the prospect of doing better as they learn how to conduct their business. 
He asked my opinion on it. Here is it in brief :

Initial capital is most important thing, I told him. A lot of things depend upon it. A lot of things are there that will take a bite in this piece of cake. Even some of those expenses will be there even before setting up the business. After setting up, its the initial capital that has to bear the expenses till the revenue begins. All those expenses to generate sales has to come from the initial capital itself. So, even being a limited amount, the initial capital must be sufficient enough to enable the business survive till revenue generation time in your business plan. 
2nd most important thing is the working capital, all the expenses like salary of your workforce, raw material, operations expenses etc. will depend upon it. Credit options are there, but first you need to earn the credibility in the market. The cash book will take some time to be balanced with inflow and outflow, till that time the working capital will depend on your initial capital as well. 
So, your business plan must define clearly, how much initial capital you will be needing to survive till the revenue starts . You must also be prepared for the unexpected expenses and must have some separate funds for it. 
The final most important point of your business plan is the break even point. No, doubt even after all the costs, every business is based on the profits. But costs are not limited. The setup cost, material cost, employees salary, operating expenses, marketing and promotion expenses etc. will be upfront. Then you need to have some patience, till 1st sale and till next 99 sales. 
I asked him some questions like, had he calculated the opportunity cost. How clear he was about his customer segment and how he had planned to reach to his customers. What were his plans to get first 100 and then 500 customers. How much time he had planned to get them to his shop and what were his plans about increasing the market share. About most of things he was still answering like fresh management graduate. No doubt, those b-schools don't teach these things and he never got a chance to know these things. 
I asked him, if he had made any flowchart of activities starting from yesterday till the day zero of his revenue. Had he bifurcated his plans into weekly, monthly, quarterly, half-yearly and annually. Had he planned about the marketing and other activities he can perform without expenses. What was in his mind about market testing and traction. He soon realized that in that very moment he had nothing but a planning closed in the box. 
Though I took care of the thing that he doesn't get demotivated. I explained him about various assumptions he had about revenue, the theory of how the cost actually starts from yesterday but revenue comes much later. 

I asked him about the marketing ideas he could think of and he talked about discounts, referrals, taking help of friends with network etc. 
"How will you implement it ? Give me a real case scenario. " I asked. We had stuck in a massive traffic and had some more time to discuss. 
He opened his mouth to answer and nothing came out but silence followed by a long ummm..... 
"Take your time, think, consider me as some one interested in your idea and explain it to me." I said. 
Moments passed, and he realized while visualizing the theories in real life scenarios that the revenues and profits were still a dream while the efforts and cash flow were going to be the real truth. 
We continued. Soon, he was discussing about online marketing, reaching customers on social media, mailers and other digital tools. His thought process was slowly taking a direction from maximizing profit to optimizing cost. 

I asked him, "Eventually, you are going to be a sales person, they why you quit your earlier jobs. If I am guessing right, sales profile must have been one of the reasons to quit jobs?"
He admitted with a statement that, now I am doing it for myself, so feels different. 
"What if I just start an online store. Helping people by letting them select from the pre-designed cakes and bouquets, categorized for occasions and gift items, getting in liaison with small but quality bakeries and florists in same suburbs who will get the product ready in their own setups and sending the final product to the customer. By this I can set a virtual business just by connecting the dots... filling the gaps. " He asked. 
"Well, there are online gifts and cakes shops already. If you want to get a share of that market, you need to think of some unique value you will be offering to customer. Like, letting users upload their own design, and providing them a 3D rendering of the final product, or sending an executive to customer address and get the requirements in person, with precise details, letting them custom design the look of cake, bouquet and gift pack. By this you can give a personal touch, reach accuracy and reduce your manpower cost too, from hiring 5-10 bakers to just 2-3 field executives in initial stage." I suggested. 
We were discussing about customer acquisition now. Increasing sales volume, reaching new customers and most important getting loyal customers and customer psychology. 
We discussed about some more points. There was many more that I could have discussed with him, but I had reached my destination. All I could do now was to wish him the best and I did. 
Hope, life will let us meet again, who knows next time, I might be ordering cakes and flowers on his online store. 

Powered by Blogger.