A JOURNEY OF THOUSAND MILES BEGINS WITH A SINGLE STEP

Interview with Prashant Kumar | CEO, BPSP Consultants

Prashant is first generation entrepreneur who believes in value creation. He is an MBA from Asian Institute of Management, Manila and has won numerous business competitions across the globe.

How were your days before you started your business (in detail)?

Before kick starting this venture, I was like any other college going student who wanted to do a lot in his life but had a fear inside whether to take the risk of entrepreneurship or choose a safer path of being in service.

In my family and close relatives, everyone in my age group was either preparing for their medical (MBBS) examination or engineering entrance examinations. In a situation, where you fail to crack any of the entrances, the only choice left was to go ahead for a general graduation degree course. Thinking about entrepreneurship was like thinking about landing on moon. Though I thought about many ventures when I was not able to crack engineering entrance examinations like small shop, saloon etc. but those were just thoughts and I never tried for that thinking it is not my cup of tea.

I still remember, when I first talked to my father about my intention of starting up my own company. I have seen an unseen exclamation mark preceded by “what”. He then bombarded me with number of typical questions – what are you planning to do? Where you will start it and how you will arrange the funds for it? Do you really know what you want to do? And so on. My family has a strong belief that strong education leads to long-term success.

I consider myself as a hard worker, whether it is work or studies. I do things wholeheartedly. After completing my schooling I worked hard to prepare for my engineering entrance examinations and in parallel, I was also enrolled into a BSc degree course from Ranchi University. I had a bad habit of studying at night after 10 pm usually. A typical day started with classes in the university followed by independent coaching classes and then at least 6 hours of overnight studies. I hardly slept for more than 4-5 hours during those days.

The lifestyle changed completely when I got enrolled in a rigorous Bachelor of Planning degree program of School of Planning and Architecture. But one thing still remained the same, studying during night. College days were just fun. I worked a lot during my college days and earned a lot (as compared to many of my classmates).

I remember, when I came to Delhi on 2^nd August 2003, my father gave me Rs 1200 as a pocket expense for the whole month, which includes food, travelling, stationary, printing, clothes etc. I barely survived the first month, many times skipping my lunches and traveling by DTC buses. Within a month I have seen the flamboyant lifestyle of many of my classmates. Next month I asked my father for Rs 2000 and his response was, “what will you do with this much of money, you know your father has limited means and I need to finance the studies of other three siblings and arrange money for your elder sister’s marriage too”. I had no answers but to keep mum. Sooner than later I realized, if I have to survive and live my life like others, I have to earn a lot. This was my inspiration for dedicating a large portion of my time doing part time work.

Were you interested in becoming entrepreneurs even while studying?

No one in my family and in close relationship has ever taken up entrepreneurship. When I was in my 10+2, I was not a smart kid though I worked hard but continuously I was facing failures in all my competitive exams. At some point of time I wanted to quit engineering and have started my BSc (physics) from Ranchi University. But as a final call, I attempted AIEEE, which could be said as a turning moment of my life and a starting point of my entrepreneurship journey. I was admitted to School of Planning and Architecture, New Delhi and since my early days I started working in parallel to my studies with many consulting firms. During my bachelor’s degree, when I was working part time, I always asked my bosses “Sir, you are so smart and have such a good network in the industry, but still why don’t you start a company of your own?” The most common answer was “buddy, you are very young, complete your studies first and then you will get all your answers. Once you will have responsibilities of your family on your shoulder then only you will come to know, why didn’t I started my own firm”.

Though at that time it was hard to understand that my curiosity to ask those questions to my bosses was only because I was fascinated to become an entrepreneur.

Did you have an entrepreneurial background or the B-school atmosphere gave you the idea?

Neither I had an entrepreneurial background nor did the B-school atmosphere give me the idea. Everything was planned before starting this venture.

I spent a lot of time with my partner thinking about the services, which we should focus on, as well as the potential clients whom we can approach. Finally in January 2009, we registered our company. We never had an entrepreneurial background. After registering the firm, we hardly received any positive response. In the field of Consulting if one is not having grey heir, they are not considered as a consultant at all. When we went out looking for some job in consulting for our newly registered firm, then everyone had the same question to us “don’t you think you are two young to advise us?” At that time we understood that though we have registered our firm, but we must complete our master’s degree from a reputed university as well as gain a handsome experience before that.

I worked in a private management consultancy firm Feedback Ventures Private Limited and my partner worked with Municipal Corporation of Delhi in order to gain an experience of both the private as well as government functioning. After three years of experience, we both decided to go for our Master’s Degree courses. I chose MBA Degree of Asian Institute of Management, Manila (Philippines) whereas my partner chose an Environmental Management program from Australian National University, Canberra, Australia.

Both of us after completion of our Master’s degree program straight away started working with our registered company BPSP Consultants Private Limited.

When did you start thinking about starting an enterprise?

When I completed my bachelor’s degree from SPA, except for few colleagues in my class (hardly one or two) many of them were interested in going abroad for future studies or being employed with a reputed Multi National Corporation (MNC). In an environment where one can hardly think about starting his/her own venture, we a group of four had made a bold decision of starting an Urban Planning Consultancy business. Though the idea was crude but we four approached a Chartered Accountant for registering the business entity (roughly around in year 2006) when we were in third year of our bachelor degree.

I still distinctly remember the response of the Charter Accountant who after looking at us just said “I respect the ambition that you people have in your mind, but I have seen many companies falling apart just because they were in hurry to register a firm before even knowing whether the partners understand each other or not. You people are very young and soon after you come out of your college, you will find it difficult to take this ambition forward. If you four after 6 months of the completion of your degree course come back to me with the same proposal of opening a company, I would not charge you people a single penny”.

We four took this incidence as a joke and moved forward, but once we finished our degree, four of us hardly talked to each other. Two of the four become so busy in their personal life and job that they hardly ever thought about our plans again. After formally registering our company in January 2009, we both started working on the strategy of getting good quality jobs.

Did you have to think twice before quitting a well-paid job?

Quitting a job is like destroying your mental calmness, perennial flow of income, annoying your elders and most importantly leaving behind luxury of weekends and holidays. But I had no fear because I never applied for a job once I completed my MBA. After more than three years of my job, I went for my MBA as per the plans and after completing it in Dec 2011; I straightaway started working on my new venture.

There were times when many of my friends tried to convince me that I am wasting my MBA degree by starting this venture and I can easily get a six-figure salary from day one. Many of my previous bosses called me for a vacant post in their respective companies but I never allowed the thought of job to capture my mind. It is not that the thought of six figure salary and a settled life never attracted me, but I always stick to the initial plan ignoring the time to time distraction which my closed one thrown at me.

You might have got several ideas. How did you zero in on one?

Both my partner and I belong to a middle class family and asking our parents to sparing even few Lakhs of Rupees is like asking a Taj Mahal from them. Thus we had no choice, but to think about an idea where we can start the business without even spending a single rupee and earn a handsome amount to invest in another business plan of ours. We had no other way but to think about a business where we can receive a mobilization advance and then kick-start the business. Urban Planning was one thing, which falls under Consulting but has a shortage of professionals in the industries. We had made up our mind to start this consulting business. But during my MBA degree, I studied about subjects which best suited for management consulting. Thus the idea got further refined and we started working in a domain of financial advisory, urban & regional planning and transportation planning.

With how much capital did you start your venture?

No seed capital was involved in starting this venture.

Interviewed By:

Anis Bari

Co-Founder | Tantra Consultancy Services & Leadership Projects for Bihar 

Author | Dreams of The Mango People

Shaper | Global Shapers Community, World Economic Forum

MBA | Asian Institute of Management

How To Prepare a Business Plan

How to Prepare a Business Plan?

A business plan is nothing but a written description of your business's prospects. It is a document that tells what you plan to do and how you plan to do it. Business plans are normally strategic. You start here, today, with certain resources and abilities. You want to get there, a point in the future (usually three to five years out) at which time your business will have a different set of resources and abilities as well as greater profitability and increased assets. Your plan shows how you will get from here to there.

You need a business plan if you’re applying for a business loan:

Most banks require it, and even those that don’t strictly require it expect it. They expect it to be a summary of the business, with some predictable key points.

You need a business plan if you’re looking for business investment:


The plan won’t get you the investment, but not having a plan will mean you won’t get investment. Investors require a business plan. They invest in the people, the idea, the track records, the market, the technology, and other factors; but they look to the business plan to define and explain the business.

You need a business plan if you’re working with partners:

The business plan defines agreements between partners about what’s going to happen.

You need a business plan to communicate with a management team:

The day-to-day business routine is distracting, problems come up, opportunities appear, and commitments should be followed and tracked. How do you know where you are in business without establishing where you started and where you intended to go?

Simple Tips for Getting Started and Writing the Business Plan:

Read Sample Business Plans.

Schedule Business Planning time on the calendar.

Gather Key Financial Statements, like income statement, balance sheet and breakeven analysis. (Get some financial statement templates for start-ups)

List a goal for start date of business and also 3 years and 5 years business goals.

Identify the key strength and experience of the management team.

Create a personnel or key partners plan.

Create a marketing budget & plan and calendar of weekly, monthly and quarterly marketing activities.

Determine funding needs and possible sources.

KISS (Keep it simple and short): Highlight the key opportunities for growth and competitive advantage for company.

What is normally scene with most of the entrepreneurs, they waste too much time on numbers and devote very less time on the information that really matters to the investors. Every investor knows that financial projections for any new venture are nothing but act of imagination. Any entrepreneurial venture faces far too many variables to predict revenues and profits. Investors normally discount the figures in a business plan. So it is always advisable to incorporate most realistic projections in a business plan. Business plans have to have numbers, it’s not like you ignore them completely but it should be aligned with your business model showing that you have looked at all possible options for your venture’s success or failure. It should also look at the breakeven issue: At what stage of sales your business will start making profits? And also when does cash flow turn positive?

So on what factors you need to focus on while writing a Business Plan?

         The Team

         The Opportunity

         The Context

         Risks & Mitigation

The Team:

The most important part of any business plan is the team because without right team nothing matters to the investor. No matter how good your plan is, without right team the plan will not attract the investors. So the right questions to be answered would be: What do the team members know? Whom do they know? How well are they known?

What and whom are related to insights and experiences. A business plan should clearly explain each member’s knowledge about the new venture. One should talk about their experience and ability in great detail. So basically it’s about the people starting out the new venture as well as the partners involved in providing the key services or as an important resource.

The Opportunity:

Here the questions to be answered are: Is the market for the venture big enough? Is the industry currently attractive or in future can become attractive? Investors are normally interested in rapidly growing market, as it is easy to gain market share as compared to the market densely populated with competitors (mature market). Investors won’t invest in a company that could not achieve a significant scale in coming 5 years. You need to calculate how much money competitors are making and how much money your venture will make. You need to calculate the profit unit wise and then extrapolate that figure.

Now for example, suppose you plan to start a chain of coffee shops in India. Now how will you estimate the market size and seize the opportunity? Learning through example will help in understanding more about estimating the market size/opportunity.

This is one way of looking at the available data and it will give the macro view of the opportunity available in the market. Now if want you to start a chain of coffee outlets in any city of India then 

how can you dig more deep to look out for market size and opportunity?

Of the whooping 1.2 billion Indians, roughly 302 million reside in the urban areas and based on market research ~10% of this population (i.e.31 million & growing) patronize eating out options. An average Indian person spends a between $1 (Rs.50) to $3 (Rs.150) daily eating out, which translates into a massive $20 billion (Rs.1.1 trillion) market for restaurant’s and eat-out’s in Urban India. With rapid urban migration and change in lifestyles, there is no doubt this segment would grow at a significant pace in the future. Now look at the first city where you want to start your operations. Once you select a city, look for the overall population of the city and then eventually look at the urban population of that city considering you are targeting urban population. 

These data you will find in census report. Now do a bit of market research (survey) like how often people (of desired age group, if you intend to target any particular age group) eat/drink outside?

   

So if x% of the people from specified age group eat/drink outside at least once, then x% of specific age group of the urban population of the city are your total customers. Now you need to segment your market. So again you need to ask your customers (Total customers) what kind of item they eat/drink outside? And you will find some y% of your total customers go out to have coffee at coffee shops. The average price of a coffee at coffee shops can easily be found out. Now you know your target customers i.e. y% of your total customers (a numerical number) and when you multiply this by average price of coffee you will get your target segment size.

Once you have got the target segment size (in INR) then you need to decide your price band for your coffee and also how many customers you are expecting to be served at your coffee shop per day

The Context:

Opportunities always exist in context. You need to look at the macroeconomic view of the business environment, various kinds of economic activities, inflation, exchange rates as well as interest rates. Another aspect would be taking a look at the government rules and regulations, which can affect the opportunity. A change in context can often turn an attractive opportunity to unattractive one and vice versa. In every business plan, one needs to show the awareness of the new venture’s context and how can it help the specified proposal. The business plan should also highlight that the management team can handle the situation even if the context grows unfavourable. There has to be a way through which management team can turn the unfavourable context in positive direction.

Risk & Mitigation:

There could be possibly no business without having risks. So when you say it’s a risk free business, just hang on; its not the line investors are interested in. Good business plans talks about the people, opportunities and the context tandem as a process. With time there could be changes in these factors as a firm evolves from being a start up to enterprise. People say entrepreneurs are risk seekers but this is a myth. Entrepreneurs always try to minimize the risks and the risks they take is the calculated one. Even if the opportunity is big having a sustainable business model but the question to be answered is “Is it possible to create competitive edge and defend it?” Risks should be listed and discussed properly and on the same lines mitigation strategy should be proposed. This is very important part of the business plan.

Business Plan Template

Information of key contact person:

Name:

E-mail:                                                            

Website:

City and Country:

Mobile number:                                              

Landline Number:

Overview of the plan

Plan/company name:

Industry (choose one) from the following:

Customer Internet and information services

Mobile applications (products and services)

Software products, including web applications

Emerging Market Technology

IT, ITES, BPO, KPO

Others

Current revenue size:

Amount of funding required:  USD/INR ____________

Please provide the following details in no more than (4-5) pages

Brief business description (Executive Summary):

No more than one paragraph to describe your business and the business opportunity. If it takes more than a paragraph to describe your business, perhaps you need to revisit the drawing board. The simpler the message, the quicker you will draw investor attention.

Team

This section should answer the question ‘Why is this team/entrepreneur best suited to implement this business opportunity’. Keep it simple. Include educational qualifications and work experience.

Who is your customer? What is the issue/pain point that your product/solution will address?

This section will reflect the clarity of your thinking about your business opportunity. Be precise and succinct.

What is the size of the market opportunity?

Please size the addressable market for your business, and outline key qualitative trends in the marketplace that either increase or decrease the relevance of your solution.  (While describing market size please include overall market size as well as the part of the value chain addressed by you)

Product/Technology Overview

Highlight the uniqueness of the technology and application (not technical details of the solution).

What is the value proposition?

Who is going to buy your product/service and how much they would pay for it. Why would consumers choose this over others? Remember to articulate the key differentiators in customer benefits, not an internal perspective on technology superiority (Attach Customer Value Canvas).

Business model / financial model

Business Model:  This is about how you will make money from this business opportunity (example who will pay you, who will charge the customer, how, when etc.)

Financial Projections:  Provide next 2-year quarterly financial projections and provide an estimate of the 5-year financial projection. Cover revenue, cost, gross margin and net cash flow.

Sales and Marketing model

How are you going to market and sell your products/services (Go to Market Model). What capability does the team have and plans to build to take the offerings to the market. What partnerships are critical to your business? What is the current status of customer and partner pipeline?

Competitive landscape

Who are you currently or in future likely to compete against and what is your plan to win this battle? Remember that competition is not just those providing a similar solution to yours, but all those addressing the same customer need through variety of approaches.

Risk factors to execution

What are the market risks, financial risks, business model risks, execution risks, etc. that may hamper your plans?

Funding objective and use of funds

Describe how much money you want to raise and what you intend doing with these funds.

Fundraising history and investors

Mention previous investment history including year, amount and investors.

Attach the Business Model Canvas Sheet

Writer:

Anis Bari

Co-Founder|Tantra Consultancy Services, Style Shop & Vidya Hub

Author|Dreams of The Mango People, The Sulemani Keeda of Entrepreneurship & Brush Up Ur Quant