KOJAIN 2010 Entrepreneurial Workshop Laurel, MD October 01-02 · Types of Funding and Their Sources Money will not come without strings! Assess following options for Funding Self

Copyright © 2010 M & R Consultants Corporation (MRCC) – All Rights Reserved

Entrepreneurial Workshop

Laurel, MD October 01-02

Anil R. ShahPresident/CEO

M&R Consultants Corp. (MRCC)

[email protected]

KOJAIN 2010


Today’s Agenda

What is Entrepreneur Spirit?

What about you?

Who, Why, When of Entrepreneurship?

Entrepreneurship and Kutchhi‟s

About my entrepreneurial journey…


Identify Business Opportunities

Types of Enterprises

Types of Funding and Their Sources

Levels of Finance

Basics of VC Funding

Form a Team

Obtain Competitive Advantages

Discover Success Factors

Explore Opportunities in Software and IT Sector

Today’s Agenda

What is Entrepreneur Spirit?

The word itself is French in origin and if interpreted in its literal context

means “between jobs”.

The keys to being a successful entrepreneur are

Uniqueness

Creativity

Innovation

Business Savvy

Being a Risk Taker

Adaptability

Leadership

Having the right inner drive or passion



What About You?

Are you a passionate survivor?

Do you have a vision and can you articulate it?

Are you a strong believer of you idea?

Are you willing to take risks?

Can you build and lead the team?

Can you raise money if needed?

Can you sell your idea or product?

Can you accept failure and move on?


Who is an entrepreneur?

Entrepreneur

“One who organizes, manages and assumes the risks of a business or

enterprise.” - Webster‟ s definition

Adaptable

“It is not the strongest of the species that survive, nor the most intelligent, but

the one most responsive to change.” - Charles Darwin

Risk Taker

“You have to take risks. We will only understand the miracles of life fully when

we allow unexpected to happen.” - Paulo Coelho

Why Entrepreneurship?

Why are we in business?

What are the reasons organizations are founded?

Which motivates cause some to become great while others less so?

How is it that some are successful despite poor planning, when others

with good strategy are mediocre?


Why Entrepreneurship?

By Choice or Circumstances?

By Design or Accident?

By Training/Planning or Brute Force?

By association with others?

By passion for a specific idea and a zeal to take it forward?

Because you are a Kutchhi.


When?

There may never be a perfect time!

Do you have internal/family support for your new venture?

What have you planned?

What are the risks you foresee?

Do you have any short-term income to survive and support your family?

What level of investment is required?

What Experience level is required for success?

Have you vetted the idea with some experts?

Do you have a good network of people to guide and mentor you?

Are you based in market for your product OR do you have easy access to it?


Entrepreneurship and Kutchhi’s

Kutchhi‟s are known for their entrepreneurial undertakings!

Until recently, Kutchhi‟s are mostly focused on trading in commodities –

creating family firms.

Kutchhi‟s are eminent for their risk taking travels to other parts of India

and abroad.

Kutchhi‟s are fairly successful in their fields.

As Kutchhi‟s, entrepreneurship is in your genes. So go and exploit it!


About my Entrepreneurial Journey


Started in 1996

Started out as an hourly software engineer in the evenings and weekends.

Hired resources and started staff augmentation (Talent-on-Demand)

Increasing project-based opportunities

Opened first ODC in Mumbai in 1999

8 years of robust organic growth

Evolution into The MRCC Group of Companies

Expanding Clientele

Publishers, Investment Firms, Insurance Firms, Colleges & Universities, State & Local Governments, etc.

Recent Accomplishments

New office in Thane for 500 M&R Engineers - Accomplished

New location in Calcutta - Accomplished

New location in Pune – Accomplished

Netvidya product line started for students.


Identify Business Opportunities

Types of Enterprises

Services: IT, Finance, Taxation, Education, Health, Brokerage, Travel

Agency, Laundries, Printing & many more

Import/Export Business, Industrial Wholesaler

Industries: Hi-tech, Pharmaceutical, Metal Plating

Retail Shops

Fast Food & Restaurant

Staffing

Hotel/Motel


Types of Funding and Their Sources

Money will not come without strings!

Assess following options for Funding

Self and Family Resources

Partnering Options – Are you willing to share profits?

Small Business Administration – SBA loans, with conditions

Bank Loan with Collateral – very seldom loan without collateral

Friends and Family and Angel Funding

Venture Capital Funding – a tough process

The last two sources have equity sharing as a condition and 5 to 10

multiplier return expectation for their investment.


Levels of Financing

SBA Loans – around $50K to start with

Bank Loans – from $20K to $ 200K depending on the project or business and or

collateral. 70 to 80% of asset‟s value for real estate and hotel/motel loans based on

income and cash flow.

Angel Investor Funding - $250 t0 $1.5M from several angels combined

Venture Capital - $2M to $8M for the first round depending on the idea and plan.

$40M to $50M in total funding through 3 to 4 rounds of funding before an acquisition

and public offering!

Multiple funding in all categories with progress of the venture.


Some Basics of VC Funding

Compatibility between your idea of the venture and VC‟s funding focus,

do not go with clean tech idea to a VC focused software!

How good is your idea? “Asprin” or Vitamin” In other words is it a pain killer or nice to have?

How big is the end product market?

Can you build a $100M revenue company with this market size in 6-8 years?

Market research data from – Gartner, Forrester, IDC

Do you have a good team for the venture? Who is the CEO?

A 3 to 4 page Executive Summary – with an “Elevator Pitch”

A 15 to 20 slide Power Point Presentation

A more detailed Business Plan to follow


Do You Need a Team?


Definitely „Yes‟ for a VC funded venture

Three key players – CEO, VP Marketing and VP Engineering or CTO

As a founder, you may be any one of them

If you are not a CEO caliber, accept that very early in the process!

Build the team further after funding and as the venture progresses

Team has to be close knit and committed to the very end!

Team loyalty is essential and not only individual loyalty

A good team makes the difference between success and failure –most start ups change or evolve from the original

Idea and only a good team can steer through tough times and remake the venture!

Why Some Business Fail?


According to the SBA, two-thirds of new businesses survive for at least two years (66%), and only 44 % survive at least four years.

Bad business location, Shift in market conditions

Overexpansion

Poor capital structure

Overspending

Lack of reserve funds

Poor execution and internal control

An inadequate business plan

Ineffective marketing and self-promotion

Underestimating the competition

Why We Do Not Grow Quick?


Growth is a question => Why?

Lack of Process

Lack of Planning

Lack of Delegation

Lack of Business Ethics

Lack of Proactive Management

20-70-10 phenomenon

What Value add?

Start Your Business


Find a Mentor

Finance Start-up

Buy a Business

Buy a Franchise

Name Your Business

Choose a Structure

Protect Your Ideas

Get Licenses and Permits

Pick a Location

Manage Your Business


Lead

Make Decisions

Manage Employees

Market and Price

Market and Sell

Understand Fair Practices

Pay Taxes

Get Insurance

Handle Legal Concerns

Forecast

Advocate and Stay Informed

Use Technology

Finance Growth

Getting Out (Exit Strategy)


Plan Your Exit

Sell Your Business

Transfer Ownership

Liquidate Assets

File Bankruptcy

Close Officially

Guarantee of Success


Present Very Specific Offering (Niche)

Hire Expertise

Establish Well defined process

Create Well defined roadmap

Maintain High Business Standards

Don‟t be everything to all

Focus on Quality not Price

Perform Active Management

Emphasize on Value Add

Opportunities in Software and IT industry

Software end to end solutions vertical specific

Remote IT data center support

Remote DB administration and maintenance/support

Technical support in niche areas

Contract programming (paid per mile stone)

Staffing solutions also T&M with value add

Security audits and awareness

Regulatory compliancy (CFR part 11, HIPPA, Sox etc.)

Product certification and testing

How to get started

In your current or past job somebody is willing to give

you a chance.

Friend can recommend you to his/her company.

Post on the web with very clear message.

Sales effort (very difficult in the beginning)

What do you require to get started

Very good Computer, printer/Fax/Copier

Good phone

Excellent web presence

Excellent power point presentation

Good communication skills with presentation skills

Course in public speaking

Don‟t quit your day job yet!

Thank You!

What’s Next?


Documents

KOJAIN 2010 Entrepreneurial Workshop Laurel, MD October 01-02 · Types of Funding and Their Sources Money will not come without strings! Assess following options for Funding Self