Managing New Business Initiative

7/31/2019 Managing New Business Initiative

1/16

Validation of Business Idea

As an Opportunity


2/16

Business Idea:

Tutorial Classes at Deoghar, Jharkhand

Courses Offered: IX XII & Engg Entrance

Customer need identifiedA good quality coaching and career guidance instituteat deoghar town in Jharkhand

Unmet and Unfelt needs:

(i) Quality teachers and guidance

(ii) One stop solution for Science, Maths & English

(iii) Career Guidance

(iv) Structured Mentoring

(v) Personalized attention

(vi) Stress free learning


3/16

How is the customer currently being served what are theoptions available? (substitutes and alternatives)

Currently customers are being served by

a. Private Tutions for individual subject

b. Mediocre Quality Coaching Institutes at Deoghar

c. Self Study

d. Teachings at colleges and schools.

Options Available

a. Course Material thru post. ( Brilliant etc.)

b. Good Coaching Institutes at Patna, Kota & Delhi.

c.Special classes by respective schools


4/16

How different is the solution?

Why should the customer prefer it to other

options?

a. Quality Faculty Members

b. State of Art infrastructure viz. classroom, multimedia, ca

c. Personalized performance monitoring and guidance

d. Appropriate location to minimize travel time.

e. Student/ faculty ratio of 20:1 per subject

f. Regular feedback to parents

g. Attractive fee structure

h. Free Spoken English Classes

i. Course structure design in congruence with colleges syllabus


5/16

What is the Differentiation ?Major Differentiationa. Quality Faculty

b. One stop solution for all subjects

c. Personalized attention

d. State of art Library

e. Exclusive study hours with personalized counselling/ guidance onweekends

f. Refreshment facility at institute.

g. Assistance for filing application for entrance exams.

h. Personal growth training sessions

Minor Differentitaiona. Course Material

b. Good ambience ( classroom, toliets etc)

c. Career counselling for parents


6/16

Identify your target segment

The target segment will be

a. Kids of Salaried class middle income parents. ( viz. Bank employees,

teachers, engineers, govt employees etc)

b. Kids of High Income Group ( viz. Doctors, Lawyers, Businessmen )

Who is the customer?


7/16

How attractive is the market?

How many customers are there? (market size)Deoghar TownIXth & Xth : 4000XIth & XIIth: 2000Engg Entrance : 1000

How many will buy from you? (market share)IXth & Xth : 100 ( CBSE, ICSE, Jharkhand Board)XIth & XIIth: 150

Engg Entrance : 50 Is the Market attractive to enter ? (market trends)

Yes, because our school / college education systemis not enough to cater to the ever growingcompetition standards. Also the student enrollment

and population is growing very fast at Deoghar.


8/16

Important Insight on Market & Industry

Markets is attractive

Industry is not attractive as entry barrier isless and substitutes are available, switchingcost is low.

The growth rate of market size is optimistic.

Good level of competition is expected incoming years as new players and establishedplayers would be entering the market.

Higher competition would lead to innovative

methods of teaching and also increasedawareness among student community.Pricing and differentiation would be the keyparameter.


9/16

Industry Attractiveness

Entry barriers : Low to medium

Substitutes: Available

Supply power: Low

Buyer power: Low but will increase with timeas the competition grows.

Competitive rivalry: Medium to High Overall Profitability : Medium to High

( depending upon the scale of operation)


10/16

Are you superior in the value chain(making andmarketing activities) than your competitors?Competitive Advantage:

a. Good networking among professors and teachers.b. Good contacts in the local media ( newspaper & TVchannel)

c. Impressive background and degree of owner.d. Major variable cost would be towards stationery/

reading material, test papers etc which can beoptimized by tie up with local printer/ publisher.e. State of Art classroom infrastructure and ambience.


11/16

Are you within the window of opportunity ?

Yes, because the customer expectation and aspirationtowards education and professional degree isincreasing. The growing competition in entrance examrequires quality coaching and guidance and

government/ private school infrastructure is not enoughto cater it. The priority of schools are good marks inBoard exams rather than shapingstudents career.


12/16

How will you make money ?

Approx Yearly Expense & Revenue

Expense

Loan Principal & Interest: 6.0 lacs

Salaries: 7.0 lacs

Stationery : 7.0 lacs

Other Overheads ( Tax/Bills/ etc) : 8 lacs

Revenue

Tution fees: 65 lacs

PBT= 37 lacs


13/16

How much money will you need ?

How much will it cost to acquire and retain customers?

Initial Advertisement & Campaign: 5 lacs

How long will it take to attract customers ?

Initial Campaign : 4-5 months How quickly will customers pay ?

Advance payment for one month

How slowly can suppliers be paid ?1month credit

How much money will be needed for cash breakeven? 40 lacs


14/16

Will the business attract investors?

How much money is required?

Initial Investment of Approx 40 lacs in land , building andminimum office equipment

What Is the payback period?

2 years

How attractive is the exit option?

Established institute with good student base can fetch

good value. The infrastructure viz. land and building willappreciate with time.


15/16

Money Skills

15 lacs will be sourced from personalresources and balance 25 lacs from Banks.


16/16

Getting the people ?

The differentiation strategy is pivoted onavailability of sincere, qualified, committed &loyal faculty members which remains the

main source of concern.How to get and retain them ?

For retaining, good salary will be offeredalong with some % of ownership.

Will people cost make the business modelunviable ? No

Documents

Managing New Business Initiative