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“It's
a funny thing”,
chuckles Aroon Purie,
“but actually India
Today was born out of
a failure.”
Purie,
as most readers will
know, is the
Editor-in-Chief and
CEO of The India Today
Group. Launched 30
years ago, India
Today, the
flagship publication
of the group is a
success that was never
planned as one. At
least, not in its
present avatar. The
original business plan
of India Today called
for something very
different.
“It does not fit my plans”
An
entrepreneur I
recently started
working with, let us
call him Ajay, got a
deal he had been
hoping for. This was
exactly how the
business plan said it
was supposed to be. And
he chose not to go
ahead with the deal.
As he
had originally
visualized in the
business plan, this
was a welcome
development, but going
ahead would have meant
having a unviable and
unsustainable business
on his hands.
His
reaction, after we
thoroughly discussed
the implications of
the deal, was, “it
does not fit my
plan!”.
As Ajay
found out, at times
the assumptions on
which the business, or
specifically, the
business model is
built, might not be
too robust. Purie also
discovered something
similar.
India
Today was
conceived as a
magazine catering to
the non-resident
Indian market. Thirty
years ago, when the
internet and satellite
television didn’t
exist, the telecom
infrastructure was
creaky and the postal
service not too great
either, the Indian
diaspora didn’t have
many communication
links with the mother
ship. India Today
was meant to fill this
gap through providing
them with the news
from “home”.
While
Purie and his team
developed a good
product to cater to
this need, the
logistics turned out
to be a different
matter. “The fact is
that we didn't realise
how difficult it was
to market such a
product to Indians
living abroad” he
acknowledges.
Distributing
the magazine was also
a nightmare.
“Indians are
scattered all over the
place”, he
discovered, “it's
very difficult and
expensive to reach
them”.
Since
the original plan
wasn’t working out,
as an experiment,
“we put some copies
into the domestic
market”, he recalls,
“and discovered that
there was a greater
degree of
acceptability”.
“Soon,
from that point on, we
started building on
the domestic
market”.
You know the
rest of this amazing
success story.
Ajay
could have also gone
ahead because “the
plan” called for it.
But he too wisely
chose to walk away.
"No
battle plan”, Field
Marshall Helmuth Karl
Bernhard von Moltke
famously remarked,
“survives contact
with the enemy."
As experienced
entrepreneurs,
investors and
executives will vouch,
no business plan
survives contact with
the marketplace
either.
There
are three reasons for
this:-
- The market realities are different.
- The marketplace changes. And,
- Mistakes happen in execution.
These
two instances are the
ones where the
assumptions underlying
the business plan were
somewhat different
from the marketplace
reality. Ideally,
neither Purie or Ajay
should have got to
that stage had they
stress-tested the key
assumptions in the
business plan. But, it
is natural, and
happens often.
Most of
the entrepreneurs who
come to us for help
with developing a
“fundable”
business plan usually
have similar
assumptions in their
base models.
Assumptions which,
perhaps, do not fully
reflect the
marketplace realities.
As we then discuss,
the potential
investors too will
have no trouble
figuring it out
either.
The
choice then, is
between trying to
reframe reality or
accepting it.
And
reality, after all,
“is that which, when
you stop believing in
it, doesn't go
away".
If I choose not
to believe in it
today, the
marketplace, which is
unforgiving, will
anyway make sure one
day that I do.
But
entrepreneurs, by
definition, are
optimistic creatures.
No new business,
technically, ever has
any hope of
succeeding. When it
does, it is entirely
due to this optimism,
the passion and
indefatigable
enthusiasm of the
founders.
So how do you make sure that you too invest your passion and enthusiasm in
something more
productive and not in
chasing a mirage?
Objectivity,
naturally, helps. You
can prevent spilling a
lot of blood if you
use a voice of reason
to objectively assess
your business plan.
The earlier the
better. Ask a few
people, whose judgment
you trust, for their
comments. If most of
them point to the same
issue(s), chances are,
you will need to
rework your plan.
Research. Research. Research,
doesn’t have a
substitute either.
Another entrepreneur
has a plan for a
me-too product. He
intends making it a
greater success
through aggressive
marketing. To help him
look at his plan from
a different
perspective, the only
question we asked was,
why competitors, also
venture-funded, were
not doing it already?
Of course, we helped
him discover the
answer and, more
importantly, in moving
to the next stage.
Does the plan make sense?
You too
can easily create a
functional
and fundable
business plan by,
first, identifying the
assumptions that form
the basis of your
plan. And then,
testing them for
validity. Are they
driven by hope, or
facts? Data, or,
opinions? The
investors, anyway,
will.
You
will also, I assure
you, get better
results, faster. While
saving yourself a lot
of trouble. Precious
time and money too.
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