Pranav
Deshpande is a San Francisco-based product marketer and a volunteer with
Startup Bridge at Stanford. Startup Bridge connects leading technology
innovators in the U.S. and India to build new relationships for tomorrow’s
moonshots.
There’s
an old trope in the West that India is like Indian trains — exotic, lurching
and slow.
But
tropes can be bad as a business strategy — and this trope is causing American
companies to miss out on Indian moonshots and trillion-dollar opportunities.
In
this article I’ll focus on fintech, which is leapfrogging in a way traditional
banking never could. Morgan Stanley expects India’s digital payments
penetration to increase from 5 percent today to 20 percent, and the e-commerce
market to reach $200 billion, with 475 million e-commerce shoppers, adding up
to a GDP upwards of $6 trillion — all by 2027.
Just
like India’s mobility revolution. Most Indians went…
There’s
an old trope in the West that India is like Indian trains — exotic, lurching
and slow.
But
tropes can be bad as a business strategy — and this trope is causing American
companies to miss out on Indian moonshots and trillion-dollar opportunities.
In
this article I’ll focus on fintech, which is leapfrogging in a way traditional
banking never could. Morgan Stanley expects India’s digital payments
penetration to increase from 5 percent today to 20 percent, and the e-commerce
market to reach $200 billion, with 475 million e-commerce shoppers, adding up
to a GDP upwards of $6 trillion — all by 2027.
Just
like India’s mobility revolution. Most Indians went from having zero
connectivity to being on the mobile internet without ever seeing a PC or even a
landline. India now has 800 million mobile phone users with 430 million having
internet connectivity. According to Morgan Stanley, the number of internet
users is expected to grow to 915 million by 2027.
The
same leapfrogging is unfolding in payments. While the internet changed how
Indians communicate, read news and get entertained, it didn’t change how they
transact. As this graph shows, the number of credit and debit cards in India
has grown only incrementally. Even top-down initiatives by the government, such
as the controversial
Debit
card usage spiked in November and December 2016 after demonetization. But it
looks like it’s returning to levels below credit card transactions again.
What
does this have to do with America? And who could the big US of A lose out to?
China.
Because China has already tackled the two biggest obstacles to digital payments
— building infrastructure and changing consumer behavior in its own backyard
and front yard. By developing a rich ecosystem with strong network effects,
WeChat has become the Operating System of China. Alipay has done the same with
commercial payments. In 2016, China’s digital payments were already 50 times
America’s. Alibaba and Tencent understand ecosystems better than anyone else in
the world, including American companies.
And
now China is showing the boldness to capitalize on a new generation of payments
infrastructure and the patience to win the hearts and minds of Indian
consumers.
Where is America in all this?
India’s
payments infrastructure is on fire. Bank accounts are the building blocks of
financial inclusion, and in just three years, 285 million bank accounts have
been added through the JAM program. UPI, or United Payments Interface, also has
matured. UPI allows any Indian with a mobile number linked to a bank account to
instantly send and receive money. Managed by the NPCI (a nonprofit
organization), it also has APIs that allow any application to easily embed
instant payments. Tech companies like Google and Flipkart already have
UPI-based payment apps in Tez and PhonePe. Major Indian banks also have added
UPI to their apps. WhatsApp also has plans to roll out it out to its Indian
users.
Payments
infrastructure means little without accessible experiences. A new generation of
mobile wallet apps is solving that problem. PayTM is the largest with 200
million users. PhonePe also has wallet functionality. With these apps, users
can connect their bank accounts or debit cards to transfer funds to the wallet
to use for peer-to-peer payments, transact with small businesses or buy
cellphone minutes. PayTM made serious inroads after demonetization, with street
vendors, nannies and drivers also accepting it.
Alibaba
is the single largest shareholder in One97 Communications, PayTM’s parent
company, with an investment over $1.2 billion. Alibaba isn’t just looking for a
venture scale return on investment. This is a strategic partnership unlike any
other seen in India. They’ve publicly stated they see PayTM as a local partner
with whom they will share their expertise in e-commerce and payments. There
also are strong similarities between the strategies of both companies, with the
focus on owning payments to own the consumer. Alibaba wants to get to 2 billion
users by 2036. They’re not getting there without significant market share in
India.
The
second hard problem is changing consumer psychology. Indian consumers are value
conscious. They’re wary of new products and require significant social proof
before trying them. There’s also a high bar for trust that products need to
overcome before a product can be adopted. And let’s face it. Understanding
digital payments is hard to understand for most of us. This explains those low
debit card usage numbers. Most people don’t even trust debit cards, even though
they’re issued by a bank they trust!
China
has solved this problem differently than American companies have.
China
is looking beyond the 60-100 million affluent Indians and the retail stores
that use credit cards. They’re also not getting tripped up by the less affluent
300-500 “middle India” consumers who don’t really use debit cards or trust
digital payments. They’re addressing these consumers by studying and investing
in where they’re spending their time.
Tencent
already has 1 billion users in China who use their products every day to order
food, buy tickets, play games and hundreds of other activities. Tencent is
instead investing in adjacent industries. Thus, they’ve participated in a $1.1
billion round for Ola, India’s largest ridesharing company, and a $1.4 billion
round for Flipkart, the largest e-commerce company.
Where
is America in all this? American companies still largely view the Indian
financial sector as stodgy and are focused on the urban affluent consumers,
versus the entire country.
So
far, American investment in India’s booming payments space have been paltry by
Chinese standards. The only company with skin in the game is Amazon. They’ve
committed $5 billion dollars to India and are buying stakes in Indian
retailers. But we’re not seeing the same level of strategic investment and
partnerships with local companies.
Despite
the deep economic and military ties between the U.S. and India, at the present
moment China has stolen a march ahead of America in investing in the Indian
fintech frontier. There’s a real risk of American companies being left behind.
Source : Trendingstock
How to write a Business Plan
This
article is part of both our Business Startup Guide and our Business Planning
Guide—curated lists of our articles that will get you up and running in no
time!
If
you’ve reviewed what a business plan is, and why you need one to start and grow
your business, then it’s time to dig into the process of actually writing a
business plan.
In
this step-by-step guide, I’ll take you through every stage of writing a
business plan that will actually help you achieve your goals. If you’re just
looking for a downloadable template to get you started, you can skip ahead and
download it now. Or, if you just want to see what a completed business plan
looks like, check out our library of over 500 free sample business plans.
3 rules for writing a business plan:
1. Keep it short.
Business plans should be short and
concise.
The reasoning for that is twofold:
First, you want your business plan to be
read (and no one is going to read a 100-page or even 40-page business plan).
Second, your business plan should be a tool
you use to run and grow your business, something you continue to use and refine
over time. An excessively long business plan is a huge hassle to deal with and
guarantees that your plan will be relegated to a desk drawer, never to be seen
again.
2. Know your audience.
Write
your plan using language that your audience will understand.
For
example, if your company is developing a complex scientific process, but your
prospective investors aren’t scientists (and don’t understand all the detailed
scientific terminology you want to use), you need to adapt.
Instead of this:
“Our
patent-pending technology is a one-connection add-on to existing bCPAP setups.
When attached to a bCPAP setup, our product provides non-invasive dual pressure
ventilation.”
Write
this:
“Our
patent-pending product is a no power, easy-to-use device that replaces
traditional ventilator machines used in hospitals at 1/100th the cost.”
Accommodate
your investors, and keep explanations of your product simple and direct, using
terms that everyone can understand. You can always use the appendix of your
plan to provide more specific details.
3. Don’t be intimidated.
The
vast majority of business owners and entrepreneurs aren’t business experts.
Just like you, they’re learning as they go and don’t have degrees in business.
Writing
a business plan may seem like a difficult hurdle, but it doesn’t have to be. If
you know your business and are passionate about it, writing a business plan and
then leveraging your plan for growth will be not nearly as challenging as you
think.
And,
you don’t have to start with a full, detailed business plan that I’m going to
describe here. In fact, it can be much easier to start with a simple, one-page
business plan—what we call a Lean Plan—and then come back and build a detailed
business plan later.
6 things to include in a business
plan
Now
that we have the rules of writing a business plan out of the way, let’s dive
into the details of building your plan.
The
rest of this article will provide the specifics of what you should include in
your business plan, what you should skip, the critical components of the
all-important financial projections, and links to additional resources that can
help jump-start your plan.
Remember,
your business plan is a tool to help you build a better business, not just a
homework assignment. Good business plans are living documents that you return
to on a regular basis and update as you learn more about your customers, sales
and marketing tactics that work (and don’t), and what you got right and wrong
about your budget and forecast. Your plan sets out the goals you’d like to
achieve and you should use it to track your progress and adjust course as you
go.
1. Executive summary
This
is an overview of your business and your plans. It comes first in your plan and
is ideally only one to two pages. Most people write it last, though.
2. Opportunity
This
section answers these questions: What are you actually selling and how are you
solving a problem (or “need”) for your market? Who is your target market and
competition?
3. Execution
How
are you going to take your opportunity and turn it into a business? This
section will cover your marketing and sales plan, operations, and how you’re
going to measure success.
4. Team and company
Investors
look for great teams in addition to great ideas. Use this chapter to describe
your current team and who you need to hire. You will also provide a quick
overview of your legal structure, location, and history if you’re already up
and running.
5. Financial plan
Your
business plan isn’t complete without a financial forecast. We’ll tell you what
to include in your financial plan.
6. Appendix
If
you need more space for product images or additional information, use the
appendix for those details.
Let’s
dive into the details of each section of your business plan and focus on
building one that your investors and lenders will want to read.
Executive summary
The
executive summary introduces your company, explains what you do, and lays out
what you’re looking for from your readers. Structurally, it is the first
chapter of your business plan. And while it’s the first thing that people will
read, I generally advise that you write it last. Why? Because once you know the
details of your business inside and out, you will be better prepared to write
your executive summary. After all, this section is a summary of everything
else, so start writing the Opportunity section first and come back here last.
Ideally,
the executive summary can act as a stand-alone document that covers the
highlights of your detailed plan. In fact, it’s very common for investors to
ask for only the executive summary when they are evaluating your business. If
they like what they see in the executive summary, they’ll often follow up with
a request for a complete plan, a pitch presentation, and other data about your
business.
Because
your executive summary is such a critical component of your business plan,
you’ll want to make sure that it’s as clear and concise as possible. Cover the
key highlights of your business, but don’t into too much detail. Ideally, your
executive summary will be one to two pages at most, designed to be a quick read
that sparks interest and makes your investors feel eager to hear more.
The
critical components of a winning executive summary:
One
sentence business overview
At
the top of the page, right under your business name, include a one-sentence
overview of your business that sums up the essence of what you are doing.
This
can be a tagline, but is often more effective if the sentence describes what
your company actually does. This is also known as your value proposition.
Problem
Summarize
in one or two sentences the problem you are solving in the market. Every
business is solving a problem for its customers and filling a need in the
market.
Solution
This
is your product or service. How are you addressing the problem you have
identified in the market?
Target market
Who is your ideal customer? How many
of them are there? It’s important here to be specific.
If
you’re a shoe company, you aren’t targeting “everyone” just because everyone
has feet. You’re most likely targeting a specific market segment such as
“style-conscious men” or “runners.” This will make it much easier for you to
target your marketing and sales efforts and attract the kinds of customers that
are most likely to buy from you.
Competition
How
is your target market solving their problem today? Are there alternatives or
substitutes in the market?
Every
business has some form of competition and it’s critical to provide an overview
in your executive summary.
Team
Provide
a brief overview of your team and a short explanation of why you and your team
are the right people to take your idea to market.
Investors
put an enormous amount of weight on the team—even more than on the idea—because
even a great idea needs great execution in order to become a reality.
Financial summary
Highlight
the key aspects of your financial plan, ideally with a chart that shows your
planned sales, expenses, and profitability.
If
your business model (i.e., “how you make money”) needs additional explanation,
this is where you would do it.
Funding requirements
If
you are raising money to start or grow your business, you must include the
details of what you need in the executive summary.
Don’t
bother to include terms of a potential investment, as that will always be
negotiated later. Instead, just include a short statement indicating how much
money you need to raise to get your business off the ground.
Milestones and traction
The
last key element of an executive summary that investors will want to see is the
progress that you’ve made so far and future milestones that you intend to hit.
If you can show that your potential customers are already interested in—or
perhaps already buying—your product or service, this is great to highlight.
You
can skip the executive summary (or greatly reduce it in scope) if you are
writing an internal business plan that’s purely a strategic guide for your
company. In that case, you can dispense with details about the management team,
funding requirements, and traction, and instead treat the executive summary as
an overview of the strategic direction of the company, to ensure that all team
members are on the same page.
Executive summary
