Menu of options for raising funding for a start up /new venture

Nation building via learning and being the best in business

We normally  operate on a ITO format.    To start business raise capital build the infrastructure, to build the product to offer the customer    

Thus we put up the money build the building and later on look for customer to generate revenue.  And more often not the strategy fails.   

So early on in MBA subject entrepreneurship, we have the serendipity walk:   walk into a street crowded with business and look for other potential business that can be set up.  Cherches le craneu.  Look for hole in what appears to be a saturated market.  Do the cusotmer first approach.  Go find a problem - what pisses you off, look for the solution, make or build the solution (MVP minimal viable product).  You will find out that some successful ventures (as gathered from entrepreneur guests)  that Toby peanuts started from a P3,000 initial seed capital,  Splash from a drumful of acetenone funded by P10,000 wedding cash gift.  So what can be the menu:

1.   Follow the Richard  Branson of Virgin example.  Fund your business from deposits of dp of potential customer.  So this is what contractors printers do.  Programmers.   Ask for 50% dp to start the project   Dont use your own money   OPM.   

2.  Forget the ITO model ie of raising equity borrowing from bank or bombay, or going to a VC.  If you do this right you dont have to go to vc.   

For example a fresh graduate from MBA was planning to put up a logistics solutions company and contacted the billionaire for initial funding.  So he said, think of how you start your company without my help or VC. or going to a bank.   So he had to think hard.   He wrote 100 logistics company (gmail of course) offering solutions to a particular problem (he all ready has a solution)

His offer was if I solve your year long problem by Friday, you pay me $5,000.   Somebody accepted his offer and the problem was solved and he got his $5,000.    So he kept the $2,500 paid a programmer to have a working website/solution.    

He wrote again other prospects and offered $2,000 monthly lease subscription by using his software /solutions.   He got  6 subscribers.   Thats $12,000 x 6 =  $72,000

He met again the billionaire and was asked if he still needed help/financing.  Naw.  That was easy

So you have to train your mind to think out of seemingly helpless situation.

For a batch of trainees, the challenge was how to raise $100,000 in a month if you dont have a job.  And they did come out with fine surprising solutions/plan.  However the thought of having security from P16,000 monthly salary lulls them into complancency and that of dependency.

3.  "What is essential is invisible to the naked eye"

The real cash generator are not those that are visible to the naked eye.  This is the primary idea behind the free Its a bait to get the people get their foot in the door. Once inside the door, the real money can be made on higher margin products.  

     1.  Free coffee - to get people to come in buy snacks sandwhiches which have higher margins

     2.  Free haircut at Landers to buy their P700.00 membership card so that you will be a repeat customer  from whom you get sales and gp

     3.  Amazon Prime -   losing logistics membership thru which you get free delivery.  Now the same

          is offering livestreaming competing with Netflix.  

     4.  Buying a losing firm to get the talent to put up a system/sales platform -  like Jet Com bought

          by Walmart to get them on e commerce plat 

Its really a great deal and a blessing that we have people like Peter Thiel who writes about Zero to One.  Creating one from Zero.    That is the blessing from entrepreneurs.     Entrepreneurs create wealth and help build the nation.

Let us count our blessings, thank the Lord for that, and so that we may continue and be a blessing to less fortunate ones.   

Value creation and pain removal: the Main Value Proposition of Business model

Nation building via learning and being the best in business

 

THERE ARE ONLY TWO WAYS TO MAKE MONEY  - the crux of all business model.   It is a compnaion post about finding capital first to make money.   Find problems first, find solution and get paid for it.   Leave the input capital first to be truly wealthy.

All the options just like the alphabet exist and all ready there, and can be rearranged in infinite number of ways.   Find the key holes (ther problems) and make keys that can fit and open the doors (solve the problem)

Doctors make a lot of money because they remove pain.  Do do pharma company;   or consultants, or auditors.   

So do lawyers and security agency:   they lessen fear.

Pain removal   

THERE ARE ONLY TWO WAYS TO MAKE MONEY

Add Value.

Subtract Suffering.

Everything Else Is A Variation Of These Two Movements.

If You Increase Someone's Advantage, You Get Paid. If You Remove Someone's Friction, You Get Paid. Markets Do Not Reward Effort. They Reward Impact.

The Objection Appears Quickly. Hasn't Every Valuable Idea Already Been Discovered. Hasn't Every Problem Already Been Solved. That Question Assumes Value Is Invention. It Is Not. Value Is Arrangement.

Mark Twain Said There Is No New Idea. Only Old Ideas Rearranged Into New Combinations. The Pieces Exist. The Pattern Changes. And The Pattern Is What The Market Buys.

Art Is Not Created From Nothing. It Is Collected, Filtered, Combined, And Released With Precision. The Same Is True In Business. You Study What Exists. You Notice What Is Inefficient. You Combine What Others Kept Separate.

Adding Value Often Means Making Something Clearer, Faster, Simpler, Or More Accessible. Subtracting Suffering Often Means Removing A Frustration People Have Learned To Tolerate.

Sometimes A Problem Must Be Made Visible Before It Can Be Solved. Entire Industries Were Built By Naming A Pain People Had Normalized And Then Owning The Relief.

The Game Is Not About Being Original. It Is About Being Effective.

If Money Follows Value And Relief, Then The Real Question Is This: Are You Searching For New Ideas — Or For Unclaimed Friction?

We can substitute sweet potato for rice, and invent more sweet potato harvester

Looking forward to the future of business

If I were to be given another life, (as what MVP is doing now) I would engage in agri business, to help solve malnutrition and solve problems in food purchase and poverty.   The problem is high price of rice  We can engage in low cost sweet potato farming  and make this as alternative to rice

Sweet potato harvester are in existence   We can engage our fabricators to make big harvester.  Be a big time sweet potator farmer....

It is time well spent rather than devoting time to elections, quadcom, impeachment,  ICC.  Let us do something for the country, its food security and future of Filipinos

Steering clear of highly regulated businesses

Looking forward to the future of business

Rizal Philippines

3.25.2021

In a recent Bilyonaryo post,  MVP was reported to be steering towards businesses that are less regulated.  They are into energy, (Meralco) tollways (NLEX) and telco (PLDT).  They are bountiful businesses and hence heavily regulated because they involve the masses.

SMC in its expressway inter connect project is having a spat with a regulatory body

We too would like to think in the same manner but the arms of govt is everywhere; they own 42% of other busineses (the VAT and Income Tax)  

It is our experience that the LGU will squeeze you dry before giving you a permit   (CIA) 

In our recent experience:

1. A councilman intimated he must get 7 numbers if our proposed joint venture with the LGU pushes through.  The local execs will get no less;

2.  In another LGU we were tricked into having a proposal to be a bidder to a proposal of a relative.  

The reason why there is the NPA problem is that corruption has not been solved;  due to theory of thesis anti thesis means that NPA exist because of corrupt officials that are still  there.  The current administration 

How to deal with customers who want price discounts?

Ateneo Professor on Entrepreneurship

Angono, Rizal  PHL   |  July 16, 2013

From Sales Hunter

How do you deal with customers who always demand discounts.  This seems to be way for most customers to get maximum benefits for minimal money:   the get your pound of flesh.  And the young sales person may be intimidated.

Its a combination of strategies that will enable you deal with this problem.

First all, you must be well versed with the MVP of your product:  what is your product's job for the customer?  It is about product value and not price.

A low price product is a commodity which does not do anything exceptional to the customer.

Rather than give a discount, give more value or free goods to customer, but not cash discount as this will distort your pricing and it will never end.

Here are some strategies on how to deal with "barato" (bargainers/cheapskates)

l. Focus on the product benefits;  say you will talk about the price later on

2.  Continue with the presentation;  do not be stopped yet by price concern;

3.  Walk away;  suggest other products/alternatives that are cheaper and suits the customer's budget;  You will be surprised that sometimes the customer will call you and pay the full price.

4.  Present price points and where he fits.

5.  Restate the benefits and  the price

Senate Bet wants to do an MVP at the countryside

Ateneo Professor on Entrepreneurship

Reposted from ABS CBN News | April 29, 2013

Senate bet Baldomero Falcone who used to work with Manny Pangilinan at Metro Pacific plans to do a securitization of assets and business opportunities in the country to induce capital flow into the countryside.

He worked with MVP in the bidding for the privatization of Fort Boni

Aside from managing the country's financial problem, he plans to be a superman

Can he keep his word?  Or is his ambitious?

Money flows naturally to a place where there are entrepreneurs.   Can Falcone do this?

Will you vote for Falcone?

Abject Lesson on MVP split with Ateneo

Ateneo Professor on Entrepreneurship


" Failure to manage one’s affairs – such as weak institutions, failed regulatory agencies, corrupt enforcements – do not mean a particular business is per se evil, as suggested about mining in that Jesuit Paper,” he said. “It is man’s frailty – Filipino frailty to be exact – that should be blamed, not the business.”
“I’ve already pointed out the examples of good mining practices elsewhere,” he added. “Indeed, the Filipino’s failure to manage well is shown in almost all facets of our lives – poor airports, poor sewerage, unclean air, mediocre economic growth. The list is long. Our preponderant task as a people is simply to do better – to strive for excellence. Isn’t that the Ateneo motto?”

These were the famous lines from MVP to Fr. Jett Villarin, Ateneo president.

But the goal is to excel to be better.

That is right it is the Ateneo motto.  It  is about self mastery.

It is entrepreneurship.

So we can not say the government or this or that has failed.

It is simply that the personal mastery of people running the affairs of that institution has not been up to par.

MVP, business tycoon, former chairman of school Board of Trustees, splits with Ateneo

Ateneo Professor on Entrepreneurship

                   

From Phil. Daily Inquirer

Mr. Manuel V. Pangilinan, head of Metro Pacific Group, now embroiled in controversy with Enrile/Trilllanes tiff on China backdoor negotiations, called it a day with his alma mater and beneficiary of generations, Ateneo de Manila University.

MVP cited in his letter his decision in  a letter to Fr. Jett Villarin, AdeMU president.   The SJ, or AdemU presented its views on minining in a Jesuit Paper written by the SJ head in the PHL, Fr. Jojo Magadia.  The split came over differences on stand over mining laws and the RH bill.  (There was an issue earlier over a plagiarized graduation speech at AdeMU by MVP)

MVP through the mega companies he controls:  PLDT, SMART, has supported Ateneo with huge donations:  construction of school buildings, facilities and support for the Ateneo Blue Eagles.

He felt that by this split, each one would be free to pursue his advocacy;

He said that by having different opinion, he felt like a " fool helping an institution which opposes his views diametrically."

It is not that the business is bad but that of a "failed institution"  Our goal is to be excellent, to be better, even citing the Parable of the Talents and  what Ateneo teaches (magis)

He said that he is saddened by these events  (so with other AdeMU alumni,  and so with our difficult to undersand mindset as a people and institution..)

It is a sad day for the country, the alma mater, and business entrepreneurship's ecosystem

We should be grateful to MVP for his generosity to MVP, to wish him well and rest of the country.

Read more about the MVP split with AdeMU at Inquirer.

From ADSLU - more on MVP withdrawal of support to AdeMU
                      

Explosive Meeting Between Miners and Antis

Promoting Entrepreneurial Revolution

 The promised blow out meeting last Friday between pro and against mining leaders lived up to its promise last Friday.  No less than the no. tycoon in the country and no. social entrepreneur pro earth leader engaged in a shouting match (that is what I thought).  It stole the thunder from the impeachment trial..  How I wish people were more enlightened especially for our procause groups who tend to have a myopic view of the world despite our difficulties.  Folloiwng blindly the western counterparts, they are copycats and ape the western mentors to the last detail, and in the end we are left holding the bag and we become helpless.  Our country fell victim to the Maoist ideology, the Chinese steamed ahead and our protracted mandala and country side wars/ left the PHL weak and uncompetitive.  We were suckers.

Now for this mining issue:

l.  Many westeners go on mining;  those who stop as in REE are dependent on China;

2.  The future and present opportunities are in precious metals:   precipitated by:    l.  growing lack of trust in fiat currency;  high demand for precious metals in electronics (recycling can not keep up)  That is why the top leaders are in the conference;  MVP was there no doubt because that is where the next opportunity is;   the heiress of has been empires would not see that;  other alert and proactive business leaders see that;

3.  The public policy sector see that controlled mining is the answer and the NGO must be convinced;  otherwise this is all about just being anti, or there is business in being anti?

      This is an opportunity we must not miss;  we should have resources to move forward and make of our country men better.  If we believe in PNOY and says this is the way, then let us go for it.

New Template for Business Plan

I propose to have two sets of business plan templates for entrepreneurs:  one that is l. strategic and causal, and the other one for 2. start up entrepreneurs, effectual.

I  Strategic:  Causative (for existing business

l.  Description of the current business:

        l.  Business Model

       2.  Business concept, logic

       3.  Analysis of the market, product, competition,

2.  Business objectives:

      l.  VMO

     2.  What are the proposed objectives with the plan: 

          Sales, Financials,  Customer Impact, Job Generation

3.  Executive Summary

4.  Organization:   Stockholders, Board of Directors, Financiers, Top Management, Middle Managers, Holders of Key Technologies

5.  Description of the product:

       l.  USP  (How is this being achieved at the moment)  Describe the PTM, Key Activites and Resources
          Detailed analysis of the USP.  Is this a sound analysis?  How was this arrived at.

       2.  Competitive Analysis:   Product Features:   Price, Benefits

6.  Market estimate:

      l.  How does the product meet the customer needs?

     2.  Micro market analysis

     3.  Competitive analysis:   market share, what are the competitive activities  vs you

     4.  Macro market ANALYSIS:   PESTEL  PESTE, STEER

     5,  What is the sales estimate

7.  Strategy:   What is the choice of activities and resources to create competitive advantage/differentiation

     (Using the business model the Alex Osterwalder Model)


Restate the MVP (or USP

 A.   On the demand side:

    l.  PTM   what are the needs, what are the wants?

   2.  Choice of customer links; (the sales force, social media, events etc to communicate the MVP

   3,  Choice of customer bonds

 B.  On the supply side:

   l.  Key activities to satisfy the PTM achieve the MVP (processes)

  2.  Key resources to satisfy to the PTM and achieve the MVP

  3.  Partners:  technology providers, bankers, suppliers to achieve MVP
  Please be aware of the question:   the Key Resources and activities must be tightly linked to PTM. and achievement of uniqueness/differentiation


 C.  Financial:   What is the ROIC as stated in the beginnig    
      l.  Revenue Model:   per product/aggregate

     2.  Costs:

          l.  COGS

         2.  Opex

        3. BE, desired ROE

How are your resources and activities, suppliers going to help you achieve the financial goals?

Review:   are you achieving competitive advantage, uniqueness;  try to use ERRC, to create new market space?  Are your HR, marketing, operations interlinked

8,  Financials:    (the three FS:   cash flow, pnl, balance sheet)  How does your FS support your strategy to create competitive advantage

9.  Compliance wtih regulations/regulators -  Discuss in detail various regulations:   local, national and international so that your company becomes a good citizen.  Are you green.

10.  Exit strategy:   How do you exit the business at the start, middle, end of things do not turn out right, if they turn out right ( as IPO gift, inheritance, donation to charity, govt

II Effectual  (for Start ups)

l.  Current Situation:

       l.  Who am I, my passion

      2. What do I want to be, my dreams, interests

      3, My resources:   financial, talents

       4.  My network:  financial backers, technology providers, manufacturing links (die makers, suppliers, subcontractors),  buyers, contacts

2,   My range of options

       l.  Product ideas

      2.  How do they match # l

      3.  What is the USP/ MVP  (define it well)

3,  Opportunity scanning;

      l.  What are current range of offerings?  What pisses off the customers?  What is the hole?  Is there no similar product int he market compared to # 2.

     2.  FGD and other customer surveys done, traffic count

     3.  Micro market analysis  (you the competition, location)

     4.  The larger context:   PESTEL
'
     5,  What is the sweet spot:   intersection of company, competitor, customer and the context

4.  What is the business model:

  l.  MVP/USP

   2.   Demand side:   PTM,  customer link, customer bond

   3.  Supply side:   Key activities, key resources, partners and the configuration

   4,  Revenue and cost model

        l.  SRP

       2.  COGS

       3.  BE

       4,  Desired ROIC

How do sustain competitive advantage, uniqueness?

5,  Product:

       l.  Design:   Drawing BOM

       2.  Production process:   how is it to be produced, engineering, quality control

       3.  Distribution, logistics needed

       4.  Product testing:   alpha and beta

       5.  Competitive analysis:  why is your product differentiated

6.  Sales estimate:

      l.  Restate customer wants and needs;  how are they pissed off by competitive products

      2.  Historical industry data, past,  what is the trend (micro and macro market)

     3.  Estimated market share;   what is the basis?

     4. What will you do to influence the outcome?

     5.  Who will achieve you help your sales goal

     6.  Degree of confidence in the projection

7.  Other objectives:  (based on six)

l.  financial    l.  Cash flow

   2.  P n L

   3.  balance sheet

       At least 3 years

2.  Customer impact

3.  Job generation and welfare

4.  Going international? Global

How do you finance the business growth?

8.  Compliance with regulations:   local, national international.   What do you if you encounter difficulties

9.  Exit strategies:

       What difficultles will cause you to give up;  What will be your range of options?

      What will you do if you are successful?

     

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International Business - Business Model Innovation

From the Harvard Business Review

There is now a shift from study of Strategy to that of Business Model and innovation.  In the last three decades, companies and Schools of Business were enamored with strategy.  But now, as popularized by Alex Osterwalder, Clayton Christianssen of Harvard, the shift is on to study of business model.  The car is the business model, the accessories you put in there is the strategy like turbo power, special tires, better suspension, tires.  etc.  How you drive the car is the tactics.

Product, processes, marketing, brand were the usual buzz words in innovation before.  But the business model can get tired and old.  To adjust to the rapid moving 2lst century business competition, the business model (the car) has to be changed and upgraded.  You can not drive up to  200 kph a car that was designed to run at 50 kph at most.  Yet we are doing that to our tired old, beat up business models.

Other non technological parts of the business platform/canvass are candidates for innovation:   the ptm the key partners, the customer link, the mvp, the channels can be changed.  The revenue model can be changed (we can use the freemium) Skype, Wikipedia, Sun Cellular, FB are innovation, but they based on entire business model that have been changed.

Amazon doing cloud computing, thats BMI.
So guys, the next time you are given innovation assignments, do not just think of the products.  Recall the business model canvass and what they contain:  MVP, customer link, customer channel, PTM, key resources, key processes, and partners.

"Every generation needs a revolution an ENTREPRENEURIAL REVOLUTION."