Following from where we left off with my first venture, my next was in market research — along with a couple of my batchmates, I decided to start a market research firm, Scope.
Learnings
(i) Complementarity of skills is the key to partnerships
(ii) Build a compelling vision and keep it alive
(iii) Focus is the key to success. Differentiate yourselves from the competition
(iv) Have a written Business Plan as a guide to action
We took some decisions when we started Scope; in retrospect some good, many bad.
In order to reduce our overheads we had deferred the formal joining of 2 of the 5 original co-promoters till a later date. These 2 continued to work in their organisations for a few more years.
This helped us reduce the overheads in the initial years, especially considering that we had very few clients and very little business when we started up. We also made a foray with another company called Zigma Marketing services into direct marketing as a franchisee for Citibank. Simultaneously, we made a foray into computer-based training for the CAT exams with a company called Score. All great ideas… but probably ahead of their times.
We were all friends, four of us were classmates and dorm mates while the fifth was a senior. There was a lot of enthusiasm of youth, the hope born out of self–belief , friendship and camaraderie. All positives; however the one thing we did not do was build a common vision for the Future that would ensure that we all worked for the same cause and ensured that we pulled in the same direction. The lack of a vision did not matter in the initial years as all the other attributes more than compensated for it. There was give and take; and the one major mistake that we made was not to plan a structure and system that would ensure that the group stayed together. Also in retrospect we should have put in place a redressal mechanism when some of the attributes that we mentioned earlier would be replaced by realism and pragmatism.
Lessons
We did not have a structure or a chain of command, a proper organisation structure, or a clear vision of the business. We all held 20 per cent of the business; all had an equal say in the running of the business and as a result decision making became progressively tough as we went along; whenever there was a difference of opinion there was a stalemate until the issue was sorted out to everyone’s satisfaction – not the best way to make decisions nor the most effective. In fact this resulted many a time in sub-optimal decisions. We were also into too many business activities with the result that we were all pulling in different directions.
Just a start-up and we were into: Financial services, Market research, Direct marketing, Teaching, Management consulting.
Two important lessons for entrepreneurs:
On formation of partnerships: It is nice to be friends when starting partnerships but it is better still to have a complementarity of skills. Friendship will follow. Start as partners and remain as friends rather than start as friends and break up as foes.
On Vision for the business: This is extremely critical for success. If you need a plan to build a house, why would’nt you plan to build a business.
To put things in perspective the market research business was a very small one in the 80’s and there were 4 companies that controlled over 90% of the business in the consumer MR market: IMRB, ORG, MARG and Mode. The techniques and methods used back then were very rudimentary, but making an entry into a market controlled by these 4 large (relatively) firms was going to be very difficult. For the first two plus years we just went in with our offerings and customers did not see any value add in what we were offering. Business was procured either through some referrals from contacts and from our marketing efforts.
This made us re-evaluate our approach to the business and based on inputs from our marketing professor we decided to
(i) drop all other activities -- We had learnt in business school the value of a differentiated offering and focus but here we were (not one but five of us) making the mistake of trying to be all things to all people.
(ii) focus on a niche where we could differentiate ourselves from the competition. A niche that was both sizable so as to be economically viable and which would grow positively in future years. A niche that was not yet occupied or was overcrowded; also one where we could positively add value and where we had strengths to compete.
Thus was born 2 years after we had started in 1987, our foray into industrial market research. We found the going easier, got a few clients and most importantly differentiated ourselves from the competition. Furthermore, the focus on one activity released our energies, something that focus always brings. Inspiration is the windfall from hard work and focus.
Some important lessons in this phase of the journey; One needs to start with a definitive idea – not just a vague intention to be an entrepreneur. Typically many young potential entrepreneurs start and end their careers with this vague intention.
The idea needs to be thoroughly evaluated. Preferably this needs to be done with prospective customers. Either a concept evaluation could be done, or better still is a product prototype evaluation and we said before nothing better than doing it yourself. This helps you to get a grip on questions such as who are your likely customers? What needs do the product / service satisfy? How is it unique and /or how is it superior to the competition? Most important what are the negatives that potential customers perceive.
Where you cannot evaluate product / service it is nevertheless important to understand for yourself what need are you trying to fulfil and how you will do it. If you are creating a new need; how do you plan to do it?
Many supporting ideas for product / service enhancements can come as a result of such interactions. Work at making a good written business plan before you start.