Dhruv Boruah

I mean, tell me how do you arrive at your sales forecasts for a high tech industry business ? If your product is new, no one knows about, there is no current market, no history data to back you up, no customer analytics information, nothing. How do you do your forecasts ? Of course you do not know what is going to happen , so you make some fancy growth numbers.

The investor is always looking at this , since this sets the standard for expenses, profits and growth. They are never perfect, they should just make sense. Normally as a startup you do not have money to hire market research professionals. There are millions of websites which talk about ways of doing sales forecasts. I have figured out two ways of doing it.

The MBA approach:

• Develop a rationale behind your forecasting. Do some market research, identify the variables, link the variables, use come common sense and make some educated guessing.
• Normally I would do this for four quarters each for the next five years. (seems to be a industry standard).
• Put down all items as no of units, which you think will generate revenue. This can be service sale, product sale, membership fee, monthly subscription fees, shipping charges, commissions etc. 

Some ways of using common sense for internet projects
- Use Google Insights and Google Trends to find out how the market is searching for your product or service. Use the keyword suggestion tool. Use some free credits from the Google Marketing Challenge . See how searches were done this month, last month, 2 months back etc
- Look for similar products or substitutes and  derive your own forecast.

After this you might want to follow the approaches mentioned in the link at the end of the post.

More Practical approach:

What if you take a reverse approach instead of taking a forward approach which is the academic way ? You decide at the end of year 5 what is your expected revenue or the amount of sales you want to make. Then since you know your END GOAL, break down your goal for year 4, year 3 etc. Now since you have your self a target revenue for every year, you know the growth you will have to achieve every year. This will simplify your costs also, since now you know the size of sales team, marketing budget etc to achieve your yearly revenue target.

At the end of year 5, the investor gets his required revenue, EBDTA. What do you think of this reverse modeling ?

Anyways, there is no hard and fast rule. Use your common sense and just come with a reasonable selling point !

- Templates available in Microsoft Template Gallery
- Refer http://planasyougo.com/category/4-flesh-bones/basic-numbers/sales-forecast/ for some basic examples.

Proven models like Amazon, eBay, Groupon, Kayak, Flipkart etc have triggered a rise in clones and other niche ecommerce websites. Technically these sites are easy to setup with open source tools and frameworks. But what people tend to forget is the business model and the day to day operational issues like order fulfillment, inventory, accounting, customer retention, customer service etc of the company. 

It is important to understand that technology is just an enabler and not the business itself.

Some of the questions you might want to solve before you start off are

Customers:
Who are my customers and where are they ? How do I get my customers? How do I retain my existing customer ? Do I need to spend a lot on Google Adwords ? or SEO ? Where do I buy user mailing lists ? Do I need them ?  Do I need to have a newsletter ?
What is my value proposition ?

Business Model:
Am I a marketplace or I am focused on something niche ?
Do you need to follow a B2B model also? Do I support backorders ? What is the cost of defaulters ?

Payments:
Does your customer have a Paypal account? Do you need cash on delivery?  What is the best credit card/ bank gateway ? Can I accept multi currency ?

Order fulfillment/Operations:
Do I really need inventory ? How do I get inventory commitments from suppliers ? How do I handle inventory ?
How do I do order tracking ? How do I so shipping ? Do I have the right partners ? Is the shipping a flat fee or based on attributes like weight/ dimensions etc? How do I do my accounting ? Am I legally complaint ? Do I need an ERP system from day one ?

Your answer will be different in different markets. Trust me there will be many surprises when you ask yourself, your suppliers and your customers all these questions.

I have consulted a couple of websites using Magento and to me it looks like a good start point, specially since it comes with a pretty decent template and also all the wish list features of a ecommerce site. Once tweaked the right way it can handle up to a million products with compromise in performance.

*ecommerce platforms – Prestashop/Magento/Uberkart/OS Commerce/Spree ecommerce etc
*ERP – OpenERP, OpenBravo
*CRM – Sugar CRM

This is in short what I could jot down in the last couple of minutes. The biggest question of course is

IS THE MARKET READY?

I just got an email that the 2011 GSMA Mobile Money Summit Call for Papers process is now open!

Here are a few of the key areas they are focusing on:

    * MNO & Financial Institution Partnerships
    * Building, Incentivising, and Managing Effective Mobile Money Agent Networks
    * Emerging Business Models, such as Direct MNO Billing & Virtual Currencies
    * NFC Commercial Services
    * M-Ticketing
    * Mobile Payments
    * International Remittances
    * Customer Activation & Mobile Money Marketing
    * Innovation – Beyond Mobile Payments
    * Agent Network and Merchant Systems Interoperability

The Call for Papers process will close on Friday, 1st April 2011 at 23:59 GMT, so hurry !

More information here http://www.mobilemoneysummit.com/cfpmms11/

As entrepreneurs raise money from investors, they see a significant drop in % of their equity stake in the company, which is technically called “dilution”. It is very important to understand this concept when looking for investments.

This video explains the concept in 7 minutes

This is the first and possibly the ONLY OPPORTUNITY to impress an investor. You have to make it work !!! I am an investor and have been working with investors and trust me this filtering takes around 60 seconds at the max. Ideally an Executive Summary should be delivered including the following points.

• The business opportunity that the project identifies.
• Products and/or services offered.
• Target audience, explaining its characteristics and needs.
• Market size, growth projection and market share objective.
• Competitive scenario. Existing competitors.
• Business model, how are income and profits going to be obtained, projections of expected users.
• Actual developing stage of the project. Implantation plan and strategies.
• Management team description, detailing education, previous experience and current dedication.
• Financial projections.
• Investment requirements. Sources of investment you have had up to now.

Technology is just an enabler of the business and not the business itself. Execution of the business strategy and increasing revenue should be the primary focus.

How to get started ?
Step #1: Get a domain, hosting and first page
Go to Godaddy, get a domain name and a linux hosting.
Now, try creating your own personal page which stores the data in a database. You will see many websites and screen casts on these.
What you will learn are the basics of
- LAMP – Linux/ Apache/ MySQL and PHP
- HTML

Step #2: Now create your own blog which can also form as another step towards your personal branding.What then I would recommend to download,  install and familiarize yourself with existing frameworks like

• Drupal
• WordPress
• Jhoomla

Then try out some of the free themes/templates and also play with the numerous modules for these frameworks.
That is it !! You have the basics ready already !

Step #3 : Analytics with Google Analytics
Now from a investor perspective and also for you, analytics are important. Hence quickly sign up with Google Analytics and try to integrate the code and track daily traffic and much more details in your website. You can also sign up for the Google Webmaster account for more finer control of your website and search engines.

Step #4: Setup Free Email with Google Apps
Now do not you need a you @yourdomain.com email Address, Google offers free Google Apps services for 50 users. You can use services like Gmail, Gtalk, Google Docs, Calender etc for free Set it up here http://www.google.com/apps/intl/en/group/index.html

Step #5: Setup a ecommerce site
Now if you have this cool ecommerce idea in mind and wanna have a prototype easy in 30 minutes for your investor, I recommend you to start using Magento framework. The community version of Magento is free and in many cases sufficient to start a end to end ecommerce site.

Step #6: ERP from day one
You do not want to confuse your accountants or yourself with tons of paper and invoices on your desk. Hence using an ERP from day one is the best approach to avoid long term problems from day one. I would recommend using OpenERP which has some pretty good modules to back every taxation system.

People will talk about CRM/ Business Intelligence etc but remember this post is all about how to kickstart !

These are some of the productivity tools I would recommend to a startup

Project Management/To do list
Documents/ File sharing
Chat/ Conference Calls
Desktop Sharing

Hello All,

This is my personal blog and I will be jotting down my observations on entrepreneurship, freedom, ideas and changing business models in this web 2.0 world.

As with any other good thing, let us start with the blessings of Siddhi Vinayak

Ganpati Bappa Moriya

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