Question

Write an operation overview for a business plan for a Kentucky Fried Chicken franchise with start-up funding of $750,000.

Answer 1

Start up is an early stage establishment that would solve a problem / pain /need / provide entertainment for a set of customers and able to make a profit out of the operations.

Here monetization of the operation - directly (by pricing the customers) or indirectly (ads, user data) should be greater than cost put in establishing and running the start up, at the minimal.

What you need to just start up?

1. Customer with a pain / need.
2. Distribution network to reach out to your customers.
3. Solution that is cost effective at least in the long term (meaning profitable within certain period like 6 months to 1 year - time period varies depends on funding and risk appetite).
4. Team to build a solution.

How to go about?

1. Start with areas / domain / problems that you are impacted or aware of. Problems that you are naturally curious or interested of , that you spend hours to read about.

2. Talk to the customers affected by the problem.

3. Understand the subtleties of the problem, attack the problem from different angles to understand all assumptions.

4. Are there insights that you come across as a result of your research? Can you understand the gap between existing solutions/work around and the problem? Is this gap big enough to cause pain to Customers today? Can this gap be filled by a better solution?

5. Can you build a solution in a cost effective way that would solve the problem and if there is some one - any one ready to pay for the solution?

6. Is the problem a pain killer (solves a pain) or a vitamin (good to but not must have) to your customer?

What you need to survive the first year of your start up?

1. Your and your team’s monthly expenses to be taken care for 6 months - 1 year.
2. A MVP [ minimum viable product] that would solve the biggest pain of your customer
3. Ability to build it while keeping your cost to bare minimum
4. Understanding your customers in and out, getting feedback constantly and improving on the product till you get the product - market fit.
5. Getting the first 10 customers. Then next 40. Then next 50. Focus on micro not macro. Be on the ground not on 10000 feet. Focus on every new customer, not on millions.

How to get a team to join you when you can’t pay them?

1. Initial team will be you and you alone.
2. Your personal relationships, alumni network, past and current colleagues. Your social capital.
3. Ability to show value for your co founders and early employers on what they will gain and how they will be part of something that generates enormous value for every one involved.
4. Showing perseverance and hard work.
5. Showing the money or human value the business can generate.

Roles you will have to play

• Visionary
• Product Manager
• Product Developer
• Mopping your office floor
• Evangelizing
• Content Creation
• Researcher
• Team builder
• Customer Expert

Indicators if you will continue from year 2–5.

1. How scalable is your startup - meaning can you scale from 10 to 100 to 1000 to 10000 to million customers in a decent period of time with very less change to your solution infrastructure while improving your profitability.
2. How big is the market - What is the size of the market of the customers who are having the pain you are solving. How big it is? Is it small and growing or Large and stagnant?
3. What’s the reason for the solution now? Is there a change in demographics [rapidly growing customers with a need] or new technology [ advances in AI, VR etc] or access [mobile penetration]? Why this solution at this point of time?
4. Your team. Your ability to create a team and make them stay.

Basics for Success

1. Focus on revenue/ways to monetize than funding
2. Focus on Customers. Live, breathe, eat like your customers. Get into their skin. Think like they would.
3. Iterating on the product till you have right product for the right market.
4. You should be able to contribute to what is core to your start up. If its a tech solution to a problem you should be able to code and build. If its a retail business you should know how to run the store. DO NOT OUTSOURCE THE CORE OF YOUR START UP.