For those who wonder about Minor in Entrepreneurship programme in NTU, there are 5 modules in total, spread over 8 months period, with the last one involving starting our own company. It is a highly sought-after program, with proper application and interview for admission. You can find out more here: http://www.ntc.ntu.edu.sg/undergraduateprograms/Pages/MinorinEntrepreneurship.aspx.
I would like to share what I learn from the 4th module, namely Managing New Venture & Business Plan. In order not to spoil the market by sharing tips and trick to win this Marketplace simulation game with my experience along the way, I would just share key-points we all can learn from and take note of.
From every quarter, we have problems of all kind, all sizes and coming from all sort of circumstances. When we face troubles or questions that can’t be solved by our team, we must be bold to ask for help. This is not shameful as everyone needs help and guidance. Although the solutions may turn out to be all bad, we must be able to choose the best among the worst. This is the art of making decision, especially business decisions which have monetary value impact. Like for our case, if the production cost is realy higher than price willing to pay (due to low production volume), I personally think we should sell according to price willing to pay. Customer is the king, and since we know the key is in increasing volume to achieve economies of scale, we must direct our efforts to increase volume, even if the only way to do it is by making losses in the first quarters. High risk, high investment, high return. Bearish or bullish, we will find out later.
A major problem we faced was the lack of cash; we actually planned to expand our production capacity, yet we did not have enough cash to do that. After calculated the projected demand, we were even more surprised that our current capacity would not be able to serve the expected demand at certain quarter.
We were not able to solve this, which could be seen in more than 20% stockout result. From this, I learn that there are many many factors that potentially reduce company’s performance. It is just overwhelming when we overlook one of them, and suddenly, disaster happen. From brand, price, ads, competitors, sales offices, sales people, production capacity, leftover inventories, and market research data; all are important. Our brand, price, and ad judgement should be the highest. If it’s not, improve or learn from competitor. As our main selling point was the sales people, we should have more of them in various places to sell our products. Market research data should be studied carefully to forecast demand which affects production scheduling. Leftover inventories can be salvaged or sold at higher price than competitors, the latter is to avoid further stockout on these unwanted products.
Again; we must learn from past mistakes, find present help and cooperation from VC’s and competitor, as well as do planning for future. Cash is super crucial in a company, though income looks high, without cash at hand we cannot do anything. That’s why we fell into loanshark who lend us so that we have at least $1 in our cashflow. Another thing I learned was not to be afraid of loan. I have always avoided loan, because I know that I’ll be paying more than I should. Now, I understand that it only applies to consumer loans. For business loans, if there’s an opportunity to expand and make more money than the sum of loan with interest, this loan is HEALTHY for the business.
In terms of seeking cooperation with competitors, a guy in our team liaised with 3 other teams. We agreed to share R&D facilities to all members of alliances. This agreement was verbally made; there were no signature or any form of legal documents involved. Here I spot a mistake. In real life, every agreement and contract must be written and signed, thus there is a proof in case anyone breach the clauses. Although we are friends, our business is a separate entity, all things shall be clear and formal.
From VC Fair, I learned that in meeting VC, it boils down to our communication skill, how we negotiate etc. It is one thing to have a profitable and sustainable business; it is another thing to let the VCs know and believe it. As for my personal growth, I commit to make time for watching TED talks and pitches, and repeat or retell them. Our team get moderate score in this exercise, which I believe; if we’re in the real world, there is minute probability these VCs will inject fund to our company. If we were to restart, our team will be more prepared, do more accurate and optimistic projections, and make sure everyone in the team have the business and financial knowledge needed to convince VCs.
After getting enough funds and data, we move forward with logics and careful measures. But to our experience, no matter how calculative and research-based we operate, there is always a risk of not meeting projection or even exceeding projection. Indra and I spent quite a long time looking into market research data, summed the total market size for a year, divide them by 4, put in pessimistic projections since quarter 6 is ‘not so good’, and divide them by number of competitors in the segment. This turned out to be wrong, as we were the market leader with higher percentage of market share compared to our competitiors. What we can do is to project as realistic as possible based on market research data, put in a bit optimistic view according to our targeted market share (not just divided it by number of competitors), and work it out by improving marketing efforts and sales channels.
Last but not least, our production capacity was smaller than our projected total demand. Problem, again! There is no way for us to quickly enlarge capacity, as reselling is not permitted. So we just maximized that capacity to produce our main best-seller product. And use the rest to produce Traveller product. We agreed on cutting the production of Traveller, considering number of players in the market. Other strategies we incorporated was to pay back all loans, to make our financial performance better, which is a right way to go. Our balanced scorecard was the best among all teams! Market share was not our main target anymore. Now I understand the importance of being balance. All aspects of business must be well taken care of. It is useless if our market share is 100%, but our asset management is bad, for example. We either stockout often, which harm company’s reputation in the long-run; or we overestimate demand and have countless unwanted inventories.
From this very last quarter, I learn that business is all about balance. Every single detail is important. Someone who is careless and not perfectionist, will not be able to compete well. To avoid making mistakes or overlooking details, there are few ways. We can have a mentor or advisor to oversee, a good assistant or colleague to remind, a manual or list of things that we often forget, a good communication between team members and last but not the least, enough sleep. Why enough sleep? Enough sleep allows our brain to rest and works better the next day. Too much work is not good for physical and mental health. We all know that, keep the balance in check. Listen to our loved ones; they may complain and give us advises which we should listen to, because they care about us. Be spiritual, do prayer, meditation, yoga, or anything, to help balancing ourselves. Friendship is also important. Win or lose, friendship is not affected. We all became more bonded and close to each other, ready for the next journey ahead.
One more thing, if I am to re-do the last quarter, I would expand more production capacity. That was our team’s biggest mistakes. If only we had enough capacity, I am very sure we could get at least 50 % of total overall market share. We have the product, price, and sales people ready, it was only the capacity, or else we could go to all five segments and spoil the market with low price in this last quarter. Yup, but there’s no use crying over spilt milk. We experience, we learn, and we will share.
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