Entrepreneurship is the trending fashion among youth and that is so positive for society. In most of the business accelerators, people are looking for a “take away” formula to take off the business ideas, grow and scale up in the market.
But there is no such idea which is worth million dollars, but the good news is, some of the valuable business lessons can make an idea worth millions.
Here are some lessons and I must say, I was enlightened with these four business lessons from my 10 years’ experience of doing business in Nepal.
The idea has to be localized.
As every person is unique, every business is also unique. The idea that got huge success in the American market is not going to work in the Nepalese market. Or, sometimes, ideas that well worked in Kathmandu face hard times to survive in Pokhara. So Ideas has to be localized. Business ideas are affected more by cultural factors, demography, and topology too. For example, A Wedding Planner company has to arrange a different set of Band with drums in Terai & Kathmandu but in Pokhara, Panchey Baja is a must. Talking about my business, for Solar thermal technology, we need to take care of iron content in water in Kathmandu but lime/calcium is a serious problem in Pokhara. So to make an idea, million dollar worth, you need to localize first.
Less Investment more cash flows
I have already shared this lesson (a story) to so many business enthusiasts already. I would like to put this here again. Last year in April Mr. Ramesh and I went to China to import goods. He deals with mobile accessories and I deal with solar technology. He placed an order of worth 30 lakhs Nepali rupees and I placed an order of 60 lakh rupees. His goods were not brittle so he had the privilege to bring via Kerung border (on a rough road) and my goods are so brittle that I had to bring via sea.
Now maths for the business starts. It took twenty days to arrive Mr. Ramesh’s good in Pokhara. He had already got an order for all his goods. So as soon, his goods arrived, he delivered them to customers within a week. He took cheques with the due date of a month from the delivery date. So, the time span between purchase to sales was about 2 months . He was able to convert his order into cash in around two months. In two months, he earned 10 lakhs net profit.
My story was different, I placed an order of 60 lakhs, my goods were brittle so had to bring via sea, it took 2 months already to arrive in my warehouse. It took 4 months for me to sale and get money back and I had earned around 15 lakhs only.
So, Mr. Ramesh could use 30 lakhs for 6 times a year and he could earn 60 lakhs in a year with an investment of 30 lakhs only. I, despite investing double the money of Mr.Ramesh, I could use the money for two times a year only and I was making half the profit of that Mr.Ramesh was making. So this enlightened me a business lesson. The million dollar idea is “ Less investment more cash flows”.
Your client base is your worth value
Remember, Facebook bought the whats app or 19 billion dollars. Was that because they had a physical assets of worth 19 billion dollars, or they had stock of 19 billion? No, it was because they had 1.9 billion users, which was a huge clientele.
Even in Nepal, Esewa is evaluated worth $ 40 million (1 year ago) based on the number of users, Dolma investment invested in Sastodeal on the same basis, and so many startups like Foodmandu, tootle, Foodmario, etc with similar assets are coming in the market like disrupters. These kind of ideas are going to be “The Million dollar idea” of the 21st century.
Does your idea have a high possibility of Business Scale-up?
You can’t be a millionaire with a small market. Off course, you have to start with/from a small market while testing your idea, but once you feel that idea is going to work, then you need to jump start in a bigger market. A market can be bigger in terms of demography, geography or sometimes with the mix products.
A business can be scaled up in two ways, one reaching more customers with the same product, other selling more products to the same customers.
To make it more clear I would like to take an example,
if you have a quick fix (repair & maintenance) company in Kathmandu, you generate revenue by charging a certain rate to the customer against your service. If you want to scale up geographically, you replicate the same business model in Pokhara, Narayanghat and more places. But you can also scale up by supplying goods that are replaced during repair. Like a plumbing service company can sell a tap, faucets to the same clients.
So finally, if you think you have “The Million Dollar Idea”, check whether your idea carries above lessons with it or not.
Best of Luck.
Prakash Acharya is an entrepreneur from Nepal, passionately working to substitute fossil fuels with clean energy technologies. He co-founds Mukti Energy, a solar energy company providing a one-stop solution in the sector. He is also a big believer in change so he advocates and works for creating impact in society. His topics of interest spans from sustainability, zero energy, poverty reduction, sociology to smart city. He graduated from Institute of Engineering, Thapathali Campus on Industrial engineering. He is also a former assistant lecturer in IOE, Thapathali . Prakash is a fellow for Social Entrepreneurship Outreach Program 2014, Social Entrepreneurship Forum Sweden.