By accident and design, I keep bumping into young entrepreneurs. And I often write about the subject.
'Agents of Change' is a piece I wrote for the latest Businessworld. It tracks under 30s, all MBAs who dropped out of campus placement to pursue an entrepreneurial dream. Something we're seeing more of at elite bschools.
The three companies I covered are:
Sacred Moments - a company selling 'puja kits'
Prakash Mundhra (SCMHRD 2006 batch)
Indigo Edge - Medical tourism and consulting
Sandeep Ramesh, Radhakrishnan, Zerin Rahiman, Shivakumar R, Abhisar Gupta (all IIM L 2006 batch)
Brewhaha - a cafe which combines great food with the fun of gaming
Mansur Nazimuddin (IIM A 2006), Sreeram Vaidyanathan (IIM A 2005)
All these guys shared the trials and tribulations of being a start up with me in great detail. Details I could not use in the article, writing under limitation of words.
I have therefore decided to publish the full interviews in this space. Because hearing these stories may inspire/ motivate some of you out there considering entrepreneurship. And give you an idea of the hard work that lies ahead!
To lijiye entrepreneurs ki kahaani... unhi ki zabaani
Interview with Prakash Mundhra
Company: Sacred Moments
Founded: May 2006
Educational background: BMS (Sydenham college), 1 year work ex with family business, MBA from SCMHRD
I joined the MBA with an open mind - to do either business or service. I have a family business background (textiles).
How it all began
I entered several b plan contests while at SCMHRD and this boosted my confidence. It started with the ITC Mera Gaon Mera Desh contest. We had to develop strategies for ITC products. I chose Mangaldeep agarbattis and prepared a business plan where the company could expand into branded puja items like branded roli, branded haldi etc.
That's how I got into this area of religious products. I was in my first year at SCMHRD at the time.
The plan did not click with ITC. But I went ahead and participated in Zee TV's Business Baazigar. I won the 'mini Baazigar title, incidentally.
In my 2nd year I entered many business plan contests and won several - notable among them IIM Lucknow, TAPMI, IIT KGP, IIM Calcutta. I refined my idea - from branded puja items to puja item outlets (like Archies) but in my heart I knew neither concept would work.
Finally, in the last 8 months I arrived at the idea of 'puja kits'. With the Rs 50,000 Zee TV gave me I researched the idea and created a designer puja kit. The idea was a puja kit as 'gifting' item - for corporates and export market. For bulk orders I decided to offer customised logo printing as well.
However I did take my placement also. I got into 2 companies - ICIC Prudential and Essar. After the placement I took part in 6 b plan contests and won 5 of them. That boosted my confidence but gave me a dilemma. Was it to be the job or my business? I was to join ICICI Pru on 11th May 2006. On 7th I sent them an email declining the offer.
Thus 'Sacred Moments' was born.
Nuts and bolts
I calculated that I needed Rs 3-4 lakhs to start Of that I had 2 lakhs with me, from all the b plan contests I had won. The rest I borrowed from family/ friends.
I consulted 3-4 pandits before finalising the product. Each kit has 32 items used in the Diwali puja, including murti, haldi, roli, honey and even gangajal. There is a vidhi booklet also, which tells you how to go about the puja.
I made samples which I displayed at the Giftex exhibition in Mumbai between August 3rd and 7th 2006.
I got a really good response. In fact the puja kit received the 'best new product' award. I was sure that I was onto something big. However, I got mainly enquiries and not actual bookings. But I made the bold decision of manufacturing 12,000 kits. The kits were prepared on a job work basis, the assembly of items was also outsourced. I used my dad's old office in Masjid Bunder as a base which was very close to all my suppliers.
Of course the orders got confirmed slowly. I secured clients like TOI, AV Birla group, Link pens etc. People bought the kits for both personal gifting and corporate gifting. In the run up to Diwali the kit (which sold under the brand name 'Blessingz') was stocked at Asiatic and Akbarallys. Contacts also helped. My alma mater - the Symbiosis society - itself took some kits.
I sold 10,000 kits by Diwali. Strangely enough I got around 500 orders even after Diwali. A Punjabi family, for example, gave it to all their baraatis as a gift! Others bought the kit to present after 'Bhaagwat katha'. IMT Nagpur gave it to delegates at a conference on their campus.
The gross revenues were Rs 35 lakhs (Rs 350 per kit). After Diwali I ended up taking a 3 month break because first my sister got married and then I got married. In the new year I went back and started fulfilling demand in the export market.
In the coming year I have expanded production and shifted it to Ahmedabad which is cheaper as a manufacturing base. Yes this means I constantly make trips up and down but one good thing is the items I am packing are not very high value ,so I don't have to worry about pilferage. I also have a godown now in Mumbai.
In the following year I have plans to launch a 'grih pravesh puja kit' and a 'vehicle puja kit' also.
Lessons and Learnings
How did I manage the cash flows? Well export orders were booked on cash basis. Luckily my suppliers gave me credit. I also worked against advances from corporate orders.
I did borrow Rs 25,000 from 5-6 friends just before Diwali to tide over the cash crisis. I repaid them soon after.
How did my MBA help in the project? Well I was condident of overcoming hurdles. A small example: I needed a 20 gm sachet of ghee. Everyone told me it's not available in Mumbai. They said forget about providing ghee but that did not seem right. So I searched on the net and finally found someone in Tirupur who is packing 20 gm ghee sachets, although for hotel parcel service.
The MBA gave me optimism as well as techniques to work around problems.
Then there are small details. Like knowing people face certain problems during puja. How do you keep the photo of the God upright? We provided a small photo stand.
Then, I wanted to give a silver coin but that was uneconomical so we gave a silver 'durva'.
I think the most crucial decision was to go ahead and manufacture 12,000 kits without having a single firm order. I sold 4000 kits in the last one week before Diwali. If I did not have the kits ready I would have missed that business.
In future I also plan to launch a range of lower priced kits (Rs 200) for the retail mass market under a different brand name (Bhakti). It will have a different design and also less items. I plan to sell 50,000 kits in all this year (2007).
There has been demand to expand to 'other religions' as well. There are many many options (Baisakhi, Holi, think of all the other Indian festivals!). Basically it's a very fragmented and unorganised market.
Currently I am handling the business with 2 staff members. When I started I had asked two of my friends if they wanted to join but they didn't. Now I have a sleeping partner who basically invests but does not participate in the management of the business.
Was it worth it?
Yes there is a lot of internal job satisfaction and I made money equal to what I would have earned in a job. I made about Rs 5 lakhs for myself in the first year. Year 1 was a learning experience, my production was not so efficient so I had higher overheads.
I did take small risks all along. Like when one my exams at SCMHRD was clashing with a business plan contest I ditched the exam :)
My marketing professor Shivram Apte had rejected the business idea totally. We had a lot of argument over it back then. Today, of course, he says he's very glad he was wrong!
Yes there are 3-4 competitors I am aware of but the market is very large. There is also an entry barrier. The kirana shop types can't build a brand and scale it while the MBA types find the product too boring.
I'm 27 and recently I was invited to give a 'guest lecturer on entrepreneurship'. It felt really good!.
What struck me about Prakash:It appears that Prakash achieved 'instant success'. After all a turnover of Rs 35 lakhs in your first 6 months of business is not a joke!
The point to note is that Prakash actually spent 2 years refining his initial product idea using the business plan contest platform (both Business Baazigar and the bschool circuit)
That's a route other budding bschool entrepreneurs should consider.
I also think the way Prakash managed his cashflows is worth looking at. You don't need an angel to come finance you. Think out of the box.
Lastly, I like his 'no compromise with the product' philosophy. He went the extra mile to produce a puja kit which married utility with beauty. And did not cut corners.
It will be interesting to see how Sacred Moments scales up further. But I certainly think it can and will go places.