This assignment was undertaken for a London University to mentor a post graduate, MBA student, who the university sponsored to hold a Graduate Entrepreneur Visa to the UK.
The entrepreneurs venture distributes Asian ethnic, mid- price range, clothing and jewelry to family operated shops in London’s Asian markets. The advantage of the business is that it offers distinctive ethnic styles and designs at a competitive price, bringing a much needed fresh style and variety into the London’s Asian markets. The transaction process is direct from the trader in the UK to the supplier in India, with no wholesaler involved.
The marketing and sales process is based on a direct relationship with the market retailers, that was previously built up by the entrepreneur 3 years ago. Even though the entrepreneur had previous knowledge of the Asian market in London, it soon became clear that the Asian street market clothing retailer was in rapid decline, with almost 50% of them having closed over the past 3-4 years. This was due to a number of factors;
- Second generation Asian children growing up and dressing in western clothes
- Reduction in older Asian clients buying clothes
- Cheaper Chinese products coming into the market
- A general shift to online sales and distribution
- Higher rents for retailers in rejuvenated traditional Asian suburbs
- Older retailers getting out of the business
- Little volume being sold in the retail shops, subsistence only revenue
The entrepreneur after discovering the realities of the current market situation realised he had to change course and develop a new approach to selling Indian clothing products. The revised approach was based upon.
- A shift to online web based solution for selling products with e commerce transactions
- Better quality products and a wider range of garments and jewellery
- Offering market traders access to online selling of their products
- Offering market traders, the ability to sell the venture’s products in the retail outlet
- Building a retail community, based on combining online and retail shop, customers
To execute this new direction, the entrepreneur decided to out-source the majority of the business development and operational activity to a company based in Bangalore. The activities carried out by the company: –
- Web application displaying the products, based on a Shopify theme, with e-commerce transactions
- All software development, data management, operational continuity, security and maintenance
- Branding for the company, overall target style of the products and text content of the web pages
- Selection of products, photography and uploading to the web pages
- Packaging and shipping of the products to the UK
- Planning and execution of online marketing campaigns on Facebook, Pinterest
Ongoing social content for advertising and press coverage is handled by a third party based in the UK together with business planning activities.
Our role was to critically comment on the entrepreneur’s business plan activities, help him to make the best decisions, encourage him to execute the commercial engagement and make the transition to a new delivery model. Frequent meetings by phone, Skype, face to face and market visits kept the relationship active and focused on the key issues to solve. Extra input was required after the 3 months when the situation had changed considerably and a new direction was required.
Our advice to move the venture forward was to steer the entrepreneur to rework his business case and to focus on: –
- Building an online social presence through market campaign planning and execution
- Engaging with market traders to use the online site for their products
- Extending the range to cover – all year-round garments, special event offerings, current designer fashions
- Using market trader relationships to gain initial revenue and market knowledge
- Taking a longer view on planning the business.
We advised on a possible phased approach to building the business, to gain initial revenue from the most accessible market segment – market traders, and secondly start building a social online presence. The diagram shows the broad activities for phase 2, capturing trader’s customer details.
The entrepreneurs team was struggling to decide, how to include market trader’s products on the web site, without diluting the quality of their own ethnic products We helped visualise three possible solutions for discussion in order for a decision to made and get web development underway.
The options included embedding market retailer’s products in the product range, setting up their own website and combinations of those themes with different price and infrastructure solutions.
The final solution will depend on feedback of this proposition from the retailers and assessment of the development costs.
Revised Business Plan
Revising a business plan when you have started your business seems academic but we encouraged the entrepreneur to reassess his direction and sales figures in order to achieve reliable revenue and not rely solely on investment money. His plans showed how Indian ethnic garments could be sold both in the London Asian markets as well as move to online sales. The so called ‘bricks and clicks’ solution.
Using financial templates for this modelling approach, it was possible to the determine cash flow pinch points over time, sales targets and highlight when and how much funding was required by the offshore investor.
We were able to provide the entrepreneur with consistent mentoring help, by regular discussion of progress and choice of the best way forward, looking at the possible fully developed ‘end game’ and providing work sheets in order to visualise the financial impact.
When the entrepreneur looked at a wider product range and marketing and fulfilment solution, we helped him understand more time would be needed to get this new approach up and running. Ventures qualifying for this scheme need to attain a first year sales target of £50,00, in order to move to an Entrepreneur Visa in the next year. The Graduate Visa holders only have 1-year to achieve this target.
In our opinion, to be successful within the time period, the entrepreneur either has to have an existing business underway or achieve immediate success from a well-defined and executed plan. The £50k sales/ 1year period is a very high bench mark to achieve, with any new start -up, particularly for an overseas entrepreneur, in an unfamiliar business environment.
You can see more details of the venture’s support advice we provided as part of the mentoring for this venture at Slideshare