Business Idea - Local Coupon Specialist

Just 4-5 years ago internet had not penetrated too well in India. That time there were some websites that were operating coupons. But these websites/coupon books offered coupons for very costly things. Like Yellow Pages - had a coupon book where it would list some of big hotels, restaurants, etc. I have also seen some other coupon books, which will list Hotels in Hill Stations and offer some 40-50% discount on the prices. Mainly the listed things would often be services like spa, massages, beauty salon, organized hair cut shops, etc.  

I think that this sector has not been tapped to its potential. I will explain. If you are supposed to start some small business then you can tap this business idea. There are different models. In one model, you charge merchants for advertising, while distributing the coupons free of charge to the public. In another model, you do not charge merchants, but charge public for the coupon book. You can opt for the second one because most of the time the merchants may not be willing to spend the money. You can charge them for premium spots like Front page, second page, back page, etc.

You go to the local merchants first and then take their permission for overall coupon - like 10 % for purchase of over 1000 bucks & second coupon would be 5 % for purchase of over 500 bucks. They can give some item specific coupons. Once your book is ready, you can think of limiting the number of coupons per merchant. If you have located some 20-30 local merchants with different businesses, you will have enough coupons. Now, if you look at it each coupon can provide Rs. 50 value to the user. If you have such 50 coupons, the total value provided would be Rs. 2500/-. This is considering small ticket coupons. You can have some big coupons too like from furniture merchant. Furniture costs go anywhere between 2000 to 50000 bucks, so if he gives 10% discount, the potential coupon value could be 200 to 1000 bucks if it is capped at 1000. 

The potential value of the coupon book can be anywhere between Rs. 5000 to Rs. 10000/- for the user. How much should the book cost to print? Not more than Rs. 20/-. If you use glossy paper and good packaging, then Rs. 40/-. You might have to print 500 copies. Cost would be Rs. 20000/-. But you can sell it for Rs. 100/-. How many could you sell? To cover your costs you need to sell 200 books. 

User - If the user sees a definite value of Rs. 200/- in it, will he not buy book for Rs. 100/-. He will easily save Rs. 100/- by buying his normal things. If this is the case, the books will easily sell out. 

Merchants - They will continue to advertise in your book because if they do not advertise his competitive merchant will. The book would be popular and who ever has coupon in the book will get more customers. 

You - The coupon book will bring value to User as well as Merchants. This should be able to help you recover the costs and also sell out all the books and make profit. You can limit the coupons use for a month and come out with monthly editions. This project would be for masses.

Scaling Up

Once you are comfortable at one location, you can go at other locations and set up merchants there. You can learn different things from different places and apply at other places. You can also have tie ups with different merchants in tourist places. These coupons can be placed at any of your location 'coupon books'. 

Engage The Family

This is one thing that I watched when I was working with big group. The owners had big vision and they were building world class company. The factory location was not in city. They had build whole self sufficient town where their employees could reside. The factory was very near from their residence and hence employees loved it. Still there would be some attrition because of the location or due to higher salaries offered by competitors or mere family pressure. To tackle this, they made a good arrangement. 

First of all, they brought one good school in the town, so that employees children studied there. Then they also made arrangements for their wives to work in their factory. The roles were small, and there was flexibility in working. For example, roles like documentation, secretary, planning, HR, etc. These roles would be light one and would be done easily for wives who were graduates but did not work till then. The flexibility of time offered convenience to the wives so that they could make tiffin or could pick up their kid, etc. The work also gave extra money to the wives. Consider the scenario. There is this whole family shifting to this factory location. The chief earner has a salary of say - 50000. The wife would be given a salary of 10-15000. The total salary for family went in the range of 60-65000, depending on the role that the wife got. Now, if he has to look for better option, he will not look w.r.t. 50000, but he will have new benchmark of 60-65000 and then will have his options cut out. 

Thus, the owners, with their beautiful vision decreased the attrition rate dramatically, improved lives of the families and increased the confidence of the ladies too.Sometimes, you have to think beyond to make change.

Understanding The Power Of N & T

In one of the last articles, I had talked about the power of compounding. We saw how the number of turnarounds per period is important than the interest/margin rate that we are getting. Some might still not be able to visualize the power of compounding and would undermine it. Some people still give more importance to the discount or margin or profit that they can get and hold their material for larger profits. It might still be good in markets where the demand is limited. For example, there might not be demand for some article, even if the rates are slashed from, say, 500 to 200. In such markets, people should stick to the margins. 

But there are markets, where demand can increase if the cost of the product comes down. In those markets, the idea should be to lower the margins so more and more products get sold. For individuals, the example of Savings Bank Account & Other investments would be easy to understand. For example, you have Rs. 10000/- in your account. The Savings Account gives you interest in 6 months period. If they give monthly interest, then the same amount will increase after year end. If you invest in mutual fund, then the compounding is  good since your unit price increases daily.

The adjoining formula for Accumulated Amount has 4 elements. Principal is constant. You can vary the r & n and see how the A varies. If you look at the formula, A is very sensitive towards n. The Power of N is very high when compared to the power of r. If you increase the margins or interest by 1 %, it will not make much change to the outcome. But change in N will immediately make you notice the change. Another element in the formula is t. T is the number of years or periods considered. If your compounding is done per year, your n is 1. But for quarterly compounding, it becomes 4. The power of T signifies the value of time. If you start early in your savings or in your business, then the power of T will take you that much farther. 

Understand the formula and apply it in your life. It will help you in long run. We often forget small things in life. And small things can sometimes make big difference.

Starting A New Business? How To Start Up?

In our early days in business, we had gone to meet one of the successful business man. He was actually friends elder brother. He shared different aspects of the business. One of the aspects was that when you start your business, either start very small or very big. His main reference was w.r.t. money that you put in business. We have seen several businesses trip over despite showing good signs in business. The major reason in those cases can be Cash Flow problem. Cash Flow can trip down any good running business. If you are going great and having good sales figures but are also tight in finance and credit, then God save you. Often the aspect of Cash Flow is forgotten and people expand very fast. Once they sense that there is good demand for their product, they start expanding. When they expand, it is like big overheads and if the cash inflow from new expansion is not coming, then the cash flow problem occurs. Your outflow is more than the inflow. 

This is what he meant, when he said that. If you do not have huge financial back up, then you must start slow and stabilize the business first. Once the cash inflow is there, you would be more confident and then go to the next step. It happens that when we are making business plans, we factor in the business that we would be getting and also the cash flow. But the stabilizing of your product or selling of your product takes time and this delays the cash flow. This may unsettle your business if you had not factored that in or do not have reserve funds. When you go other way round; you have enough deep pockets and have already stabilized your quality & product, then you are ready to go big. You can advertise, keep big launch program and invite the Page 3 people and you have launched yourself in the minds of the people. 

Recognize The Opportunities

There was heavy flood once in a city. The water level was continuously rising. Power had tripped down due to strong wind. People had started to leave the place. There was one old age man. His neighbor asks him, 'I think the flood will increase. I am leaving the place. You too come with me.' Old man says that My God is with me. He will take care of me. After some time, evacuation is ordered. One soldier comes near the house. He asks old man to come. The old man says, My God is with me. He will take care of me. The soldier leaves. After some time the water level Increases and a boat comes near old man's building. He again says that My God will take care of me. Then the water level increased so much that help comes through helicopter. When a rope is thrown at him the old man refuses to come. He says that My God will take care of me. After some time the old man is dead and is in Gods' court.

He asks God that I had so much trust in you that you will save me. But you let me die. Why? God first slaps him and says that it was He who had sent the neighbor, the soldier, the boat and the helicopter. But you did not take my help.

God is always creating opportunities. We just need to train our mind to recognize that. We should take note of the opportunities and take action. If we wait for right time, it may never come.

Perception-A Step To Build Your Brand

Have you heard someone ask for particular brand? Even you must be using only particular brands. Does the quality of different brands really so much different? Many a times the answer will be No. Most of the time the quality is same. But the brand is written all over your mind. No matter what you will buy only those product.

This is due to the perception in your mind about the brand. This perception is not created overnight. It takes long time to create the right image or perception in minds of user. You have to keep the quality consistent every time. The quality is best but along with it is packaging. The packaging changes your view about the product immediately. Visualize the pair of clothes given in simple plastic bag and that in a proper colorful box. The box packing will immediately change the perception of product. You can spend 10 on packing & ask customers 100 and they will happily give it.

You can similarly work towards perception image of your product. This will create brand awareness among consumers.

Focus One Thing At A Time

You have decided a goal and it is quite far away. How do you reach it? For example, a child wants to become great archer. Should the child try to hit the bull's eye directly? If the target is at good distance, would it be able to shoot the arrow so that it reaches the target. No. First it will need to focus on gaining strength in the muscles. The muscles should have enough power so that it is able to throw the arrow to the length where the target is kept. The very first training should focus only on strength building. Once it is able to throw the arrow to the target length, the first step is clear. It can now focus on hitting the target and then the Bull's Eye. 

When the child is trying to play cricket, it is not just about playing the shots or throwing the ball. It always starts with strength training. First, the child should get the strength in its muscles and gain the stamina to last enough in the match. It should be able to run on the field without getting tired. Then it starts with throwing of the ball. It should be able to throw the ball long enough. It should be able to pick the bat and move it easily. Once these things are done, then the training for the shots or the bowling starts. 

The situation is similar when we do our business. The ultimate aim of the business is to earn money. But, it has to make investments - both time & money, so that it has the strength to play along and earn money. You must always focus on one thing at a time. First focus on quality because that is the most important factor. Without it you won't be able to achieve success. Then try to increase the business and then think of the margins. When you have enough business, you can focus on money making & efficiency.