Preparing Bootstrapped Companies to Scale the Business

We are pleased to invite you to the Playbook Roundtable on “Preparing Bootstrapped Companies to Scale the Business“. A clear GOAL and action plan to achieve the GOAL, are essential to scale your business. This #PlaybookRT is led by Shoaib Ahmed from Tally Solutions and is intended for companies that have a bootstrapped business (SMB or enterprise), have initial customers and are trying to scale to the next level. They are keen to make more crisp their value proposition to the target audience and more clearly articulate their position relative to competitors.
This roundtable will be interactive and will help your team in
– Setting an Organizational Goal
– Realize the Benefits of achieving the set Goal
– Big Mountains to climb as an Entrepreneur to Reach the Goal
– Skills and Knowledge, Ecosystem players / partners required to reach the Goal
– Action Plans (Short term and Tactical) to reach the Goal.
This 4 hour roundtable is designed for Companies who are bootstrapped and have some visibility in market and product has been validated through an initial set of customers.
To apply for this roundtable please send the below details to [email protected] with the following information:
•The top two practical problems your company faces in Scaling your Bootstrapped company, that you would like help with.
•Please share, as briefly as possible, your current resources and efforts, the “what” and “why” of your bootstrapped business.
Applications are due by the 3rd of September. The goal is to have at most 10 companies so as to make the interaction effective. If there are other interested attendees, we will arrange subsequent roundtables. We will confirm the short-listed companies by 3rd of September 2015.

Developing a Sales Network versus Selling through a Network, Mumbai

Playbook-RoundTable is one of the most sought after community events of iSPIRT. It’s a gathering of 12 like-minded product startups who are beyond the early stage. RoundTables are facilitated by an iSPIRT maven who is an accomplished practitioner of that Round-Table theme.

Registration and Pricing

If you are keen to attend this RoundTable, do let us know by filling in your details here. We will confirm your seat subject to availability.

All RoundTables are conducted pro-bono. They only payment you have to make is to provide your undivided attention and active involvement in the process. Playbook-RoundTables are a dialogue and there’s no monologue. None.

The Playbook-RoundTable on Sales Network is a brainstorming session with participation from Product startups to discuss Sales network strategies. The RoundTable will have deep-dive discussions on the aspects of Building a Sales Network versus Selling through a Network.

The Playbook-RoundTable is facilitated by Deepak D Prakash, Former VP of Sales, Tally Solutions. Deepak has been instrumental in evolving a direct selling structure into an extensive sales partner network across India and overseas. He is also the author of the popular must-have book for all sales persons – Break the Barriers of Selling.

The experience of overseas markets and their behaviours away from home, throws up different set of challenges faced in market and within the organization.

The success of Tally in selling to the SME does not need any explaining. The strategies used for selling to SME involve not just direct sales but partner networks, network effect creation and non-linear growth strategies. These universal sales truths are similar across any software sales organization that needs to scale rapidly.

What we will explore

  • Does your Startup have the foundation in place to grow non-linearly?
  • Do you want to penetrate more into the same markets or into more markets?
  • Are you selling products or are they really services. What does a customer perceive when buying products?
  • How can I create a product from what I have created? (yes, create from create!)
  • Who is your customer? Everyone in the world? Can you sell to this “everyone” ?
  • What is the customer willing to pay? What does he want when he pays and when does he decide not to pay?
  • You know the customer, you have the product, you know how much to sell it for. Now, how will you sell?
  • Strategy, Methodology, Team – the role of each in determining your outcomes.

Do any of these questions give you worry? Do you see yourself plunging headlong into a lot of work and not really sure where its going to lead? If the answer is yes, then come join this iSPIRT Playbook-RoundTable on 14th March at Mumbai. Click here to register.

 

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Tax challenges being faced by the(SPI)Software Product Industry and Budget Recommendations made by iSPIRT.

With the budget closing in on the industry there are hectic conversations to represent the Software Product Industry in the right manner in the Ministry of Finance. The tax issues both on the Indirect Tax and Direct Tax have been plaguing the Industry for a long time and this hangout addresses the things which need to be done very well. The Indepth Knowledge of  Bharat Goenka (Tally Solutions) and the  moderation done by Sumeet Kapur(Employwise) leads to an in-depth conversation on the Tax issues.

Bharat divides the two issues into, First, the Direct Tax about TDS the why and when it should be applied along with Industry perspective, the second issue was Indirect Tax – the confusion around excise and service tax relating to products and its definition and applicability of VAT .

It becomes important to introduce the Constitutional Framework under Indirect taxes which broadly talks about Manufacturing and Services being taxed by the centre and anything that is traded is taxed by state.

Confusion arises around “Service” and “Right to Service”. Whereas “service” is not tradable a “Right to Service” when sold is a tradable e.g. a Mobile phone service being provided by a Telco is a service where as when a vendor sells a recharge coupon he is selling “Right to Service” that actually will be provided by the said Telco.

Hence, under this concept of “Right to Service” tends to be tradable until the service is rendered and not after it is consumed, because the title to right to service is nor more existing after consumption. Service is therefore treated as tradable commodity thus qualifying for VAT in states and the Center charging service tax, this leads to invoicing for both VAT and Service tax on a software product.

What is needed is clarity on the issue of tradability of service as “goods” and “service delivery” as “service”.

GST will bring in changes but the taxes will be shared between states and center. GST it self may not fully solve the problem of duality of tax on software products. The problem of duality on VAT and service shall be sorted out only when there is clarity on “Right to Service” as a tradable commodity and “service” is achieved.

We as an Industry need to help Government formulate a distinction between “Service” and “Right to Service” as a tradable, so as to do away the duplicity of VAT and Service Tax so that service tax is charged only on part of service and VAT only on tradable value added portion if and when a service is traded further by channel partners of the service provider.

Direct Taxes (TDS)

Sumeet introduced an issue on TDS. Primarily a TDS made by payers to software company leaves less cash on the money collected. This is mainly for software product which sold leaves the product company with 10% less cash on the money collected.

Bharat mentioned that Software despite being a tradable product is the only product that is subject to TDS. This creates a bigger problem for the young companies and growing industry as early years do not allow you the sufficiency of profits.

We need to bring in front of Industry that no trading activity should attract TDS. Also that by doing away TDS the Government is allowing the profitability and business growth thereby allowing more business to happen and widening the tax base eventually.

Sumeet was of the view that, if software product companies are being subject to a TDS there should be Tax credits available on service tax so that the cash availability to businesses can be balanced.

Bharat added yes we can represent to the Government on this that either give me an input credit or refund TDS on day I file my return. Sumeet added that refund must be done even if there is a scrutiny.

Pramod from Nucleus Software added that in an event the question of Duplicity of VAT and service tax was raised to the Revenue Secretary, who showed his inability to do away with duplicity on tax as VAT is a state subject.

Conclusion

Many of the changes in law have come in past few decades and there was a lack in taking the cause to Government or lack of sufficient clarity in helping Government to clearly define distinction between Goods and Services and to separate out Right to Service being traded verses Services.

Bharat Concluded by saying, in the present efforts done to represent to government, we are looking at adequacy of clarity and this clarity is much needed even if the GST is coming to solve the issues and problem in this regard.

The detailed budget recommendations can be seen here.

With Inputs from Sudhir Singh, ExcelICT

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SMBs and Indian Software Product Industry: Intertwined Fortunes

A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. ― Winston Churchill

Small and Medium Sized Businesses (SMBs), the growth engine of India, are on the threshold of a tremendous opportunity. Globalization of trade and the rapid proliferation of computing and communication technologies are affording them a platform to expand their reach to national and global markets and compete head-to-head with global players. But on the flip side, those SMBs that do not recognize and capitalize on this wave quickly are likely to be swept away by the stiff global competition. If SMBs are to successfully counter global competition in their own backyard and elsewhere, they need to adopt software technology on a large scale, enabling them to run their businesses efficiently and effectively. But, few SMBs have the financial muscle or the technical know-how necessary to implement customized software solutions. Therefore, the majority of 13 million SMBs would count on standard business application software that requires minimum upfront investment and ongoing maintenance, to fuel their growth. Such software is distinct from the software deployed in large corporations and I refer to this as ‘Small Business Application Software (SBAS)’ to distinguish it from large enterprise application software.

Business application software (SBAS) such as accounting software, ERP, CRM etc., offers multiple benefits to SMBs –

  • As shown by research, SBAS significantly enhances the internal productivity of SMBs as well as their ability to manage relationships with vendors and customers, leading to superior firm performance.
  • It forces SMBs to adopt standard processes and best practices, moving them rapidly up the quality and value curve.
  • Most important of all, by streamlining day-to-day operations, it not only frees up the entrepreneur’s time for strategic planning but also assists her with the tools needed to make informed strategic decisions.

 

The question now arises – How can Indian SMBs get the right fuel for their growth? This is where a vibrant Indian software product industry plays a critical role. Indian SMBs cannot realize productivity and performance gains from software that is designed for developed markets. This is because the business environment in India (and other emerging markets) is substantially different from that of developed markets. It is volatile, with frequent regulatory changes, and rife with institutional and infrastructural challenges. For instance, there were 340 updates to Indian tax laws last year. That’s more than one tax law update every business day! Therefore, SMBs need software products that can buffer them from such volatility and help overcome the challenges associated with operating in this unique and dynamic environment. This is possible only when products are designed specifically for the Indian SMBs – and this is best done by a strong indigenous software product industry.

Indian software product companies are better positioned than foreign firms to support the Indian SMB market. This is because,

  • They have lower cost structures which allow them to meet the stringent price-performance expectation of Indian SMBs.
  • Further, because of their familiarity with the operating environment, they can build effective channels to drive software awareness and adoption among Indian SMBs- remember that Indian SMBs are more like enterprise customers than individual buyers in that they expect suppliers to sell to them.

 

In summary, there is a symbiotic relationship between SMB growth and a robust software product industry in India. SMBs need the software product industry to power the next phase of their growth and make them globally competitive. At the same time, the Indian software product industry, having missed out on the individual productivity and communication software wave, can leverage the large SMB market in India to establish itself as a global leader in the SBAS space. In other words, software product industry is the fuel for the SMB engine and the SMB engine can drive the Indian software product industry towards SBAS leadership. By moving in lockstep and moving quickly, India can create a competitive SMB sector and a vibrant software product industry.

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Software Products: Funding and Opportunities, Shoaib Ahmed, Tally Solutions (Part 3 of 3)

Read the Part 1 and Part 2 of the series.

Shoaib Ahmed, President of Tally Solutions, began his career as a retail
software developer in the early 90s. Formerly the Founder-Director of Vedha
Automations Pvt.Ltd, Mr. Ahmed was responsible for developing Shoper, a
market-leading retail business solution — and the first of its kind in India to
bring in barcoding to the retail space. The company was acquired by Tally
Solutions in 2005, where Shoper merged with the Tally platform to offer a
complete enterprise retail software suite. In the last of a three-part series,
Mr. Ahmed gives entrepreneurs some advice from the product development
trenches.

In your opinion how important is the concept of funding? Do you think
people can bootstrap easily without funding?

Unfortunately, I come from a bootstrap background so I have to admit that I haven’t
watched the successfully funded companies very closely! Looking at the components,
you need money for development and marketing. I also feel one key component is
requiring enough money to bring on board people with enough leadership qualities and
understanding to pre-empt issues on all fronts. You have to have the working capital to
confidently bring on board people with these qualities. In this kind of context come the
questions: who should fund and at what period of time. There are the elements of the
seed and angel fund — in my mind the concept of angel fund hasn’t matured completely
because there is the expectation is that there isn’t complete clarity but there
is an element of being able to patch the company through so that they experiment through
the formative periods, and the VC comes in when the company is ready to scale, like for
marketing to get big numbers.

The sharpness, unfortunately, is not yet there because the maturity hasn’t been
established. For example, once a product company has been funded, there is an
expectation that the trend set by early adopters is what the remaining set of customers are
going to adopt as eagerly. However, this set may not have bought into the idea yet — but
there now is an expectation that based on the reaction of the first set, the next set will get
automatically attracted and it’s just a matter of reaching out to them. However, the method
and timing of reach out will be different. What it takes and what can kind of expectation
to set is dependent on the fund, but it also largely depends on getting the right kind of
mentoring and product mindset so that the entrepreneur is geared in a sensible manner.

What opportunities should entrepreneurs in the SMB space be
focussing on, other than in the accounting space?

Typically, the mid or large market gets most of the attention. For small businesses,
however, the pain-point is bringing hygiene into working systems like managing books,
inventories and people. At this point, there are options for the small business owner

to opt for enterprise integrated business solutions or specialised applications. The
opportunity lies in recognizing that different segments with different nuances exist —
and your focus is to design in such a way that their respective problems are solved. For
example, keeping in mind what a pharmacy needs both from a software and form factor,
I would say that billing is not the problem but replenishment is. Therefore, a large PC
may not be the solution — maybe an iPad or a mobile app makes more sense. So I would
say that you would need to wear the hat. To find a customer is the first element, and
giving a suggestion which works and bringing new technology in place are areas which
entrepreneurs in the SMB space should be focussing on.

What advice would you give to people who are getting into the product
development space?

First, they should understand the product mindset, which is to be able to identify if they
are building a value proposition. The whole process of product development shouldn’t
confuse them – there is the whole question of what the customer is asking for and what
the product will provide them. This is important, but product development shouldn’t just be
about reacting to market opportunities – arriving at a product design is also critical.

Secondly, there’s also a tendency to concentrate on providing too many features,
understanding customer requirements and being in a perpetual development mode. This is
why the development team has to have a strong business and marketing background.

Thirdly, having a face in the Indian market is a huge opportunity, but technology adoption
continues to be an issue so that needs to be kept in mind. This has a bearing on how you
design the product and experience. How much of that product you’re designing needs a
deep engagement, as well as elements like value and price. There’s a catch-22 situation
here because these elements of the product will still be in infancy – I don’t see a method
which a product company can use to address a market across the entire country. This is
where a lot of product companies fall into a gap because they might move to a partnership
model to sell to more people and this may not always be logical because a partner will
be interested in someone who has already created a market! A product company falls
into this gap where it sells to a few people, finds that it cannot reach out to more, gets
into a deeper engagement with the few customers it has and then loses the shape of the
product. Over the past 25 years, many product companies have morphed into service
companies because of this reason. Yes, environments have changed today: there’s
internet penetration, elements of communication have evolved and so product companies
should leverage this.

Read the Part 1 and Part 2 of the series.

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Entering the Product Space – Shoaib Ahmed, Tally Solutions(Part 2 of 3)

You can read the Part 1 of the 3 series interview here.

Shoaib Ahmed, President of Tally Solutions, began his career as a retail
software developer in the early 90s. Formerly the Founder-Director of Vedha
Automations Pvt.Ltd, Mr. Ahmed was responsible for developing Shoper, a
market-leading retail business solution — and the first of its kind in India to
bring in barcoding to the retail space. The company was acquired by Tally
Solutions in 2005, where Shoper merged with the Tally platform to offer a
complete enterprise retail software suite. In the second of a three-part series,
Mr. Ahmed talks about product development in the B2B space and reaching out
to customers.

Why do you think we are seeing businesses that start off as a product
company become service entities?

This is where I see the need for educating customers: why should you buy our product,
what can you expect from our product and what shouldn’t you expect from our product?
More importantly, will the product solve your key issue and will it do it well? Unfortunately,
who is educating the customer about these aspects? It may be a service provider who is
interested in the service revenue only. So there’s a disconnect — there’s nobody who is
evangelizing the product and being a product champion in the small and medium business
space.

What do you feel about having ‘pilot’ customers who can obtain the
product with an attractive offer like a reduced price?

I don’t think this is the right way of doing things. When you’re reaching out to customers,
it’s important to solve some of their key issues. To do this, you need information about a
particular profile of customers so very clear about who your customer is and what your
customer looks like to you. Now, if you want to get a large enough slice of the market
make sure you have experience with a complete set of customers — you cannot pilot
a semi-experience. You need to be able to engage with him and get your value from
him over the proposition you are making. This means measuring not only the product’s
effectiveness, but also measuring the quality of the sales pitch and that the service
capability and the service quality promise is being fulfilled.

You may decide in the first six months to choose a smaller customer set to target but
you’ll be measuring to see if all elements of your complete product experience are being
monitored for effectiveness or reviewed. This gives you an idea of scalability, since you
can then adopt an attractive pricing strategy with confidence. It can be an incremental
process, but unlike a pilot, you’re not only reaching out to a few customers and shaping
your product around them. With a pilot, the danger could be that the pilot customers are
early adopters who will view evangelizing you product amongst their peers as letting go of
a competitive advantage.

Do you think it’s a myth that it’s easier to develop B2C products rather
than B2B?

I think the success of Tally disproves this. Out of a potential 80 lakh businesses, nearly
40-45 lakh own computers. A large group use Tally for their business — nearly 90%
of the market. So, the constant need for us to deliver a value is critical and it’s also
important to keep communicating this value. If I as a business owner don’t see a value
in paying you for a product or service then I don’t, but increasingly in the connected
world a businessman understands that he can grow his business manifold by leveraging
technology. The information system now has to support him because he is in a connected
world so the game is changing.

In the B2C area, let’s look at the average individual : he has a higher disposal income and
is more exposed to technology. A lot of his day-to-day activities are done using technology
(like banking and filing returns). When he’s engaging with the rest of the world, he’s going
to expect a similar experience. This may act as a driving force for businesses to match
that : for example, can an individual get his doctor’s appointment online? If there is no
supporting eco-system for the the tool that the customer has, then even the greatest
online tool available to this customer can’t drive enough value. In my mind its critical that
business-to-business product development is on the system and the efficiencies have a
direct economic impact. For example, the average time for payment reconciliation in the
small business space is an average eight days. From a digital perspective, it should be
instantaneous. Just imagine the impact and velocity of commerce!

Interview Cont’d

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Start of the Product Journey – Shoaib Ahmed, Tally Solutions(Part 1 of 3)

Shoaib Ahmed, President of Tally Solutions, began his career as a retail
software developer in the early 90s. Formerly the Founder-Director of Vedha
Automations Pvt.Ltd, Mr. Ahmed was responsible for developing Shoper, a
market-leading retail business solution — and the first of its kind in India to
bring in barcoding to the retail space. The company was acquired by Tally
Solutions in 2005, where Shoper merged with the Tally platform to offer a
complete enterprise retail software suite. In the first of a three-part series, Mr.
Ahmed talks about how and why he decided to develop a software product for
the retail space.

What was it like to develop a software product way back in the late
80’s – early 90’s? Would you say it required a lot of guts?

Well, at that point of time I think you could say we were a little mad! Back then there was
no money, there was nobody willing to fund us – there was hardly anyone even using a
computer. You need guts when you have clarity or visibility of a situation, but we didn’t
have that. For example, when Shoper was still in a nascent stage, we implemented it for
a retail customer with five stores. Now, we had to automate a manual system: this meant
taking each item, entering its details into the software, printing out a sticker and sticking
that on to the item – essentially counting each item twice. What we hadn’t bargained for
was that there were nearly 10,000 items in the store! We had no idea how long it would take, but we pulled it off despite facing some major hardware hurdles along the way.

To give you an example of the level of innovation employed, another customer wanted
barcoding at the POS stage — something which hadn’t been done in India before. So
then we found ourselves having to reverse engineer a dot matrix printer into printing out
a barcode with zero information (since there was no internet) and then using scanners
(located and bought in Hong Kong) to work with dot matrix printouts of 15,000-20,000
items in the store. So you need to be crazy because you’re often going to be working in
ignorance.

What was the rationale behind choosing to develop a product for the
retail space?

We felt that there was a clear opportunity for material inventory management. Perhaps its
because we also come from a community of retailers in Bangalore, so there was a natural
orientation towards the retail space. Without a system in place or a method of working,
inefficiencies are numerous. In hindsight, working with some of our larger clients who had
eight-ten stores each gave us a sense of what it takes to run a retail chain back in 1993.

Tell us about the talent involved in helping you develop this retail
software product.

I believe that the excitement of the product domain is the driving force. It’s the fact that you
can make an impact. I can tell you that guys who came in didn’t join us because they were
salary-driven. There’s this thrill that accompanies the thought of your product being used
by different people, and you’re not directly involved in the implementation. As a product
company, you are not in front of the customer: it’s possible that the customer himself using
the product or there’s a third-party who is installing or implementing the product. That’s the
big kick which acts as a motivating force.

Interview Cont’d  (Part 2 of 3)