Venture Capitalists speak about new venture; they seek a business plan elaborating Forecasted ROI, Equity split, Break Even point, ROCE, Target segmentation etc. But how a business evolves? Opportunity can be found anywhere. If there is need-gap, an opportunity exists to bridge that. Optimists see opportunity even in Calamity while pessimists see Calamity in biggest opportunity. Fundamental of any business is about creating value for customers to cater to a need against a price. Any frustration can be the germination of an evolving business model. But what is it that makes some Businesses click while others perish? 

 

Let us take an example. Taxi Drivers haggling with fare and tampering meters are common sight in South Asia. They do that as the meter rate is not very high, trips are limited and they face extortions from multiple sources. Coupled with high maintenance and rent, what is left for the drivers? Poor chap has to earn his livelihood and support his family. But a Driver haggling with fare, tampering with Meter is very frustrating for us. Right? What do we do? Nothing. Curse the government, society, politicians. Even curse ourselves for being there. But facing such incidents multiple times, it never occurred to me that a Business Model can be envisioned. Till I heard about Nirmal! 

 

Nirmal Kumar; this soft spoken, specially abled person is a 2008 graduate from IIM Ahmedabad. He comes from a modest background in Bihar where his father was a primary school teacher. One night, he was in an Auto Rickshaw in Ahmedabad and got overcharged. Though enraged, he did not curse like most of us. A business idea struck him. He entered with a deal with Drivers parking outside IIM Campus. Against an undertaking that proper fare will be charged, he provided them Free Newspaper and Health-cum-Personal Insurance cover. Starting initially with his own money, he started visiting corporates to draw from their CSR fund. 

 

With funds, Kumar increased the facilities for drivers and developed the brand ‘G Auto’. A business model was borne. The drivers benefitted with health care, children education and insurance. Gujarat CM Narendra Modi came for inauguration which helped in many ways. With the vehicles carrying advertisement, sizeable revenues generated. Finally Nirmal Foundation, a trust, formed with Kumar as Managing Director. Currently 21 paid employees are associated with the trust. Revenues from Advertisement, Corporate Donation, and Government funding help them breaking even. The Foundation ensures that any member breaching law will lose membership; but they also help the Driver in case of any unnecessary harassment from the authority. 

 

G-Auto voted second in the SMART Mobility Awards on transportation solution given by Michigan University. Recently, the Indian Union Urban Development Secretary has written to all states to emulate the model. Kumar, looking for expansion, met Delhi CM Sheila Dixit with plans for the national capital. 

 

Kumar installed new technology like tamperproof computerized meter for positive, sustainable customer satisfaction. With the vehicles being monitored through GPRS, introduction of a Call Center and free Mobile Phone App; now customers can even request for a G-Auto delivered to his place. Imagine the power of this proposition, at late night with normal rate reliability. Usually a driver earns around 200/-IC per day in a normal system after clearing all expenses associated with the vehicle. They resort to unsavoury tactics as the ends cannot be met with limited earnings. But with theses upgradations, G-Auto gets more trips and volume compensated for low earnings per trip. 

 

The strength of this model is it’s a winning formula which offers wonderful returns to all stakeholders. This is the essence of any business plan. A business becomes successful if it caters to certain fundamental principles. 

1. The offering must satisfy a need – latent or explicit 

2. It should create value for a set of people – either directly or indirectly 

3. Customers should cherish their experience of association and return back to feel it again 

4. The perceived value offered to the customers must be more than the price paid by them 

5. It should offer positive profitable solution to all stakeholders; both the drivers and the Customers 

6. It should remain relevant and evolve continuously by adapting to the changes happening in Macro Environment. Lots of flourishing businesses suffered due to lack of flexibility and vision! Remember Kodak and its bankruptcy filing? 

 

At the end of the day, a business must be profitable and provide Shareholders more return than they would have got from a normal and secured depository route. A dream business in paper that does not make money for its shareholder is a living nightmare. 

 

Business Model is like a vision, a dream and when people have a vision which satisfies all these fundamentals - they have a winning formula in their hand. It is the vision that matters. As Sam Walton correctly pointed out - “Capital isn’t scarce; vision is.”