Making A Business Plan Work For You

Updated: Mar 13 2004, 05:30am hrs
When Subramani Ramachandrappa, a student of post-graduate programme in management at the Indian School of Business, Hyderabad, was working on the Ideas spotting and building plan course that formed part of the curriculum, he had thought up a business plan in textiles or leather, sectors in which he had worked.

There was a small problem with textiles and leather: His professors cited the discontentment in criticality matrix factor to poke holes in the plan. According to them, use of this factor helps discard ideas that have any chance of creating discontentment.

Simply put, Ramachandrappa says, this factor led to the demise of mosquito-repellent creams and the huge popularity of coils and mats.

It was like Odomos being replaced by Good Knight because people are queasy out applying a repellent cream, he says.

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The goal was to come up with a plan that would succeed in global markets, so leather and textiles were out. So he thought some more. It was then that the idea of doing business with artificial flowers struck me, he adds.

Ramachandrappa, with active support from his professors, fine-tuned the idea into a full-fledged business plan. He was joined by Kaushal Khakkar from Mumbai, whose family is in the business of exporting fruits and flowers to the US.

The business plan has so far won second prize at the prestigious Thunderbird Business plan competition in USA, most promising product award at the Indiana University B-Plan competition and the first prize at Nebraska B-Plan competition.

Unique Flowers
So whats so special about artificial flowers Natures Own Company, as their company is called, will use hygroscopic paper, or paper that retains moisture, to give the flowers a natural feel. Ramachandrappa, who had earlier worked with biotech companies like Biocon and Novozymes and currently runs his own enzymes formulation company in Bangalore, says that the choice of hygroscopic paper to make the flowers was quite by accident.

Earlier, I had been working with a company that makes paper flowers. We were trying to upgrade the papers quality to make it look more real and in the bargain we began using certain enzymes which made the paper hygroscopic. On exploring this technology further, we found that it has certain other applications too, says Ramachandrappa.

Natures Own has applied for patenting the technology and the cost of the paper has been worked out at $4 a kg. It claims that making any variety of flower is a distinct possibility and the longevity of the flowers will be anything between six months and one year. The company plans to pack a single flower in a box, a bouquet in tamper-proof plastic and hardpaper pack and a single special flower like rose (minus the stalk) in a heart shaped paper container suiting special occasions like Valentines day.

It has set its sights on the US market to begin with, and plans to tap it by tying up with prime-time American florists and then gradually reaching the shelves of premium supermarkets and mass supermarkets.

Shelf Life
Kaushal Khakkar, Ramachandrappas colleague in the venture, feels that the product can be easily differentiated from artificial flowers We wish to position it as a premium product that will be retailed through supermarkets in the US, Khakkar says.

The flowers will have a shelf life of roughly six months after unpacking, claims Natures Own. Even after six months the moisture retention capability will still be there but due to the accumulation of dust and the normal wear and tear we are presuming that the appeal of the flowers will go down after six months, says Ramachandrappa.

According to the data pooled by the company, the world marketsize for flowers is $50 billion of which artificial flower market is pegged at $5 billion and the rest belongs to natural flowers. Natures Own sees competition emanating from natural flowers, artificial flowers and other gift items.

The company plans to market the flowers on the plank of low replacement cost and low opportunity cost for customers who will physically go and pick up the flowers for themselves. The company is eyeing institutional sales like hotel chains, corporate offices, airports and educational institutions to promote the flowers initially.

Emerging Trends
Another interesting trend that Natures Own is banking on is the mixing of natural flowers with artificial ones. This is a trend that is picking up, especially in hotels. Here too, the replacement cost is extremely low. With our flowers looking more natural we see artificial flowers constituting 60 per cent in a bouquet, says Ramachandrappa. The flowers can also be used as an aid in tissue culture because of their moisture retention capability. The flowers can be used as a substrate on which tissue culture propagation can be made as it is extremely sterile.

This property may come in handy for practising horticulture as saplings can be exported to countries like Australia, New Zealand and the US using the hygroscopic paper instead of soil. These countries prohibit the import of saplings bundled with soil to keep out foreign organisms.

Distribution Channels
In value chain and marketshare distribution, the company proposes to follow the traditional pattern. While 53 per cent of the flowers manufactured will go to wholesalers and retailers, 19 per cent each will go to catalogue/mail order and retail chains. The remaining nine per cent will go to the interior decorators.

In addition, the company has planned a website that will assist customers to make a choice of flowers and buy them online. We can recommend customers on the choice of flowers and help in flower arrangement. It is more like the model where they can have the option of choosing the flowers themselves, says Khakkar.

Natures Own is planning to price a flower at $2 for the Indian market and between $4 and $7 for the US market. It is also planning to work closely with welfare groups and leverage on the ready supply of skilled manpower within these groups to make the flowers. However, the unit cost of manufacture has been worked out at half-a-dollar.

Participating in business plan competitions has ensured the backing of venture apitalists. These competitions have benn our main source of roping in promoters. A judge at the Thunderbird competition in Phoenix has offered us to do the distribution in US market while a Chennai firm has also agreed to do the funding for us in India, says Ramachandrappa.