We're now halfway through the second course of this MOOC specialization. And I'm very happy to see that so many of you are still very engaged in this MOOC. That is very encouraging. And I hope that we will have a number of really interesting social enterprises coming out of this at the end of the program. Now, what are we going to do this week is this. We will first discuss the Ruby Cup business plan in more detail. We have a couple of our students look at that business plan. And afterwards, we will discuss the advantages and disadvantages of the Ruby Cup business plan and outline how you can use a business plan to explore new ideas and clarify what it is that you want to do. Following that, we will again have a number of guest speakers. After that, we will ask you to slowly move out of the ideation phase into the actual business plan writing part of this MOOC specialization. You might be surprised that it took us so long to get to this point. But it takes time to develop the group and it takes time to identify an opportunity. I hope you have achieved that by this point now. But now, let's first have a look at what our students are saying about the Ruby Cup business plan. >> So what would you say is the interest of a business plan for a social entrepreneur? Well, any kind of plan from my perspective is trying to plot your way through time and space. So you need to know where you're going and you need to know how you're going to get there. It's okay to depart from that at some points, but you have to some sort of direction. So a business plan is putting down where you want your business to go in the future and how. >> Ok, so you mean the mission of the business, or? >> Not exactly the same because you have to plot out more details. A mission statement is more succinct and visionary, but a business plan is more step-wise. What did you think of the business plan for Ruby Cup? >> So what I thought was really good was the way they identified the problem, the way that they seem so compelled to do something about it. And the product that they created, they seem they put a lot of effort in it. But on the other hand, I don't feel that they've put so much effort into the financial plan, especially, for example, the risk mitigation. because there'll be a lot of risk, there'll be a lot of problems that they will encounter. So I think you have to think about how you will mitigate, how you will identify and mitigate many risks. So here you're talking about a product that is not really, they don't really talk about it in those cultures, so what will be the cultural acceptability of the product? This kind of thing I don't feel was really tackled by the business plan and it's a huge risk. >> Yes, I would say this is true across many cultures with the difficulty of addressing how comfortable women are buying these sorts of products and being seen in stores holding something. So the way the product looks, the way it's advertised. And their plan for tackling these social issues becomes a hinge factor whether or not it's going to get grounding in the market. >> Mm-hm, which was really good in a sense in this case, because you really feel that they created a product with the local people, that the packaging was created with the local people. So that was really, really good. But the financial strategy is lacking a bit. >> And it's going to be hard to accomplish a social mission if it can't be financially substantiated. >> And to attract investors, yeah. >> So in terms of business plans, it becomes pivotal whether the business plan is searching for support from more of a development agency, such as Sida in Sweden, in this case, or if it's targeting more investors who are looking for large return. >> Mm-hm. >> So the plan could differ greatly in terms of emphasizing that financial aspect. And if the plan is one that really brings forth the social mission, it's going to attract more Sida. >> Mm-hm. >> But it's going to lose the other investors. So how do you create something holistic out of this? >> Hm, yeah, I feel, in this case, the plan was more directed to the aid agencies, because the emphasis was really on the social side. And those agencies might be repelled by too much emphasis on the return of investments or they might prefer to know how the product will get to those who need it more. And it might be the exact opposite if you're trying to get investments, then you're trying to show how it will be profitable. >> And even if you want to show that it's a product that can be social and be profitable. In this circumstance, it's possible to emphasize that it's going to reach a group that otherwise cannot necessarily afford to have effective sanitary materials. But it's also something to show that it is in many ways superior to the alternatives that people can afford if they're in, say, a middle-class family. And that this is something that's already been demonstrated in other countries. So just to show how they're able to bring it to the new market with that similar strategy of a social target. >> Welcome back to the Ruby Girls, Maxi and Julie. We're going to talk a little about what happened after you wrote your business plan, and the most important take-aways. So first of all, what is the most important about doing a business plan? >> I think for us, it was shaping our thoughts around the idea, because we spent many hours, I think, talking about the idea and the concept. >> Discussing, discussing, discussing. >> Yeah, discussing, discussing. But once you start actually writing the elements in the business plan, it also shapes it and it also changes it. You also realize things that are maybe not realistic and things that you have to change. I think that was really useful. >> Yep, and also it's a very good means of communication. So basically, if someone asks you, so what's your business idea, you can talk on the phone or you can talk in person. But then you don't have something real. And the minute you have something in writing, you can send it around and it gives you credibility, yeah. >> And what was your main learning through actually developing a business plan? It's not so easy to write it. [LAUGH] Because it requires a lot of research. So for example, you have to do, in the business plan there's a section about the market analysis, market potential, risks, financials, when will you reach break-even? So it's not something that you can write overnight, but it's extremely valuable to write it down, because then you can tell every-. I mean, then you basically find out yourself, is my business going to be profitable, and if so when. So it could be that in 100 years it will break even, but then maybe you are dead and then it doesn't really need to anyway. [LAUGH] >> [LAUGH] >> Yeah. >> So it's really, really, really helpful actually to write things down. >> Yeah, and figure out if it works, and I think also important is to not spend three months writing it. >> Yeah, true. >> Because reality changes every day and every week. So you do some projections obviously, in a business plan you'll always do that, and try and do them realistically but don't think about it for a month before you put it down. Put it down, and then if the reality changes then you go in and you change it. The most important thing is to keep the right balance between spending time on it, but also focusing on your business, because what you don't do when you're writing the business plan is that you don't focus on business operations. So it's a little bit.. It's important but don't overthink it because sales projections is just guess work, right. Julie, our financial person, she always had to make guesses about how much do we sell in a year's time, and then we guess, but we don't know if it's true, right, so. >> So how did you manage to get funding for your project? How did you reach the next level? >> Basically it's a combination of things. In the beginning, we invested what you call sweat money. That's just our own thoughts and energy and time. But at some point we had to figure out: where can we really get the money from to, for example, develop our product? And we all had saved up some money ourselves. Also when you, for example, register the business you need to have, at that time it was 80,000 kroner, just to be able to register a business. So we did that with our own savings, but when you have a business you realize it very quickly runs out, the money. So we quickly realized that we had to find money from external sources. And so then there was actually two different possibilities that we could pursue. >> Yeah, the first one was, we won one prize in the foreign ministry of Denmark. That was not a money prize. But it gave us some inputs to the business plan and the initial idea. And it gave us some advisory. So we kind of improved a bit on the business plan and then we found a grant made by Sida, the Swedish development agency called Innovations against Poverty. Where we basically fitted in because we were a for-profit company, but we were also doing a social good at the same time. So it's kind of a middle thing. So we fitted and we applied for that grant and we got it. So that was the initial kick-off funding that enabled us to go to Kenya and that enabled us to develop the product as well. >> And then, because we had won those competitions, we received quite a bit of media coverage, mostly in Denmark, but also international. And at some point we were contacted by two guys, investors based in London. One was a Dane. One was an Indian. And they were really in love with our idea. And they could really see the business potential. So they called us up and said: we want to meet with you, rather soon than later. And they flew into Copenhagen to have dinner with us and since then they have been on board and they have been really, really valuable in terms of money and also knowledge. >> I think the main learnings from both getting a grant and also getting private investors on board is that it's a quite different process. The grant applications are written business plans. And sometimes also follow-up interviews, but they are more academic in a way. With private investors, depending on who it is, but I think our investors, they are not interested in reading 30 pages from us, it's more the relationship. The personal relationship that you build, and you build trust, and they meet us as persons, and they see us as someone who can actually do this. Apart from seeing a massive opportunity with the product, of course. But I think that's the main takeouts from the two avenues. And where are you going from now? What will the future bring for Ruby? [LAUGH] >> I mean, since we've received the money, actually from both the sources, what we found out is, the idea was based on that business plan by that time, but we quickly found out that we should not stick to it. As Julie said: we should kill our darlings. Because what we found out and realized is that, when you do your business, is that reality can change from one week to the other. So basically we found out that our product, no matter how low we went on price, was still unaffordable to girls. So we had to come up with an alternative plan, because otherwise we would have died the financial death as a company because we did not sell enough products to cover our costs, basically. So we changed our business model. >> Yeah, we realized that we really wanted to solve the problems that the girls have, because it's a massive problem that they can't finish their education. So we actually started selling in Europe. >> Mm-hm. >> Selling online and in retail, commercially, for a higher price, and through that we do a buy one give one strategy. So every woman who purchases in Europe, supports a free menstrual cup to a schoolgirl in Kenya. So that's the main model we are working with right now. And then we are also actually selling in retail in Kenya to, that small product positioning, to have the product on the shelves. And position it as a high-quality product because the girls down there, they also don't want a product if they think they get it because they're poor. So brand aspiration is extremely important, so we are also selling in supermarkets and pharmacies in Kenya. >> Yes, and so the long-term goal would be, to, we are also working hard on that, is to supply it to international organizations like the UN, UN bodies, the Red Cross, who can supply a lot of numbers of girls so that we can really move some quantities for a lower price than that we sell to European customers. But to help a lot more girls than we can help through our buy one give one business model. Perfect, thank you so much for your time. I'm so happy that you could join us. I wish you all the best in the future and let's see what happens. I hope for the best. >> Thank you very much >> Thank you. >> [LAUGH] >> So what actually is the purpose of the Ruby Cup business plan? Clearly they want to use it to raise money from the Swedish development agency on the one hand and from for- profit investors on the other hand. So what would you consider to be the advantages, the strength of this business plan? First of all, it clearly identifies an untapped market potential at the base of the pyramid. Secondly, the social impact is convincingly and strongly portrayed as potentially huge. And also the writers of this business plan use an engaging storytelling approach, transporting the enthusiasm of the founders, through the use of lots of personal stories and quotes from the potential beneficiaries. What do you see as the weaknesses of this business plan? Now, from my point of view, one of the major challenges in here is the question of: how are they going to use the capital that they want to raise for their organization? This information comes only very late in the business plan, it's very short. And as a reader it stays unclear how the capital that they want to raise will help them achieve their overall social mission and goal. A second limitation of this business plan are the financial data in general. Again, they come rather late. They're not very detailed, and honestly, I do not have too much confidence in the financial side of this business plan. Thirdly, the marketing plan remains somewhat sketchy. Actually, it seems that storytelling is used to cover the fact that there isn't yet a very clear process in place of how this product will be distributed in the end. What does the business plan achieve? Well, obviously it has been very useful in winning business plan competitions. These have been a source of income for Ruby Cup. But as you've seen in the case, at some point, attending business plan competitions might take attention away from what you actually want to do in your business. If you've gone a little bit deeper into the assignment, there were two more questions I asked last week. How would you pitch the business plan differently to the for-profit investors and the development organization Sida, which has primarily philanthropic intentions? Well, this is an inherent tension that you have when you write a business plan such as this. If you describe a too lucrative investment opportunity, charitable organizations will not provide grants for your organization. However if you stress the need for charity and philanthropy, you will find it difficult to attract for-profit investors. This is a challenge you will have to deal with in your business plan. Lastly, let me briefly talk about the question of ownership. Most people who start a business in a team will tend to agree of a somewhat equal distribution of shares among the founders. While that it is not necessarily a bad idea, you need to consider what will happen in the future. Actually, I strongly advise you that you put agreements into your documents that describe the processes of what will happen if some of your founders later on will leave the venture. For example, you might make an agreement that you can buy back shares from any founder who has not joined full time your organization within 18 or 24 months.
