First business plan

Just after I retired, I was thinking what business I would start.
I thought of lots of services of IT industry and I introduce the first idea in this blog. As a result I gave up choosing it due to some reasons but I home this can be good reference for you.

An issue I wanted to resolve

I wanted to help those who have nice business idea and want to startup but don't have enough resource or colleagues to be able to develop.

Business idea as a solution

Provide lab service with unit price 0 for startup in Asia.

Service contents

• Lab service is a kind of outsourcing development service. Clients can ensure certain number of engineers monthly and can develop anything within this resource. It's different from so to speak outsourcing, which we must estimate man-month for every projects and order, and it's optimum for startup because it's so flexible to think of the next steps with developing in parallel.
• Profit model is revenue share with 10% rate. We claim 10% of the sales related to services that we develop. If clients can get sales, we don't claim. Therefore, prototype can be perfectly free.
• We provide optional services.
  + Speed up developing
  + Translator (Japanese English / Japanese Vietnamese)
• However, we make a contract with only clients who want to build services from zero and we specify programming language.

Market size (Investment price of VC for startup)

• Japan: 155.3B JPY (2011)
• Singapore: 171B JPY (2013)
• Korea: 60.7B JPY (2012)

Sum of them is about 38B JPY. I wanted to get 5% share of it. If I assume revenue share rate 10%, sales will be [ 1.9B JPY ].

* I refer OECD iLibrary and Asian Venture Capital Journal for these prices above.
* These prices are not sales volume but investment price, so I think they are just reference to know approximate size.

Competitors

• Existing SIer.
• Offshore development companies in Vietnam or SEA countries.
  -> Basically clients must pay for man-month. Price range is about 8,000USD/Man-month in Japan, 2,000USD/Man-monty in offshore. Speed is the most important factor for startups but basically they don't have much money and can't get enough resource from these services. That's why these services are not so optimum for startups.

Review

With this business idea, I met some persons to get feedback (not for getting funding because I thought it's too early with this rough idea). Then I decided I don't choose it. Here are main reasons.

• It's almost gambling. I can't assume clear sales (it depends on success of business of clients) but it costs a lots to keep engineer resources.
• In order to help startups, VC is the best solution.
• Originally if they can't find good engineers, they must not be good startups. They can't make good design document and it will be very hard to control development projects.