Five Principles of Effectuation

Submitted By: Vikas Agarwal

PGP/20/017

Business Plan
Open a portfolio management service, which handles the investible surplus of individuals to give them
alpha returns from their investments, beating the inflation, and returns from other traditional
instruments like FDs, PF, etc.

1) Means - Bird in Hand principle

Who am I?

Finance professional - Investor/Trader Researcher Fundraising - Relationships

What do I know?

Chartered Accountant PGDM (IIM Kozhikode) Investment Banker Private Equity funds Business
experience Capital markets Other Asset classes

Whom do I know?

PE funds Bankers CA friends across various industries

2) Affordable Loss principle Focus on downside

I can afford to lose INR 10 lacs, which I have saved as a result of 2 years of service, in addition to
the opportunity cost of INR 30 lacs that I can earn during this time
Still have a time of 2 years where I can experiment, before starting a family and assuming
responsibility
Time loss of 2 years in the job market, as I believe my degree and skills would still be relevant if I
were to go back to the service sector after 2 years no risk of reputational loss

3) Leverage Contingencies Lemonade principle

Biggest risk to the business is market correction (price & time) Can sail through these corrections by
providing wealth management services where investments can be made in alternate asset classes in
varied market/business cycles, as people will never stop saving and investing. In fact, sudden corrections
are good as it makes people think about the necessity of a professional manager and the importance of
diversification in investments

4) Co-creation Partnership Crazy Quilt principle

The venture will require me to tap friends and family for funds, thereby becoming my first level of
collaborators in this venture. The growth of my venture will be directly related to their growth, which is
how I would like it to be.
Other partners in this venture would be my contacts in PE funds, and other financial institutions that can
help me with their research material, and market insights that can be used for making decisions for my
clients portfolios. In return, they will also get subscription fees, and investor backing. Maybe my clients
could become potential limited partners for these PE funds. Broking companies will also be tapped for
research material in exchange of brokerage. Their wealth managers may also sell my services to their
clients in exchange of client acquisition fees.

5) Worldview Control vs Prediction (Pilot in the Plan principle)

I will be constantly supervising the business actions, namely the investments and procedural aspects.
Therefore, any adverse situation can immediately be dealt with. Moreover, my contacts in the financial
services industry, will help me anticipate market movements in advance, cushioning me from
unforeseen events.

Also, I already invest for my own self (family). Because of this, I am constantly involved in the study of
capital markets and economics of the country. This creates an intersection between my personal and
business goals, helping the ventures cause.