Monday, February 21, 2011

How to be a successful Entrepreneur?

I have had successful entrepreneurial stint. Here are few practical insights based on my first hand experience.

Planning is always considered essential but often ignored in the height of either bread-and-butter or urgency of issues at hand. These are inevitable, but planning is not to be ignored. An entrepreneurial venture needs to focus in that order 1) Product / Solution offering 2) Sales 3) Operations and People 4) Finance and 5) Marketing.  

First and foremost mistake is to get embroiled into daily OPERATIONS. Once in a while is fine. Keeping knowledge of operations and not budgeting for an operations guy are two different things. This is the most important factor to fail. Non-availability of his time or he getting tired in daily operations would leave nobody to drive the bigger agenda - business generation.

A) Clearly Defined Horizon - A startup never has the time and enough resources to dilute the attention. Most smaller companies start with an idea or commence with presence in one product or industry and after the consolidation, moves either for horizontal or vertical scaling. Most Indian IT companies when they started, started with one product - body shopping. I know of a friend who started and established a credible product company in travel industry with marquee customers. He knew the industry and Industry him. By virtue of his domain and industry knowledge, his products used to sell by word of mouth with advertisement budget of less than 2% of net profit (and not even turnover).

B) Connected Organization
    B1. Ecosystem helps - Outsourcing is not just for big clients. It can happen when you are just starting too. Create and have knowledge of an eco-system with specialists that can be tapped at will with in-built extra time and price margins. Upfront investment in hiring and keep worrying to provide work to specialist employee is a big headache saved.

    B2. Networked Organization - Many time, customers judge you indirectly as they may not like to judge directly. An enterprise's Microsoft Gold Partnership, Oracle's premium partner, HP-Mercury's premium level etc. sends a message to customer that the organization is trusted by industry's credible names and they can take it easy in their own evaluations and start trusting. All these partnerships also keeps you in top-of-the-mind recall of partner and may get the inquiries generated at them. A friend of mine in Sacromento, California, USA left a highly paid job at Microsoft to commence a startup. He knew the product BizTalk from Microsoft well and knew what it did not have. He made complementary add-ons and largely concentrated his communication to Microsoft, by direct interactions. In 18 months time, he was able to sell his small company ( $2m revenue) at 34 times premium to Microsoft itself. In generating this $2m revenue, 60% of the inquiries used to come from Microsoft only. Connect with trade association is also very useful.

C) Astute Financial Management
    C1. Keep Cost Low - Startups in garages or room at hostel is still a good idea. Customers that we tend to acquire initially usually do not come (B2B space) to entrepreneur office and grand office may not be needed during the trial phase.

    C2. Right Price - Selling products at very high price will deflect customers and selling it cheap will erode the capital for further growth. Pricing has to be right. Networked organization also exposes one to know what is expectated and how competition behaves.

    C3. Cash is King - One single most important reason for startup to fail is to struggle over working capital to pay for operating expenses. If one has planned for a one year of expenses and ensured their availability, promoter can focus on selling and/or making the products, away from every day finance related distractions. Most college graduates have better chance of stiking gold as there is no perennial sword of meeting expenses. Bill gates, Steve Jobs, Karsanbhai Patel are few examples.

But to sum it up, two more things that are important. One, keep publise organization with "I exist" phenomenon. Keep spreading the word about your existence to be in top-of-mind recall, through low cost but positive messages. Second, use mentor services. Mentor could be another friend's organization with whom you can share your issues and discuss openly on reciprocal basis or an individual who can be unbiased. Mentor is different from co-partner and brings in fresh perspective from outside without mired in the daily problems.

Ashish Jain 


  1. Very nice, practical article Ashish. I guess the inner drive, passion and clarity of vision are one thing and most start up are lead by people having these in them, but these small practical steps discussed in your blog are what will help many avoid the pitfalls or burning out too quickly.

  2. Your article shows that you know exactly where the shoe pinches. One, that you have mentioned that planning is important. Absolutely true, it is where people fail. They plan, but plan for big aspects. One need to plan for small things which are generally ignored and breaks the chain.
    Second and a very important aspect you have mentioned about being busy with daily operations. Daily operations are the source of learning points from where one need to derive and frame new steps and that is continuous. I appreciate that you have blogged such a practical and thoughtful issue.

  3. I believe one can find many "UnMet Demands" so called vacuum space in consumer's mind. Then identify those vacua which you find least costly in terms of efforts and time to fill.
    First focus on filling that vacuum with your solutions. If it clicks then try to scale up quickly.

    Another important aspects I feel that one has to have BIG Dreams to keep self moral up and boosted but should try to start as small to keep Cost and Risk in control.