‘The difference between a calculated risk and rolling the dice can be expressed in one word: homework.’
In the last decade, more and more people have opted for self-employment rather than taking up a job. Technology has been the biggest enabler for this new age economy that throws up thousands of opportunities for starting new ventures. Therefore today, your imagination is the only limitation to identify, ideate or create a great business idea.
Today India is a happening place for entrepreneurs. The flip side of this is that being an entrepreneur is not easy. Experience tells us that startups often make 'avoidable' mistakes and pay a heavy price for it.
Situations like these can be avoided if they keep some cardinal principles in mind, before they get into a business. Here are some practical tips that will go a long way.
Stay hungry, but don't be foolish - Failure is the stepping stone to success' I quite agree with these words of wisdom. Many entrepreneurs tell their success stories laced with multiple failures. New ventures and new ideas are prone to failure and one must be prepared for this. But must you fail? Can you learn how to ride without being tossed off the back of a horse?
One should be able to take a failure in one's stride but at the same time by being a little cautious one could avoid failures; at least some of them. Excitement, rushing and gushing adrenalin are the must haves for anyone who signs off a well-paid job and ventures into unchartered waters of entrepreneurial ocean. Yet you can be measured in your approach while getting into something new. Remain excited but don't be enthusiastically foolish. Consulting others, due diligence, a sound market research, looking at the demand supply situation before you take a final call would go a long way in avoiding failures. Most important, don't bite more than what you can chew. Don’t jump into a well with no water- a dry well- there are plenty.
‘Take calculated risks. That is quite different from being rash.’
General George S. Patton
Choosing a partner - Many, if not most entrepreneurial ventures are started by a few likeminded people. Even if you are two, it doubles your strength and hedges your risk. Some ventures fail because partnerships fail. Select people you are partnering with very carefully. You must take only those on board who are competent to be in that business and can bring value to the table. Integrity matters the most- if you have integrity nothing else matters, if you don’t have it nothing else matters- and one must be sure about this for everyone on the team.
Temperaments must match. This is one aspect of human behavior which becomes a showstopper. As far as possible try to avoid joining hands with those whom you feel you can't work with because of their nature, temper or personality. A person may be professionally sound, can pool in money, has a great network, but if he can't fit into the team, don't get him in. Frequency matching is very important.
“A friendship founded on a business is better than a business is founded on friendship.” – John D. Rockefeller, businessman, investor, and philanthropist
Don't follow the herd - Herd mentally is infectious. Not only individuals, many large corporations fall into its trap. "If everybody is getting into one business, somebody is not thinking." It is essential to analyze market conditions, if you are entering something that is an established trend. Market research helps in understanding the demand and supply situation in a typical business vertical. Entering a saturated market can be dangerous and sometimes fatal. Spend a substantial time- yes a lot of time to check what are the currents and which way the wing could blow.
Look for a gap in the market - Look for a space that has yet not been occupied. I feel this is the crux of the matter as far as starting a new venture is concerned. As an author, I look for subjects that have not been tackled by other authors; I look for those gaps on the book shelves which need to be filled. As a startup, one should find out; what is something that people need and it is not easily available in the market. Check the pain points and clearly identify them. Then see if you can solve these for your would be customers.
One leg on the ground - This simple military principle tells you to move cautiously. While walking through difficult terrain, you first place one foot firmly on ground and only then you lift up the other one. It is that simple. For a startup, you need to take risks and yet keep some safety mechanism in place, so that there is food on the table at the end of the day. For instance if husband and wife both are working, only one should quit the job and start a new venture to start with. The other one can quit the job once the business is fully established. It is also wise to keep some savings tucked in place which can be of help in difficult times. Don’t be foolish to sell everything, your FD’s, gold, savings and stand stark naked.
“If your business partners aren’t working as hard as you, it’s not a partnership it’s a sinking ship.” – Julian Hall, entrepreneur
Education matters, but it should not become a hurdle - Never underestimate your education and training. Basic purpose of education is to widen your horizon by enabling you to think critically and analyze logically. Therefore whatever your area of specialization it will always add value. It also helps you to communicate your ideas more effectively. And these things are critical for launching a new business. Education is like a pizza base; if your pizza base is good, you can add any toppings to make it your way. Therefore use your education to your advantage. Specialization should not bog you down. Engineers can start a laundry business and I have seen CA's becoming actors and film directors.
Network Network, Network - The more people you know the better it is. Today technology enables you to connect with a large number of people through social media and email. Professionally, it helps you in seeking feedbacks, learning from others and expanding your knowledge base. Networks help you promote your product, your organization and even promoting yourself. Word of mouth is still one of the surest and best ways to advertise. Great opportunities can reach your door step through meaningful networks. Partnerships, Joint ventures and collaborations are possible almost at the speed of light if one has a large circle of friends.
Learn to let go - Getting into a business or getting out of it should not be based on emotions. Unless your facts and figures are right, don't get into a venture. This means due diligence regarding financial capability, market reality and a proper SWOT analysis must be in place before you decide to move in. Another diametrically opposite question is 'when do you quit if you need to quit?'
A sizeable number of startups fail. For how long you cling to a bad situation is a matter of judgment, cold facts and not sentiments. Love your venture but don't fall in love with it! Often people become rigid and fail to accept failure. Remember, you have not failed, but your venture has failed. So learn to move on. Let go at the right time. Minimize losses if it comes to that.
Get hold of a mentor - Experience comes from experience. Get a guru for yourself, a person who is mature and knowledgeable. Here networking can be of great help. If you are well networked, chances of finding a good mentor are brighter. Today there are several organizations started by people who have done it all and who want to help budding entrepreneurs to establish themselves. Do link up with some of these people. A couple of words of wisdom from stalwarts can be a game changer for you. More importantly listen to their advice and thereby take advantage of their experience.
Leave your old organization and laurels behind- I have seen young guys who worked for large corporations, Multinationals et al. As a startup they still feel they are a senior manager in a company and feel they need to hire people to create a big team and say ‘company will pay’! Which company? They forget that now they can’t put up a budget to the boss get his approval and then go screaming into something- your boss will take care if you go wrong. A multimillion dollar company can manage a few idiots and absorb losses- you will be on the road bro because it is your company. Don’t poop off the seed money or even if someone invests into your venture. You have no parachute to save you. So get out of the multinational mode/mood from day minus ten.
Learn from your competitor - Learn what your competitors are doing right and how are they managing their affairs. You can learn from their best practices, their pricing and marketing strategy. Use this business intelligence to create your own smart strategies for your products, pricing, advertising and marketing. You must also understand the weaknesses of your competitors and use these to your advantage.
The most important aspect of learning from your competitors is to learn from their mistakes. Remember, for entrepreneurs mistakes are very costly; therefore let others make mistakes and you learn from them.
It is a marathon and not a sprint - Startup success is a long hard journey. "It takes 20 years to become an overnight success," said Eddie Canton. There have been accidental billionaires but everyone cannot be as lucky as them. LUCKY ACCIDENTS ARE RARE. It is good to look up to them for inspiration but don't expect their success time lines to fall on your lap too. Therefore set realistic expectations for yourself. If you don't do this, you can get into a negative state of mind quickly.
An entrepreneur today is digging for gold, and it can be frustrating. A well thought out venture may not be as unpredictable as digging gold, yet it will have some uncertainties. You may have your own processes in place but you may have very little control on the environment in which you operate. Therefore, hope for the best and patiently keep working hard and success will be yours one day.
Expand at a manageable pace - Once you hit gold, don't kill the proverbial golden goose by hitting the gas paddle hard. Think through your expansion plan properly. You not only need finance, you also need people and processes. Having well defined processes become very important as soon as a successful startup venture gets ready to transform into an enterprise. A detailed homework and a realistic plan can go a long way in transforming your organization into a successful and a healthy institution.
Look after your team - A bunch of enthusiastic entrepreneurs don't realize how quickly they get into a leadership role. They get used to working with a handful of people and within a short time have a big team which they need to manage. The mantra for a successful entrepreneur is that right from day one you should learn to look after your team. Your own salary can wait. Your employees must get their dues first on time. Go by the motto of Field Marshal Philip Chetwode. "The safety, honor and welfare of your country come first, always and every time. The honor, welfare and comfort of the men you command come next. Your own ease, comfort and safety come last, always and every time." If you follow this, you will never go wrong.
Keep an eye on the rear view mirror - Business methods, environment and technology are ever changing and changing at a rapid rate. Obsolescence of technology, ideas, product acceptability and market preferences is happening very quickly. Before you launch a product or induct a new technology, there may be something better by someone else who is ready to launch or which already exists in a different form. It is better to keep an eye on the rear view mirror to keep watch on something that may be ready to overtake you. These seemingly simple principles can become life savers for those young minds who want to become successful entrepreneurs, transforming their ventures into an enterprise.
"Always treat your employees exactly as you want them to treat your best customers." - Stephen R. Covey