My first brush with entrepreneurship happened by chance some decades ago. I was in between careers, having spent a few years sailing around the globe as a "shippie" I was planning to come ashore and arm myself with an MBA and switch careers, to become a more staid, stable management type. It was the early '80s and a small little car called the Maruti 800 had captured the imagination of a nation fed till then on a restricted diet of "Premier Padminis" and "Ambassadors". My uncle, a very seat-of-the-pants entrepreneur, who had learnt the ropes of business by getting his hands dirty, literally, in the highly competitive automobile tires & tubes business was planning a new venture as an ancillary unit to Maruti and offered me a junior partnership. Come learn what they don't teach you at the IIMs, he said. And I jumped at the chance! So, there I was learning to put together a project report and a business plan, opening bank accounts and meeting bankers for business loans, poring over technical feasibility reports and so on.
Alas, it was not to be! For reasons not relevant here, the project never took off the ground and I was left with a dream gathering cobwebs somewhere in the recesses of my mind as I embarked on my corporate journey. Months passed into years and I kept trying to peer into the Indian housewife’s mind in an increasingly meaningless attempt to discover why she would prefer to buy one brand of hair oil over the other or what new revolutionary ingredient to add to my detergent brand so that they would all rush to buy it ….till the day I finally found the courage to chuck it all up, brush the cobwebs off my dream and turn an entrepreneur.
As I look back on the years I realize that while for me it happened by chance, there are many others out there whose dreams stay just dreams. And what the pity is, that it need not be so! Entrepreneurship was not a word heard very often during the time I was at business school, but these days it seems there are more entrepreneurship cells at business schools than business schools themselves. The question that I am asked most frequently, whenever invited by these cells to speak to students is, “What is the right time to become an entrepreneur?” While there is never a right time to turn entrepreneur depending as it does on the individual context, what is clear is that the moment you start your corporate career it becomes progressively difficult to get away from chasing the customer to chasing your dream.
The PANT model for potential entrepreneurs
Once you start a corporate career, the initial honeymoon period is full of excitement and activity, and any entrepreneurial dreams that you might have nurtured in business school are relegated somewhat to the background. As time goes by you begin to get more and more involved in your work though you still actively talk about your entrepreneurial dream and perhaps even actively do background research work for it. But then you get married, and life changes somewhat! And you tell yourself that you will surely come back to this dream in a while. Children come along in a few years, your needs grow along with your designation, status and pay check. And suddenly, the monthly dose of “drug” called salary check begins to dull the entrepreneurial fires in your gut. It becomes increasingly difficult to imagine life without the safety net of the monthly salary.
And this is the point where dreams of being an entrepreneur begin to actually be forgotten by most of us who dreamt of owning a business one day. And unless something dramatic or extraordinary occurs, we give up on our entrepreneurial dream and continue the corporate journey. One way to avoid such a happening is to follow what I call the PANT model for potential entrepreneurs.
The ‘P’ - Plan, Plan and Plan More, from Day One!
Unless you come from a business family, it is quite likely that you are going to be a first generation entrepreneur and what’s more important is that you are unlikely to sitting on a pile of cash that can be invested into your first business venture. Especially, if like me you too belong to a middle class service background.
And the planning is not just about cash. It’s about the timing, support systems when you go off the corporate radar, keeping the home fires burning, your working arrangement in the initial days of your venture and of course, the Plan B. Essential therefore, to start planning the venture as early as possible, perhaps even from day one of your first job after passing out of business school if you are very clear that an entrepreneur is what you want to be. Elements of this plan should be:
a. Your business idea, obviously, in as much detail as is possible. Ideally, the business plan should include financials and a P & L statement if not a projected balance sheet. This may be revised and fine tuned as you go along and gather more information regarding your business.
b. Your monthly cash flows once you put in your papers and the monthly check stops coming in. Plan for at least 6 months of no income at all. Estimate what your monthly cash requirement will be during this period and start saving for it. Depending on your timing, you could plan this out really well, putting aside a small amount every month when you start working till you reach your target figure. Of course, if you are lucky enough to be married to a lady with an income matching yours, then all you need to plan is how to survive on one salary. Though, I would advise that you still put aside a small amount every month. You never know when it might come in handy.
c. Plan where you will work from in the initial days. Many a would-be entrepreneur in their zeal to save money initially, plan that they will operate from a home office and set aside a study or room at home for that purpose. My advice would be – unless you are a very disciplined person, take up a small room in an inexpensive business centre or even a small room in a friend’s house. Anything that gets you out of home every morning and off to almost as proper an office as you had in your job. There is many an instance of a would-be entrepreneur stumbling into office in a pyjama suit at 11 in the morning, treating the home office as an extension of their bedroom. Apart from the fact that it presents a very poor picture of the intent of the entrepreneur, such a situation soon leads to the entrepreneur losing his way and sight of his objective very soon.
d. Finally, while as they say well begun is half done, always have a fall back option or “Plan B” in place in case things don’t work out as per plan. It is always possible that despite extensive research, background work and proper planning your entrepreneurial venture just does not work out, for whatever reason. And the signs for this may be evident to you or others as early as within 6 – 9 months of starting out. What do you do in such a situation? Do you stick it out with your venture and pour good money after bad, or do you call a retreat and fight another day? Do you innovate and change your business model or do you go back to the comfort of a corporate life? Answers to such questions are situation specific and may vary as per circumstances but the important thing is that you recognize the possibility and have a plan in place to manage it.
The ‘A’ - An Angel to Guide and Mentor
Who couldn’t do with one? An angel who could help you on your entrepreneurial journey and smooth the ride along the way. Typically, an angel would be a person who knows you well personally, someone you may have earlier worked with or even someone who is a part of the family or a relative, if you can manage that. What’s important is that your angel has faith in your entrepreneurial zeal and capabilities. Normally, an angel investor would bet more on your ability as an entrepreneur rather than the strength and uniqueness of your business idea.
Ideally, an angel investor would put in a small amount of money, ranging anywhere from a few lacs to perhaps even as much as a crore on occasion, depending on the project. The primary role that an angel investor plays is to bring in funds to help you establish proof of concept and rarely would angel funds last you beyond the pilot stage. For growth or scale up funding, you would have to look beyond to a VC or a PE player, and that is a topic for another blog another day.
The angel investor will probably take away a sizeable chunk of your company because not only has he reposed faith in you and your business idea but has also laid money on the line for you to experiment and prove your largely untested business idea. Regardless, the angel investor is the most critical person in your life at this stage. For an angel investor could potentially bring a lot more value to the table than just funds. Presumably, the angel has had experience running a business or working in a corporate environment and therefore has invaluable advice and guidance to offer you in a start-up venture. The real value of an angel lies as much in the mentorship that he can provide you as in the funds, especially if he happens to be a subject matter expert or at least have domain knowledge in your area of business. And finally, given his background the angel is likely to have built a large network of contacts during his own career. As an entrepreneur you can leverage these contacts to open doors and create your own opportunities.
The ‘N’ Factor – Networking to Collaborate
Begin early, cast the net wide, use all available options, never refuse a meeting with anyone, always answer email requests to connect and keep cultivating and growing your network over the years!To say that networking is probably one of the key elements in the entrepreneur’s tool kit would perhaps be stating the obvious. In today’s overly networked world there are multiple options available for networking but the important thing is to start early make it a habit. Serious networking requires time and effort.One of the first things you should do while at b-school campus and even when graduating is to be active in your business school’s alumni association, one of most fertile grounds to start sowing the seeds of your own network. Not only will you have access to a large database of corporate executives but they will be quite a bit amenable to connecting with you given that they are alumni of your school.
Of course, Internet remains a highly potential tool for networking, and many a small as well as a medium sized entrepreneur has successfully leveraged social media websites such as Linkedin, Facebook, even Twitter lately to connect with people who could add value and create opportunities for their business. There are a number of special interest as well industry or activity specific groups on Linkedin whose primary raison d’etre is allow their members to network among themselves. Strategise well to get maximum returns while networking through the Internet.
Be a part of all relevant industry bodies, and not just as a mere spectator but a more active participant whenever possible. Some of organizations that you might want to be a part of are: The Indus Entrepreneurs, with chapters in most Indian metros, NEN or the National Entrepreneur Network, the CII, FICCI or even the joint foreign chambers of commerce such as the Indo-American Chamber of Commerce especially if your business has a global element.
And finally, one of the best places to network and build contacts is industry seminars. Attend as many industry seminars as is optimally possible, as a speaker if possible, else as a delegate. Apart from the fact that you will probably end up meeting a lot of people from your industry including your competitors, seminars also keep you abreast of the latest technological and other developments within your industry segment. And remember, attending these seminars also gives you visibility and exposure amongst your industry compatriots and that can never be a bad thing.
The ‘T’ – The Team or The Company You Keep!
The difference between success and failure of your venture could very well be the team that you put together, nay, that comes together for your venture. This is not about the employees that will join the company subsequently. It is the team that conceptualizes the business venture, the people with similar passion as yours to make the venture grow and succeed whatever the quantum of their stake holding in the company.
Build a team that is diverse in its skill base and deep in its commitment to the cause. Focus, clarity of vision and an ability to roll up their sleeves to get things done are some of the key attributes of a team that is a winner. One of the first things that any investor will want to look at while evaluating the company is the team that forms part of the management. In fact, many an investor will be more willing to fund an average business idea backed by a strong management team rather than a strong business idea with an uninspiring average team.
In this day and age of instant communication where information flows seamlessly and effortlessly across borders in quick time, there are few if any sustainable competitive edges for a company. Quality of execution and the quality of people assets are in fact the biggest differentiators today, and the quality of execution is again highly dependent on the team, so in fact this becomes the most crucial decision. Finally, all I would say is choose the right people, nurture and grow them for each one can make a crucial difference, leave them to do the job and don’t be threatened by those smarter than you.
The PANT model for would-be entrepreneurs may not necessarily guarantee the success of your venture, but it does provide you with a solid foundation framework on which to base and launch your entrepreneurial journey. A lot depends on your own personal motivation for being an entrepreneur – is it just to satisfy an internal craving to be your own boss, to earn a livelihood for yourself or to create serious wealth for all stake holders and leave behind a legacy? The answer will shape the future of your venture.