Starting, Running and Owning a Business

Spoke to Suresh Chhajed about Entrepreneurship, Entrepreneurs and provided a lot of insights.
Young entrepreneurs in their enthusiasm tend to overlook some basic startup rules.

The spirit of enterprise has lured many a young mind and though the sheer experience of running one’s own business may be the utmost in terms of job-satisfaction, the ‘business of running a business’ in itself is seldom straightforward and is more often fraught with many pitfalls. And so has been our experience at Technoforte, when I along with three of my colleagues decided to setup our own venture about four years back. Like any startup, Technoforte also came into being with a whole set of risks, without visible customers and business, nothing to fall back upon, but with a strong spirit and a desire to create a great organization.

As business stabilized over a period of time, we realized in retrospect that we had overlooked some elementary business rules. I present below some such Elementary Rules together with the Myth that we as startups tend to believe in, and the Fact that we end up ignoring.
 

Elementary Rule No. 1  Invest in Processes

Myth: I am too hard-pressed for time. Let me continue this way for some more time till my business stabilizes and then define the processes.

Fact: A business can stabilize only when there are well-defined processes controlling it.

The key to remember here is that as a startup your processes are not very complex and hence defining the process is that much easier. Process definition need not necessarily mean having verbose process manuals with numbered references and master lists. Define a simple one page document for each department (or individual, if your startup is still too small to be segregated into departments) listing down the following:

1 WHAT needs to be done

2 HOW it needs to be done

3 WHEN it needs to be done

While WHAT defines the exact task that needs to be performed by the department, the HOW defines the way in which the task will be executed. The HOW also defines the format in which the details of the execution shall be recorded. The WHEN defines the preceding activity that triggers off the execution of the tasks listed under WHAT.

You can keep refining this basic document regularly and over a period of time as your business grows you will see it evolve into a comprehensive process manual.

Elementary Rule No. 2:

Plan rather than Execute

Myth: I don’t have the budget for an extra resource. Probably I can execute this job myself and save some expenses.

Fact: Your organization needs you for providing Direction and not for Execution. There is no substitute available for that role.

Remember you have only limited time and energy at your disposal and so, when you take execution into your own hands, it will be at the cost of Planning and Strategizing. Without a continuously evolving strategy your organization is moving like a rudderless ship. It makes more sense to delegate the actual execution to hired manpower (even though it costs) while you focus on processes, strategies and monitoring mechanisms. Make sure that, as you delegate, you have established appropriate reporting structures so that monitoring becomes that much easier for you.

Elementary Rule No. 3

Identify Core Competency

Myth: I desperately need business. I will take up any job that comes my way.

Fact: No business deal is won without putting in sufficient pre-sales and marketing efforts. Focus only where the probability of success is the highest.

Of all the possible enquiries that you are handling at a time, identify the ones where you have the maximum chances of success. Build your core competency around these areas; prepare your sales collaterals and corporate profile highlighting what you are best at doing; and focus the entire organization’s energies in translating such opportunities into verifiable success stories. Running senselessly after each enquiry that comes your way will only see you end up with little or no results.

Myth: I know best how to run my own business.

Fact: Only an experienced professional can tell you how correctly you are running the show.

This is especially true if you are a young entrepreneur in the 25-35 year age bracket. You may be an excellent techie but for running your business you need more than just techie skills. Take the help of experienced professionals in all such areas where your own professional exposure is limited – remember there’s no point in reinventing the wheel. This way you will avoid most of the associated risks and thereby maximize your chances of success. True, your startup cannot afford a
full-time-high-end-experienced-industry professional, but you can still identify an advisory consultant who can be contacted on need-basis for his recommendations.

Myth: I am losing money doing this, but let me try this for a little longer.

Fact: If the losses are overshooting your budgets, cut your losses and call off the loss-making scheme immediately.

Losing money is acceptable in business; you cannot always win. But have you budgeted for the maximum loss you can absorb for this business activity? The temptation to try for a little longer, without having a clear cut budget in mind, can see your expenses spiral out of control and affect your business adversely. It helps to allocate a budget in advance before foraying into new potential areas. Define milestones and targets against projected budget utilizations and review the same regularly. Take a measured decision each time you review and when you find your costs overshooting the budget without justifiable results, make a quick decision to exit. Remember a successful businessman not only maximizes his profits, but also minimizes his losses when he sees one.

Licensed from www.businessgyan.com a Magazine having useful and inspiring articles for entrepreneurs & business decision makers. (licensed on 18thDec 2008).