Prabhu' blog

A blog detailing my business activities What i was upto and my notes and stuff... How to go about company and entrepreneurship

Tuesday, November 21, 2006

Saint and the entrepreneur- the beginner’s guide

The saint and the entrepreneur- the beginner’s guide

1) Definition of an entrepreneur
2) Evaluating your resource
3) Hey? What is my team doing?
4) The importance of Communication
5) Get a good mentor…..
6) The personal and the family issues
7) Where is the capital and where is my investor?
8) Other needed skill sets
9) The saint entrepreneur


This book has been written to address the plight of young entrepreneurs who want to start up a company but do not know how to go about it. Running a company is mainly finding answers to questions which hinder the development of the company.

Here are the frequent questions which bother a potential entrepreneur.

I have an idea. Other than that I am clueless about opening up a company. So what do i do? Where do I go from here? What kind of team should I build up to take the company on the right path? How do I ensure that my chances of success are high.

The initial period is spent in searching the answers to the above questions. In order to answer these questions, it is critical to know the expectation of a would-be entrepreneur.

Most of them aspire to create a multi-million dollar company with a global presence.

They have very little capital but have the potential to make up for the lack of capital with their enthusiasm and hard work. They are not afraid to believe in their ideas and execute them. The only hindrance and the stumbling block is how to begin the journey.

So what kind of an approach would pay the maximum dividends and would benefit these people?

As such there is no hard and fast rule as to how a company can succeed. Hearing how others have gone on with their company is always a beneficial experience but circumstances and variables change and what clicked for one company may not click for another one.

I personally have observed that many entrepreneurs do not chronicle the initial stages of their company. By the time they write their books and recount their success stories, difficulties experienced in the later stages of the company dwarf out the original startup problems faced by them. As a result, their accounts tend to focus on second stage problems and many a times do not focus on the crucial starting stages which may make or break the company.

Here is a different take. This book has been written while I continued to search different ways to run the company. This book tries to address some crucial issues such as the lack of capital and how they play an important role in deciding the company’s success.

In addition to this, the level of preparedness needed to go ahead is also discussed. And last but not the least, what constitutes a resource and do you have enough resources to get the company done? Where do you look out for advice?

The purpose of the book is to make people lean towards entrepreneurship and help them start at a young age so that the enterprises they form will be bigger and stronger.
Everything has an advantage if you start early. I believe that the best time to start a company is in college when you can inspire other people by leadership and have little to lose.

When you do the company at a young age, many people are willing to help you. You are also free of the ego and the arrogance and the feeling of awe that take you down once you join a big company (not necessarily true.) At a young age, you are flexible, modest and are willing to ask people for their help. In addition you are relatively burden free and can afford to take the risk. Moreover you have the necessary technical guidance, manpower to leverage on, plenty of free time to research your idea and the guts to take on the world.

The above attitude entirely depends on the outlook of the person. There is no doubt that working in an industry will give you the much needed experience and confidence but if you ensure that the approach to the task at hand is balanced and treaded with caution and meticulous research, you can nevertheless succeed at a young age.

Chapter 1 – Definition of an entrepreneur

Everything has a beginning. And there is no exception to this rule. A company also has its beginning in the minds of an entrepreneur. An entrepreneur initiates the beginning of a long journey where many critical decisions are made and executed.

How would you define an entrepreneur?


If you have read the above sentence, you will probably comment –

“I know who an entrepreneur is. He is the insane guy who never loses hope and continues to stick to an idea even if it does not make any sense.”

The above view is not exactly false. The success of a company is determined by how steadfast the entrepreneur is and the risk taking ability which he has. An entrepreneur is an innovator. He has an unflinching faith and devotion to the idea and charts a well defined path for the company.
An entrepreneur with a vision finally manages to fast track the company on to a rapid growth path which eventually leads to success. An entrepreneur is not only a leader but also identifies other leaders

Though the role played by an entrepreneur is significant, the entrepreneur alone is not responsible for the success of the company. There are also other factors that play a crucial role in the success of the company.

Team is one of the most critical aspects next to the entrepreneur himself and the entrepreneur also plays a crucial role in the team building process. The entrepreneur manages to build such a strong team– be it on the strength of the idea or his own strength.

Peter Drucker -“A company is what one man cannot do”.

It is unrealistic if you solely expect the entrepreneur to do the job. A good supporting cast (which is what a solid team means) equally plays a vital role. In a core team, all the people should have the characteristics of a good entrepreneur and have the capacity to assume leadership roles. Moreover this is true if team is young. Each of them has to make up for the experience which they lack and provide a combined focus. A motivated team can weather the storm together and take the company to safe grounds.

From the word go, the team should believe that the job will be accomplished. And if the team really believes that the idea will succeed, they won’t hesitate to take minor decisions such as quitting their job and investing their personal time and money into it. Such should be the belief of the team.

If you think – Come on. What I am going to do without the evenings at the golf club? What about a new cell phone every month? I am going to lose 500 dollars every month???

Hey man. Cut it out -You are speaking about your belief in a million dollar idea. Losing 10,000 dollars should not bother you.

Most of them who would make good entrepreneurs never take to entrepreneurship because they are attached to their smug and comfortable life. The rest of them are in so much awe of their existing company that they never believe that a similar organization on a smaller scale can be created.

An entrepreneur need not be an expert in an area to know that a venture will click. Rather it is the belief in the venture and the background work that counts. There are many potential entrepreneurs who never take up the path of entrepreneurship because of the belief that they do not have a concrete idea in their respective field.

This is partly due to the fact that people are trained to believe that they can do only what they have learnt. Many of them fail to realize that entrepreneurship if actively pursued can lead to success. It is true in order to overcome the drawbacks of starting in an unknown field; the necessary research has to be done. But this should not be a hiccup from preventing a sincere entrepreneur from following his dreams.

Even if we look at how many startup companies have expanded operation, we can find that they adapt to different situations and remain afloat. By the time the company is 1-2 years old, the vision of the entrepreneur changes according to the market tune and the company plays a completely different ball game (But this is not suggested. Stick to your original plan. The above is an example of how the entrepreneur is able to adapt). In fact if a person is narrow-minded, he runs the risk of never freezing on an idea at all. And some people tend to specialize in fields where intense hardware capital is required to start a company. It is not that these people will be able to start a company. But they should keep an eye open and also be on the look out for opportunities which they are familiar with.

Let us track down what an entrepreneur finally brings to the table not only to the company but to the country.

What is the difference between a developed nation and a developing nation? Economists offer different explanations for the above - the country should be self sustaining, the per capita income should be above a certain level, the unemployment level should be low and various other factors…

Hmm. Accepted. But can’t we simply narrow it down to two or three causes?

A reduction of the above problem would reveal that a country being developed or undeveloped is simply the money which it has its disposal. If the country has a good capital inflow, it is doing great and is taking rapid strides towards becoming a developed country. But who are responsible for the capital inflow and cash flow?

Entrepreneurs account for a significant portion of the cash flow. These people form the backbone of a country and attract investments and capital. They rotate money, employ resources, import and export goods and services, upgrade their infrastructure and do many more things.

As I am writing this book, India and China are witnessing the same phenomena. The pool of entrepreneurs in these countries has grown and is experiencing increased investments and inflow of money. (I intend to carry on with this view and try to cover more countries as I keep on writing the book)

(Note there also other factors- But we are simply trying to narrow it down and see how much part an entrepreneur plays in the above equation – a biased view but nevertheless a major contributing factor)

Wow – The definition holds for developing countries. What about developed countries?

It is no less different for developed countries. Most of the giants operate out of US, Europe and Japan. The number of established businesses in US, Europe and Japan are directly a result of the efforts of past entrepreneurs. The developed nations have been there for such a long time that the number of established businesses in these countries is very high.

It maybe that for a developed country, the contribution of a single entrepreneur may be negligible as it already has a number of established businesses but for a developing country, entrepreneurship is one of the main driving forces of the economy.

The above clearly shows that entrepreneurs are responsible for the flow of money. They are responsible for increased employment and increased revenues for governments in the form of taxes. In addition to this entrepreneurs feel obliged to give back something to the society when they are successful.

Entrepreneurship is an act which is practiced not only for personal and monetary gains. In developing countries, it is the satisfaction of creating jobs, training and educating people, and fulfilling social responsibility that drives an entrepreneur. Power, money and fame are only corollaries that are an added incentive. But ultimately it is the impact on other people and their lives and how you have helped them that finally gives you the supreme satisfaction.

As to the question – Am I ready to become an entrepreneur? You have to ask yourself whether you have done the below
1) Have you been proactive and expanded your contacts circle outside your company?
2) Have you been in touch with a prospective team who may be able to help you implement your ideas?

The roots of entrepreneurship start with being proactive. You should be active in pursuing your contacts and not be in awe of your immediate boss. Experience does not help you in becoming a successful entrepreneur (this book is supposed to promote young entrepreneurs – that is why we are highlighting what a young person misses) – being proactive and dynamic does.

When do you know that the time has come to begin business?

The answer is when you know that you can manage the two transitions below

1) I can manage myself and take on the world
2) I can take care of the guys who are going to depend on me.

The first is the easiest decision an entrepreneur can make. The second is the critical aspect and if you chose a flexible team, you will buy the necessary time to grow and ultimately take care of it.

There are many things to concentrate on while doing the company – market research, technical, general management, operations, marketing and sales. An entrepreneur is one who manages all that – technical, managerial and the marketing part.

If you have a good team, you can worry less about team management and concentrate on other activities that will buy you additional time.
For an entrepreneur, there can no other better beginning than a combined team working selflessly towards the growth of the company.


Chapter -2- Evaluating your resource.
This chapter speaks about finding the right people for your company before you actually do the company. Team building is an important step in building up your company. As in my case, sometimes you would have so much faith in the company that you would be the first one to hang out your neck and take the risk. You would feel that you can inspire your team to take the leap later on.

This is potentially a dangerous way of doing the company. It simply means that you don’t have a solid team. Ultimately it ends up is a situation where you are not completely in synch with the person. A person who is out of the company will never truly realize the challenges which the company is facing. His mind will be bent somewhere else and the decision making ability will be limited. His focus is elsewhere and he is just a help to the company. The same applies for the entrepreneur. A team which is not fully formed is the first worry of the entrepreneur and half of his time is spent in trying to get the people in groove.

Guideline one

“Get your team ready so that you don’t have to worry about who is in and who is out when you do your company. There are other things to worry about when you are doing the company”

Analyze these aspects in the partner you are looking for

1) Why do you believe that your partner will be a valuable asset
2) Is he proactive when you are not there?
3) What is his ability to inspire others in your absence
4) Does he have the courage to say – I can take a lion by its tail…
5) You can judge his passion for the idea by the way in which he speaks about the idea and tries to convince other people to take up to the idea.
6) Does he know what a stake means and understand the notion of capital??

Grade the answers to the above question:-
If you are not getting any consistent replies for the above, then you probably do not have a solid partner. Part time people never understand the root causes of the problem and hence do not contribute to solving problems at all.

It is better to start a company with all the possible resources operating on a full time note.
When everyone takes a risk – It is a do or die situation. And people tend to do the maximum when such a situation exists

I am not saying that a part time member is not dedicated towards the idea. But that he may not be able to play a vital part in the growth of the company. Maximum productivity may be limited due to the heavy demand placed on their shoulder to meet dual needs.

A good idea would be to have 3-4 full time people in and others as part time people. In this way you are maximizing resources working on a project.

A young entrepreneur knows what he wants to achieve and is ready to sacrifice his short time income for the company. But the trouble brews when he has to manage other people in the company. It takes a little time for the income to come in and the first step which he takes towards managing other’s paycheck is the critical part. It generally helps if the team waits patiently for a single year for the income to come and the expenses to stabilize.
Most of the quantum leap in growth is made in the initial 5 years of a company and as much money invested and saved will yield high dividends during this period.

As far as our company was concerned, we were a bunch of people who had done our engineering and on the lookout for an opportunity which will change our lives forever.- the average day to day techies who believe that they can be the seed of a great idea. As everyone would know by now, technical people tend to fail because they tend to focus less on critical issues such as management and are generally weak in contacts – both of which are needed for a strong company.

Technical people tend to be shortsighted. And especially if a company is being formed by technical guys, most of them are concerned with the product features or the offering they have. As the person who is heading the company, it is the entrepreneur’s responsibility to find likeminded and similar guys and focus them on the right path. Nowadays it has become a trend for entrepreneurs to expect windfall profits the minute they start a company.

The core team is also not willing to participate unless they continue to draw industry salaries. If you analyze closely you will find that most of the people who draw a specified salary spend only a fraction of the amount they earn and expect more from the company. The rest is only to meet the comfort level which they are used to. It is well and good if you run across a source which lets you take salaries at a growing stage.

Everyone will be starting companies if they are able to do the above and there would be no reason for anyone to work if there is no risk in entrepreneurship.

The core members of the team should not be born out of brainwashing. When you are crippled, they must be able to act and deliver. Each one should have the capacity to say –

Hey guys. I can manage it. I can hire the people to get the company moving forwrd.

The main reason why many youngsters fail is they don’t have the above attitude. The above reason explains why managerial people with experience succeed. Their long years at the office have given them the wisdom to deal with situations. If you have the right guy who understands these finer aspects and can deal with the above, you can go ahead with the idea. I see no reason why a technical person who pays attention to the fundamentals of management should be unable to succeed.

As long as you make since efforts to accumulate the skills which a management guy has, it should not be a problem. A management degree will surely help but should not come in the way.

The roles of team members in a startup can sometimes be blurred. People in their enthusiasm tend to get involved in activities outside there area of expertise. This is good for the company but at the same one has to ensure that respective team members finish the task allocated to them.

Chapter -3-Hey man. What is my team doing?

You have started the company. You have done the groundwork on the product offering and the service of the product and are making progress. Down the road you are looking at clients and revenues. But your expectations become more and more high and you are becoming ambitious and eager to execute more plans.

To beat the competition, you have to stay ahead. To ensure this, you have to make sure that your team comes up with innovative ideas and also that new features and offerings are completed. Evaluating your team is one of the important steps that help you stay in touch with the team and plan for new ideas. You exactly know the distribution of tasks in the company and can come with a new work plan.

To evaluate your team, it is necessary that you frequently hold meetings and share opinions. Focus on team building activities and emphasize the need for transparency in communication and feedback. Frequent appraisals and feedback loops will ensure that you operate as a cohesive team.

Take steps to appreciate and motivate the team. At the same time, stress the need for a critical outlook in feedback meetings. Make sure that core members of the company operate with this outlook and come out with innovative ways to keep pace with the expectations of the market. Finally starting a company is about meeting the needs of the people rather than us telling them what they need. A critical view really helps to do this.

Start working on a feedback mechanism which will give you good results. For example it may be the six hat thinking strategy that can help you breakdown complex situations and analyze it. Adopt a mechanism that will help in decision making.

Evaluate whether individual members of the team have completed their assigned roles and tasks. If they have completed their existing tasks, assign further tasks to them.
This periodic reallocation of tasks helps the team to operate at a brisk pace and identify areas of improvement. In addition people become versatile and this results in overall personality development – skills which are needed in members of a small organization.

Appraisals, Brainstorming as a group, Redefining targets and goals are all crucial steps to benchmark and evaluate your team. These are key indicators of the progress you are making in your company.

Evaluating people and resources in your company is a difficult task and different organizations embark on different appraisal systems to evaluate their resource pool. This evaluation plays an important role in judging the motivation level of people and one can take the necessary steps to address the shortcomings.

The good point is that in a startup company, you are not that big to make this exercise a difficult one. The problem point is setting up a well defined process to do the above- this is where startup companies fail. As long as you ensure that you have a good feedback system and a well defined mechanism to keep track of the progress, the operations will be smooth and problem free with respect to team.

Chapter 4- The importance of Communication
The stuff that is briefly discussed in this chapter is setting up a communication system in a company. This is nothing but having a good organizational chart and working accord to it. A startup company may not have one – So it is essential that you address this issue.

Communication plays an important role in the growth of a company. Communication in a startup assumes two shapes

1) Internal communication – Communication within the company
2) External communication – Communication with clients, customers and partners

Let us analyze these two in detail

Internal communication
Setting up internal communication lines is a critical element in the operations of a company. Internal communication plays an important role in the growth of the company. You do not know when you will get a breakthrough contact. It is imperative that the entire core team is constantly in touch with one another and accessible at a short notice to inform each other about latest developments. This is also one more reason where a part time would not help. Resources are not available to fulfill the needs of a potential breakthrough contact.

You do not know when you may have to solve a critical bug or showcase the product in a new limelight to a prospective customer. You always need a team which can work on the above aspects. Also the contact which may bring a breakthrough is often achieved if you constantly meet people and emphasize the team strength.

What people doubt in a young entrepreneur is the ability to lead and deliver on the promise? So it makes sense to showcase your full strength

Work on establishing an information flow in the company. Set up guidelines and processes which help in the internal communication process.

External communication
External communication is dealing with the external forces – customers, clients and partners. External communication contributes to the revenue of the company and plays an important role in the future growth of the company. If you have an effective internal communication system in place and are able to merge it seamlessly with the external communication, you create a strong communication backbone for the company.

External communication is necessary to execute customer deals and partnership agreements. They play a vital part in marketing and sales. A startup company has limited resources and there is a tendency to focus more on development efforts than marketing and sales. This is a critical blunder which may adversely affect the company.

Often in a startup organization, the external communication and the internal communication tend to be the same. This is done to meet the budget needs and cut costs.
But if this is the case, it is imperative that the team be able to meet both the needs – internal as well as external.

Make sure that there is an effective team which acts as a liaison between the company and its clients. The more effective the team, the more efficient the company will be in marketing and sales.

Looking back, I believe that if a tech company shows as much interest in building up a strong marketing and sales team as they did in building the tech team, the success ratio will improve dramatically.

Communication is the basis of information exchange. Planning out an organization hierarchy that accomplishes this transfer of knowledge is critical to the company’s survival. As discussed in the “evaluating your team” chapter, small companies tend to pay little attention to these topics.

Chapter -5- Get a good mentor

The mentor plays one of the most important roles in a company. He is the morale support behind you and a person who has gone through a similar phase while establishing his company.
Mentor is one of the make and break factors of a company. Having a mentor definitely helps you cope up with problems

A mentor is a person with whom you can share all the aspects of your company. It may range from resource problems, marketing problems to even your own personal problems which may affect the running of a company.

You can even go straight to your mentor and say – “I am getting married. How far is this going to affect my operations?
The above question sounds silly but a mentor may be able to help you here also as he has gone through a similar stage in his life.

Ultimately you are looking forward to the guidance of a person who can help you run a company and tell you where you are going wrong. It is left to you to build upon his advice and execute them.

A mentor may be able to look at your problems and figure out where exactly you are going wrong and ask you to focus on that area. Half the time if you are able to do what your mentor says, you won’t land yourself in a hole. The challenge is to implement and build up the resources to execute the guidance of your mentor.

The very point of having a mentor is Knowledge transfer and Experience Transfer. A single meeting with a mentor may be able to familiarize yourself with a process and a topic which may take years to learn in a conventional setting.

All the people who have started their company have had someone to turn to and seek advice. Sometimes mentorship may come in the form of a family member or in the form of a professional contact. It is left to you to figure out the advice and

Chapter -6- The family and personal issues
Everyone has some family and personal issues that prohibits them from following up their dreams. In many a cases, it may be born out of the need to support your family or take care of your parents. It is always good that we try to fill our responsibility towards family.

Most of the people do not take to entrepreneurship because of these problems. But at the same time these issues can be addressed.
If you feel that you are short of cash and your family members may be needing health care, you can cover them under an insurance policy. You may also need to cover yourself with insurance if a lot of people are dependent on you. Ensuring that your family does not lose much out of your risk taking appetite will ensure that you follow can focus and concentrate on your company.

Believe that there is a solution to a problem and work towards it. Set your internal affairs straight before you embark on your ideas. It is left to you to judge your state of affairs and decide upon a suitable course of action.

Plan your activities and start working towards your goals as soon as possible. Give yourself a nice time frame where you can actively pursue your idea and can focus on it without any distractions.

Chapter -7- Where is my capital and my investor?

Capital is always a difficult issue when you start up your company at a young age. It is one of the things which people lack at an young age and people

I find that capital comes from your personal pocket, relatives, friends and investors.
At a young age, you are not a tested material and people won’t be ready to trust you.
You have to show the investors that you have managed operations and run the company on our own.

One more thing is that getting people to invest in your company may not be a short term affair and may take some time. Until this period, you have to figure out how to run the company.

Trying to manage on your own will help you expand operations and woo prospective investors. If you are really passionate about the idea and leads are starting to materialize, you can approach for a bank loan and run your company.

Loans up to one crore is a priority for software sector (in India). Similarly other areas such as rural development programs have also guidelines that one can make use of.
There are also other ways by which you can solve the resource crunch and manage operations. Search for channel partners, technology partners and solution partners to help you out in the initial period. In this way you would be able to reduce the cost of operations and may be able to postpone future investment until it is really required.

Find yourself a team which is able to identify the situation you are in and work with you in achieving the company’s goals. A flexible team will give you the leeway to work on your finances and set it right slowly.

Prepare a strong business case and keep on pitching your case at gathering and competitions while you run the company. .

Find a sustenance mechanism which gives you the revenue to operate the company. Focus on building up a strong pipeline of projects or a customer base which will help you keep up operations. Doing the above is the challenging part in a startup company and most people fail in these aspects.

As you build up the company and your idea starts getting refined, try to attract angel investors. Once you reach this stage, you can take it to next level and look forward to seed stage funding.

Starting at a young age is an advantage in terms of investment and capital. You can take the risk and run operations without having a significant investment into the company.
Relatively if you are in your mid career and have a family and are accustomed to taking a huge salary, the tendency will be to start a company if you are able to get significant investment into the company. You can turn this to your advantage and this fact makes entrepreneurship at a young age an attractive affair. It is the perception with which you look at entrepreneurship.

Chapter -8- Other needed skill sets
Running a company requires an expertise in a whole lot of areas other than your primary ability. In a small company, you fulfill a number of tasks in addition to the basic responsibility entrusted to you.

A company is not only about the service or product you are offering. To ensure that you continue to provide quality service and ensure your survival, you need to focus on finance, management and operations.
Since you are going to manage the company for a while until you hit an investor, the following skill sets developed if perfected will help you in running the company

1) Basics of Finance and Accounting – Keeping track of assets and expenses
2) Basics of Operation – Will help you run operations
3) Basics of Marketing – Unless you find a good guy to this, you have to take care of this aspect.
4) Management and team building skills

Make sure that you have a set of objectives which can be met. Work out the operational metrics chart. Be sure that you are able to address the cash flow problem for a smooth and efficient operation.

In terms of marketing, know how to sell the idea. This is needed to attract an investor into the company. Learn how to network with people and take the company to the next stage.
An important platform would be to get involved with professional affiliations which can help you grow your contact base. Get into entrepreneurship forums, networking forums, put the idea through and see what happens.

The above topics are a subject by themselves and familiarity with the above topics would help you go a long way in addressing the problems faced by a startup company.

Experience people would have built these abilities in course of their long career. As young people, we should actively pursue the above topics to learn more about them and expand our outlook.

Chapter -9-The saint entrepreneur

As far as the title of the book is concerned, that is what an entrepreneur is. There are many things common to a saint and an entrepreneur.

An entrepreneur leads an austere and disciplined life at some stage of the experience to ensure that his company has the necessary resources to succeed. He takes huge risks and even goes to the extent of sacrificing his short term goals to achieve his long term goals.

Both are committed to the welfare of the people who depend on them and look forward to improving the society. Both share a long term vision and work towards attaining their goals - “nirvana” in the case of a saint, “success for all the people associated with the company” in the case of an entrepreneur.

You have to be prepared to sacrifice your short term gains and focus on the long term. Just as a saint sacrifices his bodily pleasure and leads a disciplined life in the hope of attaining nirvana, an entrepreneur has to lead a disciplined life to lead his company towards success.

It may take a while for the benefits of entrepreneurship to be visible. Until then you have to wait patiently and perseverant for your hard work to take shape.

Don’t lose hope and faith and at the same time be practical and give yourself realistic chances to succeed. Get the advice of people around you, people who have gone through a similar situation – their guidance really helps. Be humble and modest. Put in your best efforts and the reward will materialize.

Learn to enjoy the experience of Entrepreneurship and pay attention to the aspects that you are learning out of entrepreneurship. Value it as a learning experience


At 4:30 AM, Anonymous Anonymous said...

after going through the blog on the young entrepreneurs,it has anwered lot my questions easily and effectively. The book seems to be a bible for everyone who wants to start his/her own venture. i am looking forward to buy the book as soon as possbile. And the comparison of an enterpreneur with the saint is a good thought.
best wishes


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