The Entrepreneur’s curse

Sunday September 20, 2009,

4 min Read

Entrepreneurs are an inspired lot. They work hard for negligible reward in the hope that their dream venture will eventually bring

them fame and riches. Ability to persist with a dream is often an entrepreneur’s biggest asset. The positive energy that entrepreneurs carry around with them is infectious. As a result, they associate with and relate to like-minded people who are full of enthusiasm. They draw endless encouragement from their peers who are in awe of their ability to pursue a dream.

Unfortunately, many entrepreneurs succumb to the fall-out of the very same qualities that enable them to pursue their dreams. At some stage of their journey, many entrepreneurs fail to make the leap from dream to hard-nosed sustainable commercial reality. Sometimes this manifests as failure to secure adequate funding - which in turn is a direct result of not being able to convince a prospective investor. In other cases, entrepreneurs might realize that they have failed to bullet-proof their business plans against foreseeable hurdles. As a result, they face insurmountable problems in implementation. When either of this happens it is often too late for the entrepreneur to introspect or improvise, and the entrepreneurial energy eventually fizzles out.   

Why does this happen? And what can be done to guard against such a result? This column will hopefully give new direction to entrepreneurs who are stuck in or are in the danger of being absorbed into such a predicament.

To illustrate this, let us examine a typical entrepreneurial venture. Most entrepreneurs’ skill sets are confined to a particular (often technical) stream. As a result, most entrepreneurial ventures revolve around a specific product or service that has potential due to a perceived gap in the market. The entrepreneur first sets out to build a core team of trusted partners who have complimentary skill sets or interests. Members of this core team then divide roles and responsibilities amongst themselves, depending on individual preferences. In turn, the core team members often turn to their respective circles of influence to harness all available forms of resources with a view to make the most of their circumstances. These individuals or the samaritans they turn to often have ample entrepreneurial energy but do they have the necessary skills and experience to achieve commercial success? In most cases, such questions are simply not raised since the core team and the samaritans are often working for free and investing their time, energy and resources into the venture.    

Now compare this to the way large corporations around the world run several hundred projects simultaneously involving large amounts of resources. Each project is ideated by individuals or small groups of management personnel and carries the risk of failure if not implemented properly. Regardless of its origin, each project is implemented by involving several large teams of employees or external advisors with expertise across multiple streams. 

In some way each such project is like an entrepreneurial dream that gets shattered if not handled properly. In reality this seldom happens since large corporations have seemingly limitless funds at their disposal to rescue failed projects. While unproven entrepreneurs might not have vast amounts of capital to salvage their mistakes other tools that corporations use to minimize risks in project implementation are certainly available to entrepreneurs who are willing to seek them out.   

In the coming weeks, we will explore several issues that an entrepreneurial venture faces in India in this column.

Santosh Pai

The author is the founder of Indiabourse - an investment consulting practice which helps foreign investors spot opportunities in India. Indiabourse also offers fund-raising support and a low-cost strategy consulting service to entrepreneurs. 

The author can be reached at [email protected].

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