If you are an entrepreneur who wants to start a new company, here are a few things that Mayur Abhaya, CEO, LifeCell International P Ltd, offers as suggestions:
- Choose a domain where it is a ‘blue ocean’ where there isn’t a large competition, nobody serving in the market. Become the leader, own the space, create a category, you will do well.
- As for the business model itself, see where your cash is coming in, and where the cash is going out. You should be in the position where it is a positive cash-flow. That helps you to scale up the business substantially without requiring any external capital. There is a larger possibility, then, to grow the business quickly, and with your ambitions not being curtailed through any external interference. Just that.
Blue ocean: The phrase refers to ‘Blue Ocean Strategy’, a business strategy book (2005) by W. Chan Kim and Renée Mauborgne, suggesting that organisations should create new demand in an uncontested market space (‘Blue Ocean’), instead of competing in ‘Red Ocean’, where the market space is known and crowded.
Positive cash flow: This happens when cash inflows are more than cash outflows. Do not confuse this with profits, which arise when income is more than expense. If you are sitting on a pile of cash, you can endure a period of negative cash flow, till you reach a point of optimal cash level. ‘Free cash flow’ or FCF is cash balance left after deducting tax and capital expenditure from earnings before interest, tax, depreciation, amortisation (EBITDA), as defined in www.businessdictionary.com. And, to those interested in an accounting news relating to cash flow, here is a story about Netflix, which reported negative FCF, because of heavy capital investment on its original programming.