Six reasons to run a 'dhanda' before founding a startup

23rd May 2016
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Have you ever tried selling vada pav or samosas in high school or college just to earn some pocket money? Ever attempted newspaper vending to make a few extra bucks for a "fun trip"? What about working for a company without pay just to learn various skills? How about running your own enterprise (small or big) and dealing with the ground realities of business?

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(Image Credit: Shutterstock)

If the answer to most of the above mentioned questions is "no", then you should seriously rethink your decision to embark on a new startup.

With the funding environment tightening in the last few months, one important learning from recent failures is that founders should run a company with a view to becoming profitable in, at least, the medium to long term, rather than just chasing senseless models with deferred monetisation strategies. Every penny being spent on the business (whether bootstrapped or funded by a VC) should have a return in mind. This still does not guarantee success (due to various external factors) but it does protect you from potential downside.

Some of the reasons why it pays to be a businessman before you become a founder / co-founder of a startup are as follows:

  • Risk appetite – Business is all about taking risks. It is a journey through ups and downs with the vagaries of the real world. When you run a business, you are responsible not only for your own fate but also several other families. Business hones your risk-taking capacity and prepares you for uncertainties in life.
  • Patience – It takes a lot of patience to keep your cool during a crisis. Once you have gone through several crests and troughs, your behaviour becomes more predictable and you can understand how people behave during crisis situations. Your tolerance level goes up!

"Fall seven times and stand up eight." - Japanese proverb

  • Network – One of the biggest benefits of running your own company is that you get to meet a lot of people who help you build your network in all spheres of life. The adage, “It’s not what you know but who you know," is true to a certain extent in business and the same holds true for startups as well!

"The richest people in the world look for and build networks, everyone else looks for work" - Robert Kiyosaki

  • People management – Business owners hire employees in their companies right from housekeepers to directors, and they learn how to manage staff to get the best out of them. People management is one of the most important skills acquired when you run a business.
  • Fund management – In a dhanda business, there is no VC money to support the first couple of years and founders are on their own to raise money from their friends / families / acquaintances. Their single point agenda is to become profitable and use those profits to grow the company. This inculcates a frugal and cost-conscious attitude in the entrepreneur and helps him to tide over crisis situations when he is finally running his own startup.
  • Local regulations and operating environmentLaws and regulations differ across countries and even across states within a country. It is only when you actually get down to starting an entity that you will know what it takes to do it. Initial hiccups and dealing with issues such as taxation, labour laws, legality, fundraising, etc set the tone for your future, so that you will be able to replicate the same when the stakes are higher.

In a nutshell, it’s a big help to have some ‘real life’ business experience before venturing into the startup world, as it will help you look at things from a more practical angle. You cannot get that perspective just by devouring thousands of articles and viewpoints from different businessmen across the globe. As someone rightly said,

To get to heaven, first you have to die!

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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Authors
Anurag Jain
Anurag is a co-founder and COO at KredX, an online bill discounting platform helping SMEs find the required working capital for their business and providing retail investors an alternative investment avenue with above average returns. Anurag has more than 12 years of experience in technology, banking and business. He started his career with Oracle after passing out from IIT Kanpur in 2003, moved to HSBC and then started his own construction company registered in Bangalore, before taking the plunge in the startup world.

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