Wow! So I am a B-School Grad, with some experience working for corporates and now it is time to take a plunge into the family business?
The English speaking 2nd Gen entrepreneur is all set to ascend the awaiting stage designed specifically for him/her.
We all want to grow big and quick. Our success rates in the past and hey! I have done that before attitude fails to caution us from committing some entrepreneurial sins.
"Get into the game if you have the passion. Make the right moves, with perseverance and if you want to play the entrepreneurial game , you bloody well have some guts and patience". - PVR
1) Consultants - Beware of the trap!
So here's Mr.Know it all and I can fix everything for you with an invisible magic wand. Either recommended by a fellow entrepreneur, friend or a relative. 50% of his job is done by the one's who have recommended the consultant to you. The rest of course is done by him by throwing around a few big names he knows or he has worked with. These guys would prefer working on a retainer, see you once a week/month and "advice" you on how to grow and expand. Success ratio? Err..not guaranteed.
Consultants are not bad and as an entrepreneur try and engage one on performance/incentive basis and not on retainer. That way, he doesn't keep billing you every month and concentrates on showing positive results to "earn" his share. "Every person has a limitation and there is always someone better than you and its only prudent to acknowledge that and seek guidance."
2) The Big Heart - Let me help this poor soul and maybe also expand my territory.
A team comprising of Architects, BD Managers, Marketing, Execution experts from a renowned architecture company and today jobless and families to take care of was introduced to a company by a consultant who was highly recommended and hired on retainership. Apart from pitying them, the company was sold the idea of expanding my business, they were suggested a forward integration mechanism; add interiors as an addition to construction. Wow! Sounds absolutely interesting. They quickly did a back of the envelope math, understood from them the kind of business they could get and the ROIs and with a blink of an eyelid they were all hired. Now, Till they could get any business, they were cost and a huge one. In the bargain, the existing stakeholders suffered. Cash flows weakened and thud! Cash woes began.
3) Biting off more than one can chew
"Orders orders everywhere and opportunity knocks only once". So lets grab it is the mentality. But the big question is, are we ready for it? Do we have enough resources? What if it tanks? As a business its very important to keep questioning "what if" both, to feel good and to be aware. The sales turnover game and we will somehow make it happen bug keeps pushing us to take the big leap and we realize, that we are in a mess, when the only way out is honoring the order and completing it.
4) Unsecured Debts - When you need more than you deserve.
With the cash flows taking a hit, thanks to the market conditions, incorrect moves or maybe it's just not time yet and your bankers have given you the desired working capital for the financial year and can give you no more, one is left with no choice but family, friends & NBFC'.
The first two choices are still bearable, one can and should inform the financial conditions and the repayment schedule accordingly. However, NBFC will 1) Run a credit check on you 2) ask for repayments in EMI right from the 1st month 3) give a tough and embarrassing time, incase the payment is not made per schedule.
Always bear in mind, unsecured debts from NBFC should be the last option and is better avoided, especially when the businesses collections are not guaranteed.
5) Liabilities - When payables become a matter of concern.
Argh! How much ever you try, your receivables just aint coming through.
The incessant calls and gatecrashing of creditors into your office makes life miserable and daunting. That's when one realises, that liabilities should have been kept in check. The Golden Rule is to ensure you be honest to your clients on your inability to perform or execute work without money. Inform your clients, that in order for you to be successful the client needs to pay you on time.
6) Unavailability: Can't face it!
The inability to pay your creditors and repay your banks, leaves you with no option but hide. Now, that's the worst mistake you can ever make. You have no option but Face it. Buy time...but dont abscond. Non availability will only make things worse.
7) Frenemies: When it ain't right for you, its excellent for your competitors.
Your friendly competitors are waiting for an opportunity to get your share of business too. Your failure in certain areas, only fuels your competitors hopes. They either come to "help" you by taking up your projects or sympathetically informing your suppliers on your current financial state, creating fear amongst your suppliers. All that one needs to do, is to handle this situation with care.
8) Employees - Your stakeholders....Your assets.
In our bid to excel or in our efforts to make good the mess we are into, employees become the scape goats. We forget the numero uno fact that these are the assets that drive the organisation. Very important to appreciate every effort your stakeholder is putting in. It is important to assure them that their efforts are delivering positive results.
9) Investors - it's all bout money, honey!
When you are ready for an investor, more than the business plan, it is important to check how ready are you to on board an investor. This is a temporary marriage of convenience. Even in this small relationship, the binding force threads on truth. Its all about honesty and transparency. Any slack in that and the investor may just want to call it quits.
10) Fear of Failure - "Fear that thou can fail; only to be thrifty and touch the face of success."
Entrepreneurship is all bout the risks you take. You reap most, while a few turn rotten. "Take risks to the extent you can fall, get up, dust yourself up and start all over again. Don't get bruised all over" . It is important to calculate your path to your goals and even more important analyse your hurdles. But, Hey! dont let fear grip you. And all that you need to do is "Dare to dream, dare to build your dream, dare to gather your shattered dream, dare to rebuild your dream, dare to live your dream"