Entrepreneurship in India – Rules for Spectators – Part 4

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Rubber meets the road

In early 2004, in its fifth year, our first startup broke even. I recall us making plans to finally buy decent ergonomic chairs for our committed and long-suffering employees. The demands of growth and the challenges of cash flow made sure we never got those new chairs. Yet with more clients, more visitors and greater travel by our staff, we ended up hiring a car and driver on a monthly basis. The same people who’d send us a cab for the airport trips now sent a car and driver who’d be at our disposal all the time, for a flat monthly fee.

Balan* was the driver and in my first trip to the airport I learnt that he owned the car we were in, and he was a sub-contractor to our regular rental car supplier. Over the next two car rides, I picked up his story – high school drop out, set out driving an auto (that he’d rent on a daily basis), then worked as a driver in a company, before saving enough money to buy his first Indica. Now he owned two cars, drove one himself and had another driver on his payroll. He sub-contracted for a number of folks who had small fleets and one day hoped to build up his own fleet.

Last week I got a call from Balan. He was calling to introduce his nephew, who’d just graduated from college. Balan’s fleet has grown from the two Indicas to two eight cars now. Despite the recession his business had thrived and he’s effusive in expressing his gratitude for us giving him a leg up with our steady business. At a time when even basic services such as barber shops and restaurants were seeing customers cut back on their spending, that fact his business had grown is testament to his drive and what Ram Charan terms “business acumen.”

The town and the gown

Once we sold our first startup in early 2006, I have had the time and opportunity to consult for friends and several clients to help with their businesses. These have all been college-educated, entrepreneurs – ranging from manufacturing (electrical gear), distribution (music to mobile phones in Class B towns), software products to training services. In many instances, Prasad the barber, Girish the restaurateur and Balan the fleet owner, have a far clearer sense of where their businesses stood, who their clients were and where they made their margins. And these were the folks without the college (or even high school) degrees. Yet both groups of entrepreneurs are successful and struggling with common questions – from the strategic, “How do I grow my business?” “Should I grow my business?” “How do I raise capital?” “Should I take on debt or do I dilute equity?” – to the tactical decision making on hiring, pricing, marketing and promotion.

Academicians who study entrepreneurship make the distinction between voluntary (those who make a choice) entrepreneurs and those that fall into entrepreneurship, without a choice. Most entrepreneurs that get formal funding or the media mostly talks about belong to the former voluntary group while folks who go into their family businesses or traders and micro-entrepreneurs fall into the latter, involuntary group.

Yet both these groups have far more in common, particularly when it comes to problems they face and mistakes they make. Much like parenting, most entrepreneurship involves learning on the job. While reading up about parenting (particularly in my case about adolescent behavior) will help, it only takes us so far. Grand-parents (for people) and consultants (for businesses) help speed up the learning and avoid the most egregious mistakes, but nothing can replace the learning that experience brings. Yet the journey to achieve such experience need not be as stressful and lonely as it sometimes seems.

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2 thoughts on “Entrepreneurship in India – Rules for Spectators – Part 4

  1. Pingback: Tweets that mention Design of Business » Entrepreneurship in India – Rules for Spectators – Part 4 -- Topsy.com

  2. I recently had a long chat with the panwalla who i befriended in front Krishna Vaibhav restaurant in Marathahalli. It was interesting to note the way he handled his stocks for the raw material for making paan. I asked him how much is his daily earnings. I was surprised at the kind of clarity he had about his business numbers. number of paans sold daily; seasonal variations; raw material cost; payout costs; take home money; what is the projection for the month; what are the areas of other business possibilities; He gave all the details and did not need an excel sheet or a record ledger. I learnt the prime areas of focus and how an entrepreneur needs to be on top of his numbers. passion of an entrepreneur needs to be supplemented by simple sense of all the numbers.

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