People who know me say that I am a born entrepreneur. I wouldn’t disagree. I had been wanting for sometime to be able to share my experiences with youngsters standing on the brink of adulthood; to be able to maybe inspire them to be unafraid of taking chances. The opportunity came to me a few weeks ago when I got to have an interactive session with a bright bunch of 16-17 year olds at a school for the underprivileged in Hennur.
Our interaction led me down memory lane and to relive the many lessons I learnt over the course of the years of starting a business from scratch. My journey started in 1980 and it still continues. Along the way, I have made several mistakes and learnt many valuable lessons. Here I will list the most important of my learning.
- Knowing your customer – Knowing your customer and as an extension, understanding their business and its problems is paramount. The worst thing for a start-up to do is solve a problem where none exists. This is why, knowing the customer is critical. Once the problem is identified, figure out how the customer wants to have it solved, not how you would want to solve it. You need to tailor your solution as per the customer’s needs. Learning comes from observing your customer at close quarters; only then you begin to understand his problems and needs. It is imperative to spend as much time as possible initially, in close proximity with your customer in their work environment.
India’s demographics and cultural codes also play an important role. Our population is 70% rural; the real mass market lies with these people who are mostly vernacular. The trick for start-ups is to cater to this huge market in their languages; and to consider their thought processes. The needs of this 70% are entirely different from the rest of the 30%. Indians have different spending habits due to vast income disparities; also we have chronic doubtfulness of services that are not tangible.
No amount of strategy planning in a business school will help with the challenges of dealing with flesh and blood people; the amount of learning one gets from ground realities is unparalleled. So invest the time and effort in really knowing your customer.
- Execution – The poor Indian work environment adds a different dimension to the methodology of a start-up. One has heard enough horror stories of trying to get a business off the ground in India. This ranges from the registration of a company to hiring to getting these hired people to work. Nothing is standardized in the Indian system; laws are ambiguous and surprises galore, mostly unpleasant; which is why the Indian “jugaad” (a Hindi word, which loosely translated means to find a low-cost solution to a problem) is a remedy for most.
To compound this, the Indian work ethic is poor compared to say, that of China or Japan, where loyalty and commitment is at the forefront. Agreements are constantly dumped overnight and contracts defaulted.
We need to accept the fact that we work differently and the young blood in start-ups need to recognize this and tweak their working and expectations accordingly. My learning on the execution of projects has been that we need to factor in 3 times the normal time period required to close a project.
- Projection – Last, but not the least, start-ups need to focus on the bottom-line and profits. I am also an angel investor; many a time I have asked start-up founders about their revenue model and how they foresee profits, only to be met with surprised looks as if I was asking foolish and completely unnecessary questions.
Start-ups, particularly nowadays, work only towards valuation. VC’s have spoilt entrepreneurs. Since they provide immense funding, start-ups end up concentrating on all the frills and peripherals except the core business – which is identifying the profit source.
In my experience, real or realized profits will turn out to be one third of the projected profits. Real profit is the net profit after all expenses, including operating profits, profit before expenses/ taxes/ depreciation/ interests as well as opportunity costs. Very often, the reason behind the discrepant figures is because some of these factors are overlooked while calculating projected profits.
The future belongs to young sparks who will think out of the box and will be brave enough to take the risk of implementing their innovative ideas. If I could inspire even one of these young adults to follow their heart I would consider myself successful. A true entrepreneur is one who can lighten the spark of entrepreneurship in young minds.
I hope to go back to this school or others like it, more often. Change comes with not one interaction but several.
Nice RK, With all your experience, i think it is the right time to share it with youngsters, I too can join you in these kind of pursuits…. Great going….keep it up…