How to take your business to the next level?

A lot of us start our own business with a lot of ambition. We set unrealistic targets, dream unreasonable success, because when we start out, two factors are playing at work:

1) We do not have the experience to run our own venture! Holds true especially for any first generation entrepreneur. And most of us probably jump into it without proper mentoring

2) We romanticize the idea of being an entrepreneur. For us, it is the means to give us what a regular corporate job probably just cannot give us.

I personally have experienced both of these factors. I started my venture over three years back, expecting to get out of red within the first six months, and earning crazy profits by the end of maybe 18 months. This is how my first financial model looked like.

Let me give a brief background about this.

I run a small preschool and day care. Before thinking or starting anything, my primary premise was that dedication, hard work, and sheer ambition would be all I would require to kickstart the project. When I first started working on my financial model, I worked with the premise that for extremely premium quality baby care, where parents would not have to think about anything, from food, to baby diapers, to early child hood education, to homework supervision, parents would be willing to pay a reasonably high fee. It would be sort of like a premium charged for a completely relaxed frame of mind. The second premise I worked on was that real estate, while always expected to be expensive, would still not be so pricey that the revenue would not heavily outweigh it. My third premise, or rather I think this was the second premise, was that in a place like Gurgaon ,which is so heavily comprised of working couples, this would be a big volume business. My expectation- that within the first year, I would be 50 kids strong, end of the 2nd year, maybe a 100 kids, and then by 3rd year, I would reach what I thought was the optimum number a single unit could hope to handle- around 250 kids between baby creche, preschool, and after school daycare.

My first reality check- ambition alone did not matter! In a country like India, where we still have a huge chunk of population working with an extremely medieval attitude in life, being an all women's team was looking to be a serious drawback. People we approached, whether for finances, or for property, were just looking at us like inexperienced women, who were being indulged by a wealthy benefactor perhaps! They refused to take us seriously, did not respond to our queries, almost actively discouraged us. Horrible and pathetic as it was, we realised that it was very difficult to attend any meeting without our "male benefactor", because men in this field were trying to make life very difficult for us. I believe this was one of my earliest lessons in the business world- not all is hunky dory, and sometimes you have to take the help of others to just sort of speed up the process a little. We could have probably stuck on and been independent, but probably have lost a lot of precious time which would have caused the competition to become immense in an industry like this. 

My second reality check- prices of real estate were more absurd than I had ever imagined! Suddenly, one component of my financial model started looking absolutely ridiculous. Suddenly, from thinking that I could find a huge space and turn it into a pretty yet professional outfit I started thinking about maybe starting out a little smaller to begin with, and then make it huge (this incidentally was an advice I had got- start out as small as possible to test waters; only I did not heed it fully. Ok, maybe I only heeded it like 10%).

So there we were, finally ready with our setup. A space we had got ready for children, our staff ready to handle the first 10 odd kids, the financials etc in place, marketing and sales strategy clear, the first baby coming in. One month goes by, two months go by. We field some visits, but we don't get any conversions. We start to sweat a little. What is going wrong? Is our place not attractive enough? Are we not able to draw in adequate numbers? Is our sales pitch going wrong? We decide to do a second round of competition survey. And here we get our third reality check- new players like us can't afford to charge a premium on our service. No matter what we mean to offer in terms of quality. In a country like India (I know I am somewhat generalizing it, but it's quite true), most people (not all) are unwilling to pay a premium for anything. The general mentality is- maximum value for minimum price. Then it doesn't seem to matter whether we are haggling for something like aloo pyaz or for something like the care of the most precious little thing in our life. New players, like we were at that time, again probably romanticise the whole thing, and that is where we go wrong. So after two months of paying exorbitant rents, we go into damage control mode. 

Finally somewhat on track, we manage to trudge along for the next few months. Almost the end of the first operational year, and we are only at about 8 students. So it was time for my third reality check- this is not a big volume business, there is no way you reach 50 odd students so quickly, it takes a lot of time to build up any kind of reputation, at this stage you are only drawing parents who are looking at that small setup of kids, you can't draw those who are looking at huge numbers to give them the confidence to register their child with you, and so on. In fact, we always seemed to struggle to breach our magic numbers- the first 10 kids, the next 10 kids, the next 10 kids and so on. 

So as you can see, three years into the business has made me realise that sheer inexperience and the insane amount of romanticising has led to a complete collapse of the original dream from which I, or most entrepreneurs start. The financials go for a complete toss, and you are constantly wondering, what do I need to do next? How can I give my business the next push? You constantly try to reinvent, come up with new strategies to understand how to take things forward. Which is what is expected to happen in any industry, but becomes trickier in one with extremely low entry barriers, one which completely belongs to the unorganized sector, where for a lot of people, stability of the school does not matter. I have seen old names fade away and new one come up in a span of approx 2 years. Old players get disheartened, new players come in without understanding the dynamics of the industry (probably like we started out), make things extremely difficult for the existing lot, then 2 years down the line themselves fade away for the same reasons, and so the cycle continues. 

I am yet to have a concrete idea of how to take my baby to the next stage, I know only that must keep strategising, an never lose track of what my original dream was. At the end of the day, that is what keeps on driving you...