Well I hope I can now claim to have enough experience (both good and bad) to be able to distribute some basic gyan to aspiring entrepreneurs :) While a lot of it will just seem basic commonsense while reading, trust me when I say that we often miss out on some of these pointers when we start out. Some people (to some extent I will include myself in this group) will just call it part of the learning curve, but it is always good to have some kind of a checklist when you start out.
1) Choose your industry wisely
You might have 10 different ideas going through your head. But when it comes to choosing your industry, think deep before taking the plunge. Since this project is going to be your own baby, choose a mix of what you like doing (or what you think you like doing) and what you are actually good at. This need not be an industry you are already working in. There you have to figure out if you like the work you are doing, but just need it to be more challenging, or you want to apply your current work skills and do something which you like. For instance, if you are fond of music, and are actually good at it yourself, then think of becoming a musician. But if you like music, and are a good sales manager, then try to combine these two things and take the plunge. In my case, for instance, I liked spending time with kids, and my basic skill set was primarily administrative, so I set up a preschool and day care, but did not take on the responsibility of taking a preschool class (trust me, I have always known that teaching is not my forte!).
2) Choose your partner wisely
That's right. It's very important to partner up with the right set of people. You need to complement as well as supplement each other to a large extent. For instance, if you are not a huge risk taker, find someone who is willing to take some risks for the betterment of the business. But don't partner up with someone who is so drastically opposite to you, say for instance who only takes risks which you are never comfortable with, that you two (or more) are constantly at loggerheads with each other. There should be a balance of skill sets in the working team. Between all of you, you should be able to cover the basics like finance, marketing, sales, administration, human resources etc. None of you needs to be the jack of all trades, but you should be willing to learn from each other, so that if need be, you are not left in a lurch if the other person leaves.
3) Study your industry well
Before setting up shop, do your research well. This is not like the bplans you create in a B-school. Let's face it, they are all primarily created within the confines of your hostels, doing primarily internet based research. Reality check people- that's not how a business works! You need to literally get out on the roads and do primary research, No matter what the industry. You need to speak with people connected to your industry to understand the ground realities. Even if it is a tech based industry. Just making a hypothetical plan, working out your strategies and especially finances basis that is never adequate (since many a times they are sort of based on reverse calculations). For instance, if you want to start a cab sharing facility, and work out the passenger charges basis costs involved, and add a markup for your profit, that might not be enough. You would still need to go out on the roads and understand how much people are willing to pay up too. Or whether you might just need to bear losses for a bit and lower the charges till you make a name for yourself. As another example, say you need to rent a small space to start shop. Check with at least 5 different people regarding the costing of that space, or the costing of similar other spaces. People might try to take you for a ride, or there might be some other party which is being more reasonable. Understand the what, where, when and how of the industry you plan to get into
4) Follow your gut instinct
While interacting with people, always pay heed to what your gut tells you about the person standing in front of you. If it tells you to not enter into a partnership with that person, there is probably a good reason for that. If you feel that this is not the kind of customer I want, you are probably right again. Sure, you can't always gauge a person when you first meet them, but at least 70% of the times you are probably right. Don't necessarily give in to the temptation of getting the wrong set of people involved in your business
5) Define a structure for your work
You need not start big here. But some basic structures should be in place right from day one (naturally expect them to keep on evolving, that is how business grows). But some structures, rules and regulations should be in place right from the word go, which should be clearly spelt out for all the involved parties (be it yourself, your partners, your staff, your customers, your vendors, etc etc). two people should (for the most part) never be able to blame each other for any kind of difficulties/goof ups. If you want to set deadlines for incoming receipts, spell it out clearly for the paying customers. Your client should be made fully aware of the penalties which will be imposed in case of delayed payment (you might offer waivers in the early days, but it will at least act as a deterrent for future delays). In case you want credit terms from your vendor, it should be discussed while getting involved with them. Terms of employment with your staff should be made absolutely clear. In case you are making any changes to your structures, be clear in communicating them to all stakeholders.
6) Start small
Don't rush to start a new venture on a large scale (unless you have the finances to back you of course!). Start small till you understand the working reality of your industry. Especially holds true if large amount of funds are involved as start up cost. You might be severely tempted to do otherwise, but trust me, for the most part, it's not worth it. Wherever possible, try to minimise costs, say by entering into alternative models like revenue sharing or profit sharing, space sharing etc.
5) Don't panic!
Many a times you may feel like things are simply not going according to plan, and you would be severely tempted to just give up. Don't panic. When you start, remember to set a certain timeline in place- both in terms of the amount of time you are willing to give this venture to work, and the amount of resources you are willing to invest. Don't give up before then. You might get seriously tested, but the end result will be worth it :)
All the best, if you plan to start something of your own. And existing entrepreneurs, if you feel that I have left something out, do comment. Let's make this as comprehensive as possible :)
1) Choose your industry wisely
You might have 10 different ideas going through your head. But when it comes to choosing your industry, think deep before taking the plunge. Since this project is going to be your own baby, choose a mix of what you like doing (or what you think you like doing) and what you are actually good at. This need not be an industry you are already working in. There you have to figure out if you like the work you are doing, but just need it to be more challenging, or you want to apply your current work skills and do something which you like. For instance, if you are fond of music, and are actually good at it yourself, then think of becoming a musician. But if you like music, and are a good sales manager, then try to combine these two things and take the plunge. In my case, for instance, I liked spending time with kids, and my basic skill set was primarily administrative, so I set up a preschool and day care, but did not take on the responsibility of taking a preschool class (trust me, I have always known that teaching is not my forte!).
2) Choose your partner wisely
That's right. It's very important to partner up with the right set of people. You need to complement as well as supplement each other to a large extent. For instance, if you are not a huge risk taker, find someone who is willing to take some risks for the betterment of the business. But don't partner up with someone who is so drastically opposite to you, say for instance who only takes risks which you are never comfortable with, that you two (or more) are constantly at loggerheads with each other. There should be a balance of skill sets in the working team. Between all of you, you should be able to cover the basics like finance, marketing, sales, administration, human resources etc. None of you needs to be the jack of all trades, but you should be willing to learn from each other, so that if need be, you are not left in a lurch if the other person leaves.
3) Study your industry well
Before setting up shop, do your research well. This is not like the bplans you create in a B-school. Let's face it, they are all primarily created within the confines of your hostels, doing primarily internet based research. Reality check people- that's not how a business works! You need to literally get out on the roads and do primary research, No matter what the industry. You need to speak with people connected to your industry to understand the ground realities. Even if it is a tech based industry. Just making a hypothetical plan, working out your strategies and especially finances basis that is never adequate (since many a times they are sort of based on reverse calculations). For instance, if you want to start a cab sharing facility, and work out the passenger charges basis costs involved, and add a markup for your profit, that might not be enough. You would still need to go out on the roads and understand how much people are willing to pay up too. Or whether you might just need to bear losses for a bit and lower the charges till you make a name for yourself. As another example, say you need to rent a small space to start shop. Check with at least 5 different people regarding the costing of that space, or the costing of similar other spaces. People might try to take you for a ride, or there might be some other party which is being more reasonable. Understand the what, where, when and how of the industry you plan to get into
4) Follow your gut instinct
While interacting with people, always pay heed to what your gut tells you about the person standing in front of you. If it tells you to not enter into a partnership with that person, there is probably a good reason for that. If you feel that this is not the kind of customer I want, you are probably right again. Sure, you can't always gauge a person when you first meet them, but at least 70% of the times you are probably right. Don't necessarily give in to the temptation of getting the wrong set of people involved in your business
5) Define a structure for your work
You need not start big here. But some basic structures should be in place right from day one (naturally expect them to keep on evolving, that is how business grows). But some structures, rules and regulations should be in place right from the word go, which should be clearly spelt out for all the involved parties (be it yourself, your partners, your staff, your customers, your vendors, etc etc). two people should (for the most part) never be able to blame each other for any kind of difficulties/goof ups. If you want to set deadlines for incoming receipts, spell it out clearly for the paying customers. Your client should be made fully aware of the penalties which will be imposed in case of delayed payment (you might offer waivers in the early days, but it will at least act as a deterrent for future delays). In case you want credit terms from your vendor, it should be discussed while getting involved with them. Terms of employment with your staff should be made absolutely clear. In case you are making any changes to your structures, be clear in communicating them to all stakeholders.
6) Start small
Don't rush to start a new venture on a large scale (unless you have the finances to back you of course!). Start small till you understand the working reality of your industry. Especially holds true if large amount of funds are involved as start up cost. You might be severely tempted to do otherwise, but trust me, for the most part, it's not worth it. Wherever possible, try to minimise costs, say by entering into alternative models like revenue sharing or profit sharing, space sharing etc.
5) Don't panic!
Many a times you may feel like things are simply not going according to plan, and you would be severely tempted to just give up. Don't panic. When you start, remember to set a certain timeline in place- both in terms of the amount of time you are willing to give this venture to work, and the amount of resources you are willing to invest. Don't give up before then. You might get seriously tested, but the end result will be worth it :)
All the best, if you plan to start something of your own. And existing entrepreneurs, if you feel that I have left something out, do comment. Let's make this as comprehensive as possible :)
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