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7 daily challenges for every entrepreneur
8 lessons for budding entrepreneurs
You had a great idea, a well-drafted business plan, some cash to begin with, a talented team and you managed to rake in more funds. Now, you are running your own business. So far, so good. But, are you equipped for the challenges that lie ahead? I share with you my entrepreneurial experience of six years in the form of seven daily challenges that every entrepreneur-in-action faces, more as a routine than an exception.
1. No rules protecting employers
There are rules, the world over, upholding the interests of employees. But there is little an employer can do, if at the receiving end. For example, if you discover that an employee has secured a job with your company by means of duplicate certificates or fake experience, all you can do is to ask them to leave with full pay. You hired him/her and it is solely your mistake!
Similarly, there are instances where you hire someone at a very handsome package for a crucial position. But, by the time you train him/her to understand the responsibilities, you are gifted with such a beautifully crafted resignation that you wonder why the artist didn't try a hand at creative writing for Bollywood.
What takes the cake is a situation where, on the second day of the month, you realise a person performing a highly skilled task decides to quit for a better paying job and doesn't have time for the handover. Be prepared for such situations and ensure there are some multi-taskers in the organisation to come to the rescue.
2. Global competition
You submit a proposal for a requirement to a prospective customer, after taking into account the cost of your employee, his allowance, certain percentage of the money that has gone into building the product and a little margin. You do the best costing possible, as you want to penetrate this account and have a long-term association with the client. You'd think your price would be best, considering the Indian advantage of labour, materials, etc.
Then comes the bid award day and the contract goes to some other company in some part of the world, ready to deliver what you promised, in a similar aggressive timeframe, similar reference customer base, at half the price you quoted. Yes, you heard it right -- half the price! This is a reality you have to live with. So, when you submit a proposal to one of your prospects, keep in mind not only your country, but also the rest of the world. After all, the world is a global village now, thanks to the Internet revolution.
3. Changes around the globe
You have made some profit, and plan to use it to fuel your global expansion. You hire the best man, train him and get him stationed in another country to give a local presence and comfort factor to your prospective customers. You are burning a lot of money on a daily basis with a hope that, sooner or later, you will start getting returns. But, something happens and you have to shut shop. No questions asked.
The reasons vary, from political changes in the target country to a failed feasibility study. Now, considering you are not a topnotch multinational able to hire a big consulting company to advise you, be prepared to burn some money here and there. There are similar situations, for example, in my company, which depends heavily on the Middle East market -- all our support departments (sales, pre-sales, recruitment, operations, etc) are idle for the entire month of Ramadan every year. Such changes have to be managed with a positive attitude.
4. Balance between projects and personnel
Usually, with startups or in the early stages of expansion, you have a project but no one to execute it. And, if the founders are techies, you have no choice but to burn the midnight oil and finish it somehow. Most likely, if this is the first assignment with the customer, you cannot afford to compromise on quality -- after all, you are expecting bigger business from the same customer. Such an experience makes you wise enough to do some advance hiring the next time around and, guess what -- this time, the opposite happens.
The project that was supposed to come in yesterday now lingers for months. Every time you pay those salaries, you think, 'Did I make the right decision? Am I doing justice to my investors' money?' Over time, you will learn to balance the two situations by pitching for regular work to help you tide over.
5. Delayed payments
You finished the work as planned and it is now time to collect payment. You have made plenty of plans for that money, from hiring more people in sales, to acquiring another office, to investing in a new idea. But, for no apparent reason, the money is delayed, especially if you are dealing with a large customer. The only thing you hear is 'Sorry, it is just a procedural delay', or 'You will receive your payment soon.' But nobody knows when.
So, how do you pay your employees and vendors? This, I must confess, is one of the toughest parts of being an entrepreneur. The only option you have is to forego your salary. In fact, pull out all your savings and put them in the company to bridge the gap. If still does not suffice, go to the bank with some 'tangible' property. That means, if you have a flat, you mortgage it. In most cases, the family is not even made aware of this, because it is a short-term problem and you do not want to scare them.
6. Return to the investor
So far, you may have heard stories of successful entrepreneurs becoming venture capitalists to help budding entrepreneurs. You may also have been advised not to be 'sticky' and to try and have a smaller pie of a bigger cake, rather than a bigger pie of a smaller cake. Sounds great! But, in reality, let's admit, these 'mother hen' entrepreneurs are successful because they are smart. They know how to grow their money and that is precisely the reason why they have so much money under their belt to manage.
So, if you end up taking money from them, be prepared to answer many a difficult question on a daily basis. If you can't manage that, you are out -- of the very own company you built! Remember, a bigger pie of a small cake is any day better.
7. How society perceives you
As an entrepreneur, I remember approaching a leading Indian bank for a home loan, where I was rejected for being "self-employed." And, believe it or not, a software engineer working in my own company got his loan sanctioned. If you are an Indian, an entrepreneur and unmarried, I give you my best wishes, because there is slim chance that a typical Indian middle-class parent will select you for his or her daughter.
You are perceived as a person without job security, unlike your classmates or ex-colleagues, who are sought after for being placed in well-known multinationals. Surprisingly though, if there is a natural calamity or any other cause needing attention, society expects successful entrepreneurs to donate generously, and they do.
So, if you thought being entrepreneur is fascinating and fun, yes, it is, but it comes with its own set of problems. However, once you learn the ropes, you start enjoying the ride. Once an entrepreneur, always an entrepreneur.
-- The author is Director of the Bangalore-based TechUnified, which provides software products to banking and telecommunication customers globally. He is an alumnus of NIT, Surathkal.
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