Way to Success: Turn-on 10 essential things before starting new Business

Starting a small business can be extremely exciting and challenging. It can lead to great personal and financial rewards in the future, but you will likely face a number of challenges when starting out. Business is like a wheel barrow. Nothing happens until you start pushing. The demands on your time may be greater than you anticipated, and enough money to keep things going can also be a problem. With some careful planning, you can anticipate some of these challenges and will be able to overcome them.

Most entrepreneurs leave their secure jobs to dive into the chaotic world of business. When entrepreneurs leave their jobs to become a business owner, most experience a culture shock. Also, contrary to a salaried employee, business owners are in charge of the entire day-to-day functions of your business. Our industry experts have given several definitions about the Entrepreneur and Entrepreneurship.

Entrepreneurship

• "Entrepreneurship is a way of thinking, reasoning and acting that is opportunity obsessed, holistic in approach and leadership balanced."
• Scott Shane (Case Western) – "Entrepreneurship is an activity that involves the discovery, evaluation and exploitation of opportunities to introduce new goods and services, ways of organizing, markets, processes, and new materials through organizing efforts that previously had not existed."
• Howard Stevenson (Harvard) – "The pursuit of opportunity without regard to resources currently controlled."

Entrepreneur

• An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield. (Jean-Baptiste)
• An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource. (Peter Drucker)

But all the definitions and characteristics are not enough to make the enterprises successful. An entrepreneur should have capability to overcome with the key challenges.

Today we are wondering to review many examples around us to understand the Entrepreneurship Direction.

Michael Dell (Dell Computers), Frank Carney (Pizza Hut), Fred DeLuca (Subway), Sunil Mittal (Bharti Enterpreses), Sachin and Binny Bansal (Flipkart), Shiv Nadar (HCL Infosystems), Shyam Bhartia (Jubilant Foodworks Ltd.), V G Siddhartha (Café coffee Day), Mangal PRabhat Lodha (Lodha Developers), G.M. Rao (GMR Group), Rakesh Jhunjhunwala, Ajay Bijli (PVR Cinema), Namit Malhotra (Prime Focus Ltd.), Ronnie Screwvala(UTV), Sanjeev Bikhchandani(Naukri.com), Deep Kalra (Makemytrip), Subhash Chandra (Zee TV)

All above leaders are recognised by their milestones. They are creators of success. It came because of their ability to find out key challenges and over come. We are going to discussed below the key challenges of starting any business.

Challenges of Starting a Business as Entrepreneur

"Starting a business is like jumping out of an airplane without a parachute. In mid air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground." – Rich Dad

I have trust that most of us are agree with Mr Rich Dad. But between Success and Entrepreneur only 2 things are very vital. 1. Taking the right decision 2. Making the step ahead every day.

These 2 attributes can change the entire thought process and create the success path for future. We are trying to cover all the major challenges of a new Entrepreneur below.

Challenges of Starting a Business from Scratch

1. 1.       Crafting the Vision and Business Idea

Entrepreneur should be visionary leader. He/she should possess the ability to see what others cannot see. It can be problems for other but must see it as opportunity

"There is far more opportunity than there is ability." – Thomas Edison

But forecasting opportunities is just the beginning point of the journey. The main business challenge is going to be ability to counterfeit that opportunity into a proposed business idea. I see this as a business challenge because the process of transforming problems into business opportunities is like trying to turn lead into gold. I call it the entrepreneurial process of "Creating Value out of nothing"; a process that brings innovative products into existence. Below is an illustration of how the process goes.

• Identifying a problem >Seeing an opportunity in the problem > Coming up with a solution > Forging the opportunity into a business idea > Integrating your solution into a business plan
  1. 1.       Raising Capital for to Start-up Business
  After developing the business idea, the next challenge entrepreneur is going to face when starting a business from scratch is that of raising capital. As an entrepreneur, he/she is the only one that knows business your idea to the core. Only he/she is the designer of future story and success
  "Capital can do nothing without brains to direct it." – J. Ogden Armour
  Trying to convince investors about something that doesn't exist is definitely a challenge. It is always a big challenge especially when you are going to start your first initiative. It can happen only if you make investors understand that this idea is going to delivery in the future and trustworthy.
   "If you want to know the value of money, go and try to borrow some." – Benjamin Franklin
  There is more to raising capital than just simply asking for money. Most investors want to invest in already established businesses with minimal risk and they want to be sure that they get returns for the risk they took. Most brilliant business ideas never scale through the venture capital stage because the entrepreneur is either not prepared or lacks what it takes to raise the needed capital. Just as my mentor, Robert Kiyosaki says:
  "The world is filled with brilliant ideas and excellent products but the world lacks seasoned entrepreneurs." – Robert Kiyosaki
  1. 2.       Assembling Strategic Business Leader/s
  "Eagles don't flock, you have to find them one at a time." – Henry Ross Perot
  The third business challenge Entrepreneur will face in the course of starting a small business from scratch is assembling the right business management leaders. When we talk about a team, I am not talking about regular employees. I am talking about a "Strategic Round Table Business Leader" that will meet regularly to brainstorm on ways to grow your business.
  "Individuals don't win in business, teams do." – Sam Walton
  The process of building a business team starts even before the issue of raising initial start-up capital arises. Remember I said that most brilliant ideas never scale through the phase of raising venture capital. Well; this is where most budding entrepreneurs miss it. Most brilliant ideas and products never get funded because the entrepreneur is trying to raise capital as an individual. A business team is a vital, yet often ignored key to raising venture capital successfully.
  "Business and investing are team sports." – Rich Dad
  4. Finding the Perfect Business Location
  Is finding a good location/s a business challenge? It is always a puzzle for people but as per my opinion finding a suitable business location/s at the right price, utilities and other resources are definitely not easy. How do you get a location that has a rapidly growing population, good road network and other amenities at a good price?  As a entrepreneur you need to find out solutions for all these question before execution of your business strategy
• 5. Discovery Good Employees suitable to business
  "If you own a butcher shop, don't hire vegetarians. To hire the right people, you have to let the wrong people go." – Rich Dad
  Today's most of the organizations are suffering problems with suitable Employees. An organization can rise the fund, manage the fund, purchase the materials and machine but they can not manufacture the Employees. Most writers and managers crank up the process of finding good employees as an easy task. They define the process of finding an employee as simply presenting the job description and the right employee will surface. But I think it's more than that.
  "The competition to hire the best will increase in the years ahead. Companies that give extra flexibility to their employees will have the edge in this area." – Bill Gates
  Business owners know how difficult it is to find a hardworking, trustworthy employee. Most employees want to work less and get paid more. Finding a good employee who will be passionate about delivering his or her services is quite difficult.
  6. Identify the Good Customers
  The sixth challenge Entrepreneur will face in the process of starting a small business from scratch is finding good customers. Note the keyword "good customers." In the process of building a business, you will come to find out that there are good customers as well as bad customers. You must be on guard for bad customers. Good customers are really hard to find. A good customer will be loyal to the company and will be still maintain relationship if internal team make a mistake and apologize. A good customer will try to do the right thing that will benefit both himself and company mutually.
  "Thank God for my customers. They buy my products before they are perfected." – Henry Ford
  For start up company people will not support easily especially bad customers will always look for loopholes in the company's policy to exploit and make a few gains. Bad customers will always try to exploit the company's goodwill and look for ways to rip off the company. Bad customers are responsible for bad debts. Good customers build your business and bad customers will always try to liquidate the business.
  7. Managing the Competition at Market Place
  "In business, the competition will bite you if you keep running. If you stand still, they will swallow you." – Victor Kiam
  Competition is the next challenge which Entrepreneur will face when starting a new venture. We can not tell that we should feel bad about the competition but it is a challenge for new people to over come and handle you market effectively. It helps us to create the benchmark for creativity, the main engine that stimulates innovation and production of quality products at great prices. Without competition, there will be no innovation and without innovation, the world will be stagnant.
  "If you don't have a competitive advantage, don't compete." – Jack Welch
  We should look competition as a welcomed challenge which helps us to improve our market reach to product development. It gives esprit to young start to deliver their best to compete competition at market place. Competition keeps us on our toes and drives us to constantly improve our products and services. But Entrepreneur must be warned. Competition can make your business lose its relevance in the eye of your customers so you must always be on guard.
  "The competitor to be feared is one who never bothers about you at all but goes on making his own business better all the time." – Henry Ford
  8. Unforeseen Business Challenges and Expenses
  "Smooth seas seldom make good sailors." – Anonymous
  Just as a sailor prepares for unexpected storm, just as a pilot is always on the watch for unpredictable bad weather and thunderstorms, so must an entrepreneur prepared for whatever comes. Unexpected challenges can come in the form of:
  • Unexpected law suits
  • Inconsistent government policy
  • Not being able to make payroll
  • Unpaid bills and taxes
  • Unexpected resignation of staff from sensitive office
  • Bad debts from customers
  • Loss of market share
  • Dwindling working capital
  • Inadequate stock or inventory
  "A company's ability to respond to an unplanned event, good or bad is a prime indicator of its ability to compete." – Bill Gates
  These business challenges, if not handled properly can ruin your plan to build a successful business. Another challenge you must expect is an unforeseen increase in business expenses. If not handled properly, it might result in constant negative cash flow and eventually; business failure.
  9. Keeping Up With Industrial Changes and Trends
  "In three years, every product my company makes will be obsolete. The only question is whether we will make them obsolete or somebody else will." – Bill Gates
  Change in trends is a challenge Entrepreneur must be prepared for when starting a business. Trends have made and broken lot of businesses. We need to understand lot of profitable businesses that have been wiped out by slight industrial changes and trends. A typical example is the Dot com trend, where many established industrial based businesses were wiped out by new web based dot com companies.
  "How fast a company can respond in an emergency is a measure of its corporate reflexes." – Bill Gates
  When the Dot com era began, business owners were left with only two options. Either they join the dot com train or they get crushed by the dot com train. Seasoned entrepreneurs know that trend is a friend and are always willing to swiftly adjust their business to the current trend. Keeping your eyes open to spot trends is really a challenge but the big task will be your ability to quickly use the trend to your advantage.
  
  
   10. Exit Strategy
  "In the world of business and investing, your exit is more important than your entry. A good thumb of rule is this; exit before you enter." – Robert Kiyosaki
  Before starting a business, it is advisable to plan an exit. Lack of an exit plan is the primary reason why most businesses crumble after some problems or founder absence. An exit strategy is very important to the long term survival of a business. Now how do you plan an exit strategy? There are benchmarks you can use to determine your exit from any business.
  Most smart entrepreneurs will use a certain benchmark as a target and once this specific target is reached, they exit the business. Examples of such benchmarks are:
  • Annual sales
  • Annual Turnover
  • Asset Base
  • Market Saturation
  • Customer base, subscribers or number of users
  Now when it comes to exiting a business, there are three strategies you can apply. You can choose to exit a business in any of the following ways:
  a) Turning over the business to professional managers
  When your business reaches a certain stage of maturity, you can exit by turning it over to professional managers. In this case, the business still belongs to you but you are not involved with its day to day affairs. You will have to give up administrative role to competitive person. When you exit in this manner, you will have more free time to look at other projects or retire.
  b) Selling the business privately
  In this case, Entrepreneur is exiting the business by selling it to a private investor. In the business world, it is called M&A (Mergers and Acquisitions). Exiting your business this way means that after the sale and transfer of assets is complete, you have nothing to do with the business again.
  c) Taking the company public
  The unique thing about this type of exit strategy is that while you are selling your business (in form of shares) to public investors, you still maintain control over the business. It is always suggested to consult your legal advisor or consultant before taking or crafting any exit strategy. but always remember "your exit is more important than your entry."
  As a final note, I want to state clearly that challenges come only to make you stronger; so don't faint in the face of challenges. Stand tall; keep moving your business forward and I will see you at the top.
• ABOUT THE AUTHOR
• Deepak Kumar
  Deepak Kumar is a senior Consultant at Prajwal Business Services. He has completed PGDM in Marketing (Gold Medalist). He has more than 7... (Bio)