Ready reckoner | How to be a smart entrepreneur
I recently went through the lists of student entrepreneur business plan competition winners over the last few years. The depressing finding was that very few of these companies seem to have survived up to today. Why is that? There is nothing wrong with the competitions themselves, as they are great vehicles to promote entrepreneurial careers among India’s youngsters. However, too many competition winners (especially in the tech space) believe that simply creating a great tech product is enough to create a great company, which will be snapped up by a tech giant for millions of dollars. Media hype about small companies like WhatsApp and Instagram getting billion dollar valuations just add fuel to the fire.
The truth is that growing a successful business needs strong strategic and execution capabilities, which many inexperienced entrepreneurs lack. So what capabilities does a “smart entrepreneur” need to build a great company?
How to build and manage a team: Nobody can build a company by themselves. You have to know what skills are needed to grow the company, how to attract talented people with those skills, communicate your vision to them and give them space to execute on it. You need to inspire your team while maintaining their respect.
How to understand customer needs: Many entrepreneurs build the solution first and then look for customers to buy it. It is important that you spend time with a large number of your target customers face to face to understand what exactly their problems are and if your solution is the right one for them. It’s better to do this before you spend time or money on creating your solution. Don’t get fooled by stories of Silicon Valley companies that create new tech product categories. Most of these game changers require very deep pockets and have a very high failure rate.
How to manage finances: Running out of money to pay salaries is the number one reason for business closure. You need to learn the techniques of running a lean start-up while you build revenue and raise external funds. Have a strong understanding of your company’s cash flow and profitability.
How to manage the unexpected: There are many factors outside your control like the state of the economy, customer sentiments, entry of well-funded competition, resignation of a key employee, etc. Although you cannot anticipate everything, it is good to do a SWOT analysis to lay out the most common risks and threats to your company and plan ahead on what you will do if they occur.
Smart entrepreneurs realize that very few people have all these capabilities within themselves. That is where they look for other successful entrepreneurs who can help them build these through a strong mentoring relationship.
It is not too difficult to find a mentor. Many networks like National Entrepreneurship Network, The Indus Entrepreneurs and Indian Angel Network have experienced mentors who are happy to support upcoming young entrepreneurs to help them grow. You may also find a successful entrepreneur among your relatives or friends circle that would love to take you under his or her wing. You can even check online networks like LinkedIn to identify people who could serve as your mentor.
Once you’ve found someone who you’d like to have as your mentor, the ideal thing to do is to ask for 30 minutes of his or her time to get their advice. In my experience, most people never refuse such a request as it also gives them a chance to learn what new developments are happening in the entrepreneur’s space. If the first meeting works well and there is enough value generated for both sides, you can always ask for a follow up meeting the next month. Voila! You now have a mentor.
To be a smart entrepreneur, you need to know what key capabilities you possess and what capabilities you can build with your mentor’s support. All you need to do is ask.
Akhil Shahani is director of the Smart Entrepreneur Program, a joint initiative of the Indian Angel Network and the National Entrepreneurship Network that provides education, mentoring and resources to entrepreneurs.