Updated April 21, 2023
Introduction to Entrepreneurship
Every year Forbes releases the list of the world’s top billionaires and arouses reader interest as Bill Gates, Warren Buffet, Carlos Slim Helu, Amancio Ortega, among others, vie for the top position based on their shareholdings and other wealth. In the Indian context, Mukesh Ambani of Reliance Industries with $19.3 bn net worth, Dilip Sanghvi of Sun Pharmaceuticals with a net worth of $16.9 bn, and Azim Premji of Wipro are the toppers. The list reveals one common factor to all billionaires: they are not workers or top employees but businessmen who took the risk to start their own entrepreneurship business or continued the glorious tradition set by their parents or grandparents.
Therefore, it is evident that if you need to go beyond fixed income and uncertainties in life, you need to be not just a worker or remain in a ‘white-collar job’ throughout your life but venture out on your own. Yet most people do professional entrepreneurship courses such as engineering, medicine, entrepreneurship management, or even liberal arts or commerce to get a good job, not to venture independently at some point in their career.
Is Entrepreneurship For You?
It is common for many young men and women to think they cannot start a business independently. This can be due to various reasons, such as a lack of entrepreneurship ideas, unwillingness to take a risk, or insufficient entrepreneurship finance or infrastructure. It may be recalled that the legendary N R Narayana Murthy, who co-founded Infosys with a few other professionals, set up their venture in a car garage. Many banks refused to finance their project in the initial years, and Murthy himself met clients to market their services.
Likewise can be true for other brands. It may have been mostly started from the garage of a house, e.g., Amazon, Harley Davidson, Apple, Google Microsoft, Hewlett-Packard, etc. One of the largest selling voltage stabilizers, V-Guard, from South India, had humble beginnings. The founder, Mr. Kochouseph Chittilapilly, himself distributed the products directly to shops in a used scooter he bought and Rs 1 lakh he borrowed from his father, who was a peasant. But now, he is a millionaire, having listed V-Guard industries and operations in the leisure, electrical, and manufacturing industries. The legendary Dhirubhai Ambani rose from humble beginnings selling clothes in wholesale markets in Mumbai much before his Reliance Industries became known for its investments in petrochemicals, oil, and telecom.
So what matters is not big money, infrastructure, or bank funding but a burning desire to make it top by relentlessly pursuing your idea.
8 Important Signs of Entrepreneurship
So here are the 8 most important signs that will explain if entrepreneurship is right for you:
1. Find a need/problem and fill it
Success in any business depends on identifying a need and filling it. Tata spent millions of rupees developing the Nano car, but it was to fill the need of the teeming middle class in India who wanted a small, very affordable, and fuel-efficient car. It also helped them tap into the market for those looking for a second car to ride. Many of the success stories in business were created by identifying a need and filling it, applying to low-budget airlines, solar panels and inverters, e-commerce ventures such as Amazon and Flipkart, vacuum cleaners, LED
2. Have sufficient money to last for at least six months
Many entrepreneurs work for a few years in a high-paying job and then quit starting their own venture. A new project may take over a few months or years to break even. Meanwhile, even if the promoters may have to go without a salary or any dividends. Hence it makes sense to work initially and save money before starting a new venture.
There are many entrepreneurship advantages other than monetary in such a scenario; it includes entrepreneurship learning from others’ mistakes, getting exposure to managing people and resources, and, more importantly, building contacts in the industry. For example, an IT professional handling social media and content in a large company can think of starting a new venture focusing on website development, social media marketing, and design, as he has domain knowledge and the necessary connections to get the first orders.
3. Focus on cash flows before profit
From small trading businesses to big industries, cash flow is paramount as it is the entity’s lifeblood. Every month rents, salaries, stationery, and petty cash expenses come up, and there should be sufficient cash flow for such recurring costs. If the entrepreneurship organization has to borrow to meet its routine expenses, it runs into trouble. It is said that a company can survive without profits for so many years, and it may mean no dividend declaration for its shareholders. However, if there is no cash flow, the entrepreneurship organization will have to wind up its operations even if it runs on profit. In the initial months, promoters themselves don’t draw any salary or fix very low salaries in comparison to what they are eligible for to ensure cash flow.
4. Make use of incubators/angel funding
In recent years, there has been news of many bright engineering and management students who have shunned lucrative job offers to start their own ventures. The most difficult part of any start-up entrepreneurship business is to have the necessary infrastructure and funding to keep going. Banks shy away from startup projects as there is no track record to go by, making them appear very risky. Hence, many engineering and management students who want to set up a business utilize the incubation facility in technology parks set up by the government or start off the incubation facility within the campus and remain there for a year or two before moving out to their own premises. However, they may require some funding for it which angel investors provide.
5. Have a good business idea
It may be recalled that during the dotcom revolution in early 2000, many new ventures were launched with much fanfare and venture funding but petered out after a few years due to a lack of a revenue model. No angel investor would be interested in the project without a good revenue model. Angel investors may be willing to invest $25,000 to $100,000 in a company with potential where the promoters have shown a commitment to quality, are passionate about the project, and demonstrate integrity.
They must have a clear entrepreneurship business plan, marketing strategy, innovative technology or product, and potential to grow big. Angel funding may be the best option to raise money under most circumstances, but it doesn’t come easy. You have to go through meetings, negotiations, project appraisals, and personal assessments before getting access to funds.
Until such funds are available, you may have to depend on your parents, close friends, and family members or even pledge some gold or immovable property to keep going.
The angel investors will be interested in knowing about the capital you have raised, additional funding required, how long it will last, the marketing and advertising strategies, the quality of team members, and whether accounting is proper.
6. Venture Funding for growth
As the company grows, you may still need more capital for technology infusion, marketing, launching innovative products, and expansion to other territories. Here, the due diligence would be much stricter than in the case of angel funding. They would examine the balance sheet, accounting procedures, the future of the company’s products and services, potential technology disruptions, and many risk factors facing the company. They will seek one or two seats on the director board and close to 40% more share capital. Since the venture fund wants to exit after getting a good valuation, they will seek to closely examine your track record in the market, your strategies, plans, and potential strength in introducing new products.
7. Embrace PR, social media, and technology to your advantage
Small and medium enterprises now should not be reluctant to embrace new technology due to cost factors, as cloud computing has emerged as an affordable option for setting up servers and onsite installation of software. Also, Enterprise Resource Planning (ERP) that integrates all the company functions is available for small and medium enterprises. Big data analysis, cheaper storage options in the cloud, and efficient CRM (Customer Relationship Management) software would go a long way in keeping the company agile.
Moreover, start-ups can be noticed by the media if they have an innovative product, as newsmen find readers interested in success stories. Social media, such as Facebook, Twitter, Pinterest, and LinkedIn could be used to good advantage.
8. Learn about business, understand and invest
For someone starting an entrepreneurship business straight out of college or after working in the industry, it is essential to understand the business dynamics before investing. What are the margins, competitors, and costs involved in regulatory non-compliance, apart from many issues facing any new entrepreneurship business venture?
There are debates about whether one can learn entrepreneurship or not. However, several universities and institutions worldwide have started entrepreneurship programs of one-year or two-year duration. In India, the Ahmedabad-based Entrepreneurship Development Institute of India is offering a postgraduate diploma in Management-Business Entrepreneurship (PGDM-BE). It equips students to identify new entrepreneurship opportunities, starting a new venture, the procedures, preparing project reports, marketing strategies, financial planning and control, human and resources management, logistics.
Without proper entrepreneurship training and guidance, many new entrepreneurs may lose money, get stuck in projects, and seek the support of foundations that give guidance to overcome the crisis.
However, in Forbes magazine, Andrew Yang, promoting entrepreneurship in the US, wrote that the entrepreneurship training module does not seem to be delivered. The number of entrepreneurship training programs has quadrupled in the past 25 years. Still, there has only been a decline in private business ownership among households with people under 30 years. This shows that many students who complete the entrepreneurship program do not end up doing their own business.
Business is not about 100% success but also taking failure in your stride. Bill Gates failed in his first venture, as did many other successful businessmen. But it’s not easy to teach how to handle failure in the classroom. It is an attitude that has to be developed. Likewise, bundling all issues related to starting a business in a two-year program may make it look daunting for students, hesitating to begin one and fearing all the risks and failures.
Conclusion
Entrepreneurship is undoubtedly the best way to attain wealth and prosperity and lead a fulfilling life compared to holding on to a highly-paid job with more risks and uncertainties. However, every entrepreneur should possess a few entrepreneurship qualities irrespective of whether he has undergone an MBA, engineering, entrepreneurship MBA, or is just a school/college dropout. Entrepreneurship needs courage, vision, the ability to take risks, be willing to change, and, more importantly, communication skills and leadership qualities.
However, you don’t need to be an extrovert. Many of successful businessmen have been introverts. According to Bill Gates, introverts can quietly slip away from the crowd, remain somewhere for a few days, and devise a solution. Or else the entrepreneur can hire some extroverts and utilize their entrepreneurship skills where required. The other techniques that introverted businessmen use are to act the extrovert’s part even when holding their introverted qualities in other compartments of life. This goes on to prove that introverted entrepreneurship nature need not be a hindrance to entrepreneurship.
Entrepreneurship is also about cultivating good contacts in the media, government, and decision-making process, as many issues related to the industry are decided upon and commented upon by the government’s fourth estate and executive arms. It shows that success in entrepreneurship business is multi-variable, and you need to chart your own path to success.
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