For the First Time Entrepreneur

Archive for the ‘Starting Up’ Category

Bank with the Best

Posted by Vijay on March 7, 2007

One of the things I have realized during my 3+ years of entrepreneurship is that you should not be fooled by glitz and glamour. In most cases (exceptions excluded), the glitz is meant to hide all the flaws underneath.

Nothing highlights this fact than the banking industry today. My best experiences have been with our Nationalized Banks. Granted there could be a few starting problems. But once you establish your credibility, the service levels are unmatched by anyone.

At my company we bank with Bank of India. Three years ago, they were the only Bank willing to give a small BPO company a break by giving us a loan for equipment and working capital facilities. During those three years, they have bailed us out of some tricky financial situations when payments from customers came in late and cash flows were tight.

What really impresses me about them was the human touch to their service right from the Bank Manager upto their Zonal office. Compare the same with some of the more market savvy International Banks and their computerized call centers.

I still remember Infosys CEO Nandan Nilikeni was the chief guest at a function last year to commemorate Bank of India’s 100th year. In his own words, the only people who gave Infy the time of day when they were growing were these very Nationalized Banks.

Give me a Nationalized Bank anytime.

As a small business you stand a better chance of success there.

Cross posted on BizzBuzz


Posted in Bank of India, Banks, Finances, Small Business, Starting Up | 1 Comment »

The End Game

Posted by Vijay on February 23, 2007

Though things NEVER happen as planned in business, it is good to at least have an “end game” in mind.

The question to ask yourself is “Why am I doing this?”. Your answer will give you the end game you are looking for and allows you to plan better.

Typical “End Games” can be:

1. I want to build a company, sell it and retire.

2. I want to build a company that will succeed like Infosys and linger for generations.

3. I want to build a business that will give me enough money to lead a comfortable life.

It can be anything… but you need one.

Without this you will be like a rudderless ship.

Posted in Musings, Starting Up, Strategy | 3 Comments »

Alive and Kicking

Posted by Vijay on February 10, 2007

This blog has been dormant for a while now. Not because of lack of interest but because of some major things that were going on with my business that had me worried about our people and the direction we were headed in.

I am happy to say that we have come out of the mist and things are looking so bright that I am ordering new sunglasses.

Over the last 4 months we were literally on a rollercoaster ride. I will over the next several months blog it.

In the meantime, please take time to read this wonderful post on Information Architects Japan’sweb site.  It gives a true picture of what small businesses are faced with today. I had written a post along similar lines some time ago but this article is much better.

I love the term “Tire Kicker” that they use. To quote them, a “Tire Kicker” is:

Tire-kickers are those people that go check out cars whenever they can. They act as if they want to buy the car and ask for special deductions and conditions and they take 20 test-drives just to “change their mind” in the end. The true reason why they don’t buy is: They don’t have the dough

Posted in Moving On, Starting Up | 11 Comments »

Partners and Partnerships

Posted by Vijay on December 9, 2006

Too often businesses are started and partnerships are established verbally. “We’ll work out details later” is the common phrase used. Bad idea !!

While no one might want to cheat you, its a well known fact that shares in a company become more valuable as time passes especially if the business is successful. Suddenly issues like “What’s his value?”, “My contribution is greater” start to come up. I have seen so many companies that start out in right earnest and then get into these issues to such an extent that the business goes for a toss. Fortunately I have been lucky in this regard.

So here are some guidelines:

1. Establish shareholding at the very beginning. Holding patterns, Divestment, Exit etc.
2. Clear guidelines on roles and responsibilities.
3. Get an auditor that everyone is comfortable with.
4. Make sure that you have a comfortable working relationship with your fellow founders especially the ones who are involved on a day to day basis with the company.
5. Be professional. Don’t let personal likes and dislikes affect your decisions. Call a spade a spade.
6. Be clear on who handles finances. This issue will cause a LOT of heartburn if its not handled properly.
7. Teamwork is crucial in the initial stages. Don’t take major decisions unilaterally (if you are the only founder, then consult an advisor)
8. Be open to bring in new blood even if it means giving up some equity. Remember 100% of zero is still zero. I’d rather have a smaller piece of a bigger pie.

Posted in Starting Up, Strategy | 3 Comments »

Of Business and Businessmen

Posted by Vijay on November 16, 2006

They come in many forms and I have seen them all. Wanting to give you business, wanting to partner with you, wanting to help you scale new heights.

The main thing to remember here is to remember that THERE IS NO FREE MEAL. If something is too good to be true, then IT IS too good to be true.

As a small business you are always looking for business opportunities. However you need to stop and analyze carefully before you jump in. Even if it means delaying your decision. The fist instinct is trust every opportunity that comes your way. Don’t do it. Qualify any lead that comes in and do a credit check. You cannot afford long payment cycles as a startup.

Here is how to identify fraudsters:

1. If someone is looking for any advance payment to give you business. Then there is NO business. If there was business, they would not be asking for an advance. This is a common scam thats employed.

2. If people talk big numbers without proof (you’ll make a million bucks in 3 months), then they are frauds.

3. Anyone looking for minimum amount of paperwork is generally not completely above board. Normally all legit operators have good solid paperwork.

4. If they give you an Non-Discolsure that looks like its been cut and pasted (and its easy to see that), show them the door. Don’t sign any agreement that has verbiage that will prevent you from continuing your business. Have a lawyer whet each one. I know it costs money but its worthwhile in the long run.

Look at any opportunity with a long term view. No shortcuts.

Posted in Starting Up, Strategy | 1 Comment »

Employees are the key to success

Posted by Vijay on November 10, 2006

I love my people.

The greatest achievement that we can be proud of in the last 3 years are our employees. Each one of them… Without them we would be nothing.

Each of our managers have grown with the company. They started here and they have resisted offers by competitors to move even if it meant hikes in salaries.

Key is to keep the workplace enjoyable, keep your commitments to your employees and be transparent with them. They appreciate that and reward you with loyalty and productivity.

That is not to say people have not left. We have had our share of attrition. However we have never had an employee leave on bad terms. I always expect they’ll be back.

Employees. They can make or break a company.

Posted in Starting Up | 7 Comments »

Venture Capital. Don’t bet on it.

Posted by Vijay on September 3, 2006

One of the great questions that you will face as a first time startup is how to finance your operations. Choices are Self Funding, Friends, Family, Banks, Highway Robberies and then the Venture Capitalists in that order.

Don’t count on VC money to come to you in the beginning unless you have a track record (of previously raising and spending it). I read an interesting Business Week Online article (The Art of Doing it Yourself). Talks about how small businesses shouldn’t count on VC money and how VC money comes when you least need it.

I sat through an INSEAD presentation last week that stated that over 90% of startups are funded by the founder. This was followed by Family and Friends.

So when we started the business we were told, “Build a good team, Build Customers. Funding will follow. Trust us”. So we did just that. Stated with a motley crew of 8 people and built it way up to 100. Went out an got some customers as well . Oh yeah and revenue (Monthly Recurring Revenue). It took us 2 years to do this. Along the way we even finalized bank financing (we were later told that this was quite an achievement).

We then looked to a VC for funding and were told that we were asking for very little. So much for that.

The USA is the ONLY country where there is an ecosystem of VCs for startups. Most of the VC funds there are run by people who have been entrepreneurs in their past lives. In countries like India most VC funds are run by people who have a finance or a banking background and are very very very risk averse.

The best bet for someone starting out is some amount of self funding and a customer who is willing to bet on you by giving you business. I know it’s easier said than done but its possible and easier to do this that raising money from a VC.

Posted in Starting Up | 8 Comments »

Missing the Bus

Posted by Vijay on August 28, 2006

Are there things that I wished I had done? Of course. I have these “pangs” of regrets every single day. I had the idea to start an Indian software company that provided services to US clients way back in 1988. I had the advantage that I was based in the USA. Even the big boys were starting out then. But when it came to leaving the job I had, I balked. Of course I was only in my mid-twenties at the time.Of course I had the idea but other people did it and as I said in my previous post thats what counts.

My own “missing the bus” story is a biggie. In 1991, I decided to move out of the USA for personal reasons. I had 2 options, one was to move back to India and the other was to move to Singapore. One of my uncles called me up and asked me to talk to this “up and coming” company in Bangalore where his classmate was the CEO. They were looking for someone who had worked in the USA. I of course did not meet the said CEO since I felt Indian companies did not pay well. I preferred to move to Singapore. I cannot complain about my job in Singapore and my subsequent return to India working for a top notch company. But the Indian company that I did not talk to turned out to be INFOSYS (no two guesses as to who the CEO was). This was BEFORE their IPO. Talk about MISSING THE BUS… I think I probably take the gold medal here. Only wish I could turn back the clock…. sigh !!

So this time around when I got the “urge” to “do something” in 2003, I took the plunge not wanting to miss the bus this time around. So far things are working out great. The company is doing well and I don’t have the “What if I had done this?” question haunting me anymore.

Posted in Starting Up | 10 Comments »

“Advice” is the worst of all “vices”

Posted by Vijay on August 26, 2006

While you do need to get validation for your business plan, the biggest validation should come from you, the entrepreneur. I have known guys who spend so much time validating an idea that it passes them by and someone else does it. How often have you heard about a business and then thought to yourself “Hey I thought of doing something similar 2 years ago”. You might have thought about it 2 years ago, but someone else actually went out and did it and that’s what counts. There are no points for “thinking” about an idea.

There are two kinds of people that you meet when you have an idea, the first type I like to call the “Dr. No” types. These are people who start every sentence with “No but…”.  It’s easy to get discouraged by people like that. STAY AWAY from people like that. What you need is someone who will look at your idea for what it is worth and give you advise based on that and not from some bitter experience they have had. Yes, I like it when people advise me on caution but I usually stay away from people who make doomsday predictions about anything you have to say.

The other extreme is people who will effusively agree with whatever plans you might have. While this is very encouraging, you need to be careful not to get carried away.

My theory on starting a business is simple. You should never ask yourself the question “What if I had done that?”. Are there things I wish I had done?… YES!! Stay tuned.

Posted in Starting Up | 1 Comment »

Personal Life, Finances and a Startup

Posted by Vijay on August 19, 2006

If you are married and have a family to support, the one thing you should consider carefully is whether you can support your family and maintain your current lifestyle while you are busy with your startup. For most of us, starting a business meant going without salaries while at the same time ensuring that employees and bills are paid on time.

It is a tough call to make. Especially when you know that there are jobs out there that will pay good money. This is where the “passion” aspect comes into play.

1. Are you willing to compromise on your lifestyle? In my case, I went from a job that paid me a six figure salary to zero. My savings were the “saving grace” so to speak. I went from being able to spend $1000 on a whim to where I was doing a double take on spending $100.

2. Be absolutely frank with your family. Don’t do anything that involves personal finances without consulting your better half.

3. Make sure that you have enough money to last a year without any cash coming in (mortgages, school fees etc).

4. Try not to have any ongoing “big spend” while you start. In my case I was finishing up a house (and that takes money) while I started. BIG MISTAKE. I ended up compromising on the house.

5. Never underestimate the sacrifice your family has to make. Too often one gets caught up in the business and it’s easy to ignore the support the family is giving you.

Posted in Starting Up | 3 Comments »