Jack Welch and the 4E's of Leadership.

Jack Welch and the 4E's of Leadership.

Energy

Effective leadership has passion. By passion it does not mean you are loud or flamboyant but something from deep inside. Passion cannot be taught or learned. The best way to be passionate is to hire people who share your excitement for the job at hand.

Energy gives results if there are no compexities, all the bureaucratic layers are done away with.

People become passionate and contribute if they are given the platform to be heard.

Energises

The leader energises, they are energisers. As energisers they inspire, mobilize people to act, and spark others to perform. They do not engage in turf wars, operate in silos, or tolertae backbiting behavior.

People respond to them, and these reponses make them very effective.These people are like gardeners who instead of spreading fertilizers and water spread confidence.

Leadership is the ability to articulate a vision and the ability to get others to act on that vision.

The 4E leader makes sure that good ideas are surfaced celebrated, and acted upon.

Edge

Individual with edge have a competitive spirit and know the value of speed. They are confident ; they know when to green light or red light a project or acquisition.

The effective leaders get the right people on the bus and the wrong people off the bus, and then figure out where to drive it.

The leaders with edge are very similar to the sports stars. They always win whether it is the customers or market place.These leaders can only flourish if you have differentiation. You differentiate these leaders and reward them according to their victories.

Executes

Individual with the 4 E get the things done.They consistently deliver in many cases not only meeting the goal but blowing them away. They realise that the first three Es are of little value unless they are leveraged to produce results.

The leaders, understand that there is no subsitute for achievement. They develop their expertise and do the job better then anyone else. They know that the performance has to be delivered today and not in the future. They do their job better than anyone else before thinking of promotion.

Narayan Murthi -Infosys

Energy to work hard especially during the initial phases of Infosys to build a world class IT company and then not to rest in the laurel but beat one milestone after the another.

Energises - The best performance of Murthi, he has created a vision of the company which will be unique in terms of value system, wealth sharing and quality.

Edge- Infosys has a edge , it is considered to be different, better, smarter than the other IT companies. Thanks to Murthi who has always recognised that the people who are performing, should be differentiated and be rewarded accordingly so much so that the salaries of the certain employees are higher than the Managing director

Execution- Infosys surely by showing the double digit growth, beating the projections on revenue and profit definitely focuses on execution.

Questions Venture Capitalists ask an Entrepreneur.

Questions VCs ask a Successful Entrepreneur.

WHEN raising money from venture capitalists or angels, you’ll want to meet as many as possible. They won’t all invest, but each time you pitch, you get better. Each time you pitch, you get asked different questions, get different opinions and ideas. It’s worth it to pitch as many people as you can, as often as you can. Some questions will get asked over and over. And you’ll discover those patterns quickly enough and adjust your pitch accordingly. If you have a lessthan-stellar answer to a question that gets asked once or twice, it’s not a big deal. But if your weaker answers are to the most common investor questions, you’ve got a problem. With that in mind, here are some of the more common questions investors will ask:

SO WHAT’S YOUR BUSINESS ALL ABOUT?

The wording of this question will change, but this is the classic “elevator pitch” question. Translation: “In the shortest amount of time possible, grab my interest by the proverbial you-know-whats.” Sell them quick, with something simple and powerful they can remember; and keep reiterating that message throughout your presentation.

WHAT’S THE BARRIER TO ENTRY FOR COMPETITION?

For Web 2.0 startups, this can be tough. The question comes from VCs and angels that might not be as familiar with the overall industry and the ease with which many web applications can be built. They’re looking for a real technological barrier that might not exist. Some answers that might help you skirt this topic: launching big, building a devoted community, key partnerships and/or customers (before launch), we’re cooler than everyone else (this won’t work.) None of these answers are great (for a host of reasons.)

WHAT’S GOING TO STOP BIG MONSTER COMPANY IN YOUR SPACE FROM COPYING YOU?

This is almost identical to Question No. 2 but it’s more commonly asked because there’s always competition. And, it’s usually from the “big bad wolf” company that’s got tons of money, lots of market share, a huge staff and years of experience. For starters, don’t say, “What competition? We don’t have any.” There’s always competition. Secondly, this is a tough question to answer. What is stopping “big bad wolf” company from copying you instantly and smashing you like a bug? Generally, you can argue: We can move more quickly. Big bad wolf is too busy managing what it’s doing to innovate. They’ll acquire us rather than copy us (if you have examples, use them.)

HOW FAR DOES THAT MONEY GET YOU?

Have a good answer to this question. Couch this in product and financial terms, i.e. “It gets us six months past launch, when we expect to be cash flow positive.” The best way to think about this is to calculate how long the money will last if you earn zero revenue. Count backwards by four-six months and that will tell you when you need to start the process of raising more money. If the money is only going to last you four-six months, you need to start looking for more money almost immediately (which isn’t a pleasant thought.)

WHY ARE YOU RAISING THE MONEY YOU WANT TO RAISE?

The amount you’re asking for is critical. Make sure you’ve done your financial homework. Don’t tell them your numbers are conservative, just explain to them how you arrived at them.

DO YOU HAVE ANY CUSTOMERS? HAVE YOU SPOKEN TO POTENTIAL CUSTOMERS?

Investors are looking for traction, or at least the inkling of traction. As soon as possible, try and get a few potential customers to say, “Sounds interesting.” You might even use them as references. This raises the comfort level for investors and helps answer the question, “What’s the market?”

WHAT’S YOUR MARKETING STRATEGY?

For early stage companies this is a very tough question. Chances are “just getting to freaking launch” is what you’re thinking, but that’s not good enough. And “launch big” is equally uninspiring. Think about presenting a timeline of events and customer acquisition numbers that you’re anticipating, tied to marketing. Throw in a variety of strategies that you’re going to do or researching. Marketing will be critical to your success, so you better plan for it sooner rather than later.

WHAT ARE YOU CODING IN?

Investors do want technical details. This is an easy question to answer at least (assuming you know!)

HOW ARE YOU HANDLING TECHNOLOGICAL INFRASTRUCTURE FOR SCALING?

Investors want technical details. They want to know that you’ve thought about the behindthe-scenes technology to support your system. When customers are signing up faster than you can process their credit cards (don’t let that happen!), will the system stay running at a reasonable speed? The further you get along in the process with investors, the more technical details they’ll want.

WHAT’S THE TEAM LOOK LIKE? WHAT ARE YOUR BACKGROUNDS?

Investors want to know the backgrounds of the founders. If you’ve got people on staff, they’ll want to know who, why you hired those people, and who else (and how many) you need to bring on board. They’ll want to know how quickly you expect to grow the team over time as well. Although there are common questions you’ll get from venture capitalists and angel investors, what’s more fascinating is that each investor will ask different questions. You can’t be prepared for every question, but even if you get new ones, the more comfortable you are pitching (because you’ve done it so many times), the better.

Reference:
(From entrepreneurship site Instigator Blog)

A Crorepati who lives in a hut!

Successful Entrepreneur in the Making!!!

His story is an inspiration for millions. A self-made entrepreneur, his mission is to help the poor through job creation. E Sarathbabu hit the headlines after he rejected several high profile job offers from various MNCs after he passed out of IIM, Ahmedabad two years ago.

He instead started a catering business of his own, inspired by his mother who once sold idlis on the pavements of Chennai, worked as an ayah in an Anganvadi to educate him and his siblings. As a child, he also sold idlis in the slum where he lived. "We talk about India shining and India growing, but we should ensure that people do not die of hunger. We can be a developed country but we should not leave the poor people behind. I am worried for them because I know what hunger is and I still remember the days I was hungry," says Sarathbabu.

In August 2006, Sarathbabu's entrepreneurial dream came true with Foodking. He had no personal ambition but wanted to buy a house and a car for his mother. He has bought a car but is yet to buy a house for his mother. The "foodking" still lives in the same hut in Madipakkam in Chennai. Today, Foodking has six units and 200 employees, and the turnover of the company is Rs.32 lakh a month. But it has not been a bed of roses for Sarathbabu. After struggling and making losses in the first year, he managed a turnaround in 2007.

How has his experience as a 'Foodking' been in the last two years? Sarathbabu shares the trial and tribulations of an exciting and challenging job in an interview with Shobha Warrier.

A Tough Beginning

As I am a first generation entrepreneur, the first year was very challenging. I had a loan of Rs 20 lakh by the end of first year. I had no experience in handling people in business, and it was difficult to identify the right people. Though I made losses in the first year, not even once did I regret my decision of not accepting the offers from MNCs and starting an enterprise of my own. I looked at my losses as a learning experience. I was confident that I would be successful one day.

Sleeping on the railway platform

My first unit was at IIM, Ahmedabad. When we started our second unit in October 2006, I thought now I would start making money. But I made losses of around Rs 2000 a day. A first generation entrepreneur cannot afford such a loss. But I worked really hard, working till 3 a.m. in the morning. What reduced my losses were the birthday party offers.

I started the third unit again in Ahmedabad but it also made losses. All my units were cafeteria and I understood then that the small cafeterias do not work; I needed huge volumes to work. My friends who were extremely supportive in the first year when things were difficult for me. I had taken loans from my IIM-A friends. They were earning very well.

In December 2006, an IIM Ahmedabad alumni event took place in Mumbai and I decided to go there mainly to get a contract. I was hopeful of getting it. I also knew that if I got the huge contract, I would come out of all the losses I had been incurring.

I booked my train ticket from Ahmedabad to Mumbai for Rs 300 and I had Rs 200 in my hand. As the meet went on till late at night, I could reach the station only at midnight. I missed the train. I decided to sit on the platform till the morning and travel by the next train in the morning. I didn't have the money to check into a hotel. I didn't want to disturb any of my friends so late at night.

It was an unforgettable night as I was even shoved off by policemen from the platform. It was quite insulting and embarrassing. After two hours, people started moving in, I also went in.

A man who sat next to me on the platform gave me a newspaper so that I could sleep. I spread the newspaper and slept on the platform! I sleep well. I got my ticket refund in the morning and went back to Ahmedabad. And, luck did not favour me, I didn't get the contract.

In March 2007, I got an offer to start a unit at BITS, Pilani (Sarathbabu was an alumnus of BITS, Pilani). That was the first medium break for me. For the first time, I started making profits there though the other units continued to make losses. The reason for our success at BITS, Pilani was the volume; there were more students and there was a need for a unit like ours while in Ahmedabad, they have at least a hundred options.

If I made Rs 5000 a day at Ahmedabad in two shifts, here I made Rs 15,000 a day. BITS, Pilani unit gave me the confidence to move on. Unless you make money, you can't be confident in business.

What changed my fortune

When all my friends who worked for various MNCs made good money every month and I made losses with my venture. But I kept telling myself, I am moving in the right direction to reach my ambition and vision. My dream was to provide employment and I was doing just that. I continued to work till 3 a.m. but I never felt tired.

Through BITS, Pilani, I got the BITS, Goa contract and that was the biggest break for me. It was not a cafeteria like the earlier ones but the dining hall that we got. We had to feed 1300 students. We started our operations in July 2007. At Rs 50, for 1300 students, our sales was Rs 65,000 per day. We soon started making a profit of Rs 10 to 15,000 a day. Around 60 to 70 people work there. I gave the charge of the Ahmedabad operations to one of my managers and moved to Goa.

I was still in debt by Rs 15-20 lakhs but I knew BITS, Goa would keep my dream alive. Within six months of starting our operations in Goa, I repaid all my debt.

I was called to give a speech at the SRM Deemed University. After the speech, I asked the Chancellor, can you give me an opportunity to serve in your campus? He said, "If not you, to whom will I give such an opportunity?" It's a food court but a big one, similar to the one at BITS, Pilani. There are around 17,000 students there.

Now, I have the BITS, Hyderabad contract, ready to start in July 2008. Other than the six units, I have approached a few more universities and corporate houses too. In the first year, I had made a loss of Rs 25 lakh. Right now, we have a turnover of Rs 32 lakh every month, which works out to 3.5 crore (Rs 35 million) a year.

I have hired about 200 people. Indirectly, we touch the lives of around 1000 people. By this year end, we will have 500 people working for us. Only 10% of my workers are educated, the rest are uneducated. I want to make a change in their lives. If they have any problem, I will take care of it. We support the marriages and education of poor families. We are paying more to the employees as the company is doing well. Now that the foundation is strong, I plan to have ten units and a turnover of Rs 20 crore (Rs 200 million) turnover by next year

His advice: Never give up!

In the last two years, I have given more than 120 lectures in various institutions in India. When I got the first opportunity to speak, I thought God had given me an opportunity to encourage or inspire entrepreneurs. When youngsters tell me they are inspired, I feel good.

When you just dish out the theory, nobody believes you. But when you do it, they believe you. What I tell them is based on my own experiences.
When I thought of starting a company, I felt India needed 100 people like Narayana Murthy and Ambani. If 100 such people support 2 lakh people each, imagine how many Indians get supported.

Entrepreneurship is needed to uplift the poor. It is not easy to be an entrepreneur, especially a first generation entrepreneur.
There will be lots of challenges in the beginning but you should learn to look for the light at the end of the tunnel.
Never give up even if there are hurdles. There are many who give up within a week.
You need determination and a tough mind to cross the initial hurdles.
If you are starting without much money, you should not have any overhead expenses.

He still lives in the same hut

As I am in the food business, I know how much the price of every food item has gone up. Many people will languish in poverty because of inflation. Had my mother been working as an Anganvadi ayah today and earning Rs 1500, she would not have been able to feed us and educate us.

On the one side, we talk about India shining and India growing, but we should ensure that people do not die of hunger. We can be a developed country but we should not leave the poor people behind. I am worried for them because I know what hunger is and I still remember the days I was hungry. That is why I feel it is our responsibility to take care of them.

I wanted to buy a car and a house for my mother. I bought a car first, not a house. I still live in the same house, the same hut. I can build a house right now but I want my business to grow a little more. I feel good in the hut; that's where I get my energy, that's where I lived 25 years of my life. I want to remind myself that the money and fame should not take me away from what I want to achieve.

But within six months, I will build a good house for my mother. Her only advice to me is, don't waste money.

Till I was in the 10th, there was no electricity in my house. I had to sit near the kerosene lamp and concentrate hard. That's how I learnt to concentrate.
The two year journey has been very enriching. It seems like a 20-year journey for me. I was living every moment of the two years, from sleeping on the Mumbai railway station platform to this level.

Logging On To A Road Less Taken.

Logging On To A Road Less Taken

Creating Quality IT Workforce Has Been A Passion For Seed Infotech Founders

A JOB as a scientist in the Defence Research and Development Organisation is not just challenging, but prestigious and safe too. At 32, Narendra Barhate could have continued in the cushy position and retired. But in 1994, he opted to take the risky path of entrepreneurship. Thus was born Seed Infotech, an education and training firm for information technology professionals, mainly in Maharashtra.

“I felt constrained at work,” he recalls. So did his friend Shrikant Rasane, who joined him in the venture. “At that time, the software industry was just starting to take off. There was also a need for trained manpower and bridging the gap between what companies needed and the quality of manpower colleges were able provide to them.” The duo eyed this opportunity and weighed their options. They could start a software company or a training firm. “We chose training,” said Mr Barhate. They roped in two more friends and started Seed with a contribution of Rs 25,000 each.

The first generation entrepreneur was determined not to let his inexperience come in the way of building a successful company. “The first couple of years were not difficult because we were small in number. But as we grew, we started realising the importance of financial discipline and systems and process. We got around this by hiring people with appropriate skills in these areas.” With formidable names such as NIIT and Aptech dominating the business, he also realised the need for continually refreshing business strategy. “We learnt the importance of planning ahead for five years, ten years.”

The first big test for the company’s mettle came just after the turn of the century, when many peers went down in the technology slump. “In 2002, the whole market was sinking. But with the support of well-wishers, we were able to survive it. No bank was willing to lend us money and we needed money to keep the business going. We were able to take credit from family and relatives and tide over the crisis. We suffered losses only for that year, but we came out of it the next year itself,” said Mr Barhate.

From (L): Seed directors Rajesh Vartak and Bharati Barhate along with co-founder and CEO & MD Narendra Barhate and co-founder & ED Shrikant Rasa

Luckily, Seed already had a business to train technical people in Japanese language skills. When everything else dried up, this business continued to do well. Though the segment’s share in overall revenues has fallen now, Mr Barhate fondly recalls its role in sustaining the company during that lean period.

The company provides software training to graduates and employees of corporate customers. It also runs a finishing school, which rounds up the individual with soft skills. Top names like Infosys Technologies and Cognizant are among its 250 or so clients. Corporate business accounts for a fourth of revenues.

Mr Barhate also said the company was saved from further trouble in the downturn also because it had not spread itself thin. The institution had been focusing on Maharashtra, especially its base in Pune, one of the country’s technology hubs. It certainly had wanted to expand, but took a cautious approach when business turned patchy. “That was the time we were thinking of expanding beyond Maharashtra. It is lucky we didn’t,” said Mr Barhate.

Today, with a much larger IT education industry and a steady stream of students, Seed Infotech feels it’s ready for a national presence. Within three years, it plans to be in major cities such as Bangalore, Chennai and Hyderabad and
reach Rs 100 crore in revenues by 2010, about two-and-a-half times the current level.

It is also expanding the scope of its training programmes. “Usually, corporates also require some hand-holding after we have provided training. We plan to provide tool-based consulting and some hand-holding for project readiness,” said Mr Barhate. Further, it plans to enter distance learning and niche training areas in engineering services. All these plans are part of a strategic business plan being drawn up by a consultant. Having put one lakh students through Seed Infotech’s portals, the business of education has proven to be the education on business for this scientist.

Article Resource:
Author: N Shivapriya is the cheif editor in the Economic Times, Mumbai and the article appeared in one of their successful columns called "Starship Enterprise.

Where angels don’t fear to tread.

When A Rookie Entrepreneur Is Not Yet Ready For Venture Capital Funding,It Is The Angel Investor Who Gives That Person Wings.

BUSINESS aspirant Madan Pandit quit his job in 2004 and roamed Bangalore’s cyber cafes to build the prototype of an online search analytics tool, which he later converted into his first venture. When he needed funds for the start-up, he didn’t consider venture capital (VC) firms but approached well-known angel investor Kanwaljit Singh. With an unproven technology and hardly a business model to speak of, he still succeeded in getting the funding.

On the other hand, Phaninder Sama, cofounder of Redbus.in, an online bus ticketing site, ran his new business for around three months before making a venture capital pitch. He and his partners skipped the angel step altogether. They, too, got the money. In fact, the new image acquired by the VC connection helped them hire high-class talent.
Two entrepreneurs. Two radically opposite strategies. And both are happy with their respective choices today. So, how does one tell whether a new business should go in for angel investment or venture capital funding? It is indeed a crucial choice for a small company, because if an entrepreneur is not yet ready for venture capital, it is pointless to waste time pitching the business to VCs and more profitable to approach an angel.

Angel investors, often, are successful entrepreneurs themselves, fondly reliving their early struggles and wanting to mentor young minds. Some think of investments in start-ups as a way to give back to society. Others, who left India and made it big in the West, want to shrink the country’s economic growth curve with the stimulus their money would bring to entrepreneurship. Thus, they are driven first by the beauty of new ideas and only then, by return on investment. They can put in as little as a few lakhs of rupees to as much as several crores.

Venture capital funds, on the contrary, are professionally-driven enterprises which pool in resources from their investors and channel them into ideas that are more likely to succeed. They often look for a proven, or at least a well thought-out business model, cash flow, management bandwidth and so on. They also look to invest a sizeable amount of money, say a few million dollars.

“By default, you would always want to go in for VC,” Suvir Sujan, a venture capitalist with Nexus India Capital and a former angel investor, said. “VCs can get you further with capital. With an angel, you could get stuck, because there is only so much funding an angel can provide. After all, he is just one individual. The VC offers the stability of an institution.” However, an angel would be the option when VCs are telling you it is too early to invest in your company, he added.

Venture capital funds can be of immense help in building a company to maturity, after the business has cleared the initial hurdle of getting on the track. In an increasingly globalised world, marketing and hiring the best talent can be expensive and large investments are called for in the growth stage. Angel investors don’t have the financial muscle to shepherd their investee companies beyond a point. So, in reality, the two investors play for stakes in different stages of entrepreneurship, but their roles often overlap. To choose between the two, a thumb rule for an entrepreneur could be the stage at which a start-up finds itself. The earlier the stage, the more inexperienced the entrepreneur, higher is the need for angel investment support. Remember, the angel is likely to take more personal interest in the business than a VC could possibly do.

Madan Pandit recalls how he stumbled on Kanwaljit Singh at a social gathering. Talking to him, Pandit realised the investor was passionate and hungry for ideas such as his own and that he would be willing to bet on a horse that was yet to run a race. They continued to remain in touch after their first meeting. Eventually, Mr Singh took Mr Pandit under his wings. “I didn’t completely understand what he did. All I had was the framework of understanding as to why it would work. I also knew for sure that he had the relevant experience and that he had his sense of direction clear in his mind,” Mr Singh said. Pandit’s offering, which he calls a ‘post-Google solution’, is aimed at enabling analysis of information thrown up in a search so that the results could be used more effectively. This new thought was put on a firmer business footing with the help of Mr Singh’s association.

His business, just an idea at that time, could have been rejected by venture capital funds as too small and unattractive. They might have been discouraged by his lack of experience or doubted the viability of the product.

The community of angel investors is expanding rapidly in India and it is time entrepreneurs benefited from this class of patrons, experts said.

Raising venture capital is often a difficult task even for companies with a proof of concept. For the rookie, it can be a frustrating experience to get rejected repeatedly. Just the fire-inthe-belly won’t light up a VC’s imagination and the funding agency may reject an application on the slightest doubt. After all, VC panelists have to refer back to hard-nosed investment committees for approvals.

On the other hand, angel investors often work on a hunch. “They can take more risks as they are spending their own money. Angels invest in entrepreneurs because they like to do it. So it is okay if the entrepreneur does not have a revenue model,” said The Indus Entrepreneurs-Delhi president Saurabh Srivastava. Processes, balance sheet and market share, the staple diet of venture capitalists, are not so central to an angel investor’s strategy. Bharati Jacob, partner with SeedFund and also a former angel, said she invests in people who have the capacity to build a business, rather than on their revenue models and marketing strategy. “As an angel, I did invest in companies because I trusted the people. I didn’t necessarily know the sector as well.”

There are a number of ways to seek out an angel. The National Entrepreneurial Network’s (NEN) Online Resource presents a list of angel investors in India and simplifies the search process down to three points: 1) Ask everyone you know. This could include friends, family, acquaintances and even ex-bosses. 2) Research, and then cold call. You might find a potential angel from his blog or a news article or maybe someone who has had experience in a related industry. 3) Make use of existing forums: It is easier than ever before to be an entrepreneur in India. There are specific groups like NEN and TiE that have brought together experienced entrepreneurs to mentor and network freshers. These organisations can help hook up a young entrepreneur with potential angels. There are also numerous events conducted by organisations like CII and Ficci.

But each external investment comes at a price. You fork out a chunk of your company to the investor, angel or VC. An entrepreneur must be careful in how much stake he or she is ready to give away. Mohit Dubey of Bhopal learnt it only much later. His idea was to set up a website that would simplify the procedure of buying a car, new or used. His firm, carwale.com, started rolling with Rs 4 lakh given to him by a former boss and mentor, and raised Rs 12 lakh soon after.

Back then, he ended up surrendering a large chunk of his company for the initial investment. In retrospect, he thinks it may have been too much. Nevertheless, he looks at the brighter side and calls it a learning process. “If I were to do it all over again, I would have given out a lot less stake to the investors and consultants. If at all I would give out such a large stake, I would give it on the condition of performance.”

Article Resource:
Author: Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

11 tips to grow beyond the start-up phase.

11 tips to grow beyond the start-up phase

HIRE PEOPLE WHO ARE BETTER AT THE JOB THAN YOU ARE

It’s a fact that companies are built by people, and the best people build the best and most profitable companies. Put simply, great employees may cost you 20 to 30% more in wages, but they can be twice as productive as mediocre employees. Invest in good people.

PLACE HIGH URGENCY IN EVERYTHING YOU DO

Always do everything you can today. Too many people treat their businesses as 9-to-5 jobs. Never put something off until tomorrow if you can do it right now.

GET CUSTOMERS COMING BACK

The road to profitability is through repeat business. Too few business owners set themselves up for long-term success. Your business grows when you add regular new customers on top of existing regular customers. Think of it this way: What if every customer you ever got stayed for life? How many regular buyers would you have?

MAKE DECISIONS QUICKLY

New companies don’t have the time or resources to stand still. General H Norman Schwarzkopf once said, “When placed in command, take charge.” It’s better to make a decision and move than to stand still.

DELIVER MORE THAN YOU PROMISE

If you tell a customer it’ll be three days, deliver in two. If you think it’ll be two hours, say three hours and surprise them. This is the best form of marketing ever.

PRICE YOURSELF FOR PROFIT

Don’t ever be the cheapest. You’re the little guy; you don’t have economies of scale. Big companies can make up in volume what they lack in margin. You can’t.

NEVER SPEND A RUPEE YOU DON’T HAVE TO

You don’t need a new desk, you need a cheap desk. Too many new business owners go and buy the best stuff because they think image is important. Listen, when you get profitable, you can have a big mahogany desk. Right now, just get a desk.

SET A BIG VISION

Start Small, Finish Big should be the title of your book. Don’t aim to be the best dog trainer in your city — aim to be the best in the country. Remember, building a business is a 10-year plan, not a one-year plan.

MARKETING IS MATH

Don’t ever let an advertising sales representative teach you anything about marketing. They will say dumb things like, “Half your advertising works and half doesn’t — and you’ll never know which half.” Rubbish. If an ad that costs Rs 100 gets you Rs 100 back in profit, it’s a good ad. One other tip: Image advertising doesn’t make sense when you’re not yet profitable.

LEARN TO SELL

There’s nothing worse than a business owner who isn’t willing to sell — or even learn to sell. No company makes money unless someone sells something, and you can’t just rely on people you hire to do the selling for you. If you want to grow a profitable business, you’ve got to learn sales yourself.

IT’S SIMPLER THAN YOU THINK

Before most people even go into business, they work it up to be far more complex than it really is. Business is very simple: Sell at a profit and keep at it. Overcomplicating the process won’t help anyone. If your business seems too complex, it probably is — so make it simple and watch yourself succeed.

Reference:
(Adapted from entrepreneur.com)

The Making Of Richard "virgin" Branson

Challenge yourself

Richard's first big challenge came when as a five years old kid he wanted to swim in a beach but could not do so as he did not know how to swim. Inspite of trying his best , suffering cold water and swallowing whole lot of sea water, he lost out the bet with his aunt who offered ten shillings if he could learn swimming by the end of the holiday.

While return he was obviously very unhappy as he hated losing when he saw a river, he decided to give a one last try and pleaded his father to stop the car. The river looked deep and fast, running over rocks but he dared and took the risk. With active encouragement from his parents he stepped into the river , almost got drowned before he relaxed and started floating and then swimming awkwardly and thus won the bet.

Richard "virgin" Branson.

Stand on your own feet

His first lesson on self sufficiency was when he was four years old . While on his way back from somewhere his mother stopped the car at a little distance from the house and told him to get down and find his way home across the field.

Richard loved these challenges and these lessons from his parents became tougher ,once he was asked to bicycle 50 miles to south coast with only a map for guidance when he was 12 years old .These early lessons made him strong and rely on his own self thus making him independent.

When everything seems lost

Richard found out the easy way of making money by selling records domestically which were meant for exports. He started making an enormous profit as tax was not paid on these music records but this was illegal. He was caught and thrown into the prison. He could somehow escape by agreeing to pay penalty which was three times the illegal profit which he has made.

He had no money but slogged without moaning and paid the penalty in installments in three years. He realized that the reputation is everything and his advise to all new business startups is " be fair in all the dealing, do not cheat but aim to win."

5 Traits You Cannot Teach In Customer Service.

5 Traits You Cannot Teach In Customer Service

There are some character traits that cannot be taught in Customer Service..
If we could, we would because it would make the whole world a better place, not just Customer Service. We can't, therefore we work with people whom we believe to most exemplify these traits. Here are 5 you cannot teach.

1. Enthusiasm.

We see it, we feel it and boy, do we wish everyone had it.

Many people don't though. It is often reflected in their faces when a request is made and reinforced with a sullen "just a moment" that does nothing to help us believe that we are about to receive a Service which we so desperately hope is better than what Mr. or Ms. Sullen face has just prefaced us with.

Enthusiasm is infectious, contagious and outright fun. It seems the Enthusiast is everywhere, ready and willing to do whatever it takes to make sure that we have a fantastic Customer Service experience. It is reflected by the pride they take in doing the job right, the care they take making sure everything is just so and the delivery of "Is there anything else I can do for you Mr. or Ms. Customer?"

The Enthusiast is nearly extinct these days. The victim of "Faster, More, Cheaper" Customer Service.

Are you exemplifying "Faster, More, Cheaper" or are you trying to grow Customer Service Enthusiasts?

2. Happiness.

A feeling of pleasure. I have come to believe that Happiness is sometimes misused for the word Enlightened.

I know, now you think I am really off my meds. Let me ask you something. Have you ever met a person who was Happy? I mean really, really Happy? Really, when? Where do you think "Happy Hour" comes from? My point is that when people feel Happy, it leads to the ending of Happiness, or a state of Unhappiness. In other words, there is a limit.

I don't think there can be a limit to Enlightenment. Either way you think about it, it is not something you can teach. You can feel it. You can see it when another person really has it. You just can't teach someone to be Happy or Enlightened. They have to find it themselves.

3. Commitment.

The feeling one has when one decides to do something no matter the cost or the journey. The ability to see it to the end. People who have commitment are not easily swayed. They keep putting one foot in front of the other, keeping their eye on the prize, the goal, the end.

Oh, they have trials and tribulations, and when you ask them about it, they shrug and say things like "That's the way we do it" or "It needed to be done." They have little concern or care for the thoughts of others who can't see the world through their eyes. They shrug and say "It's got to get done, and I'm the person to do it." You can't teach that.

4. Belief.

The thought that someone feels completely, through and through that resonates deep inside them and tells them that they are on the right path. They don't need your beliefs, and are quite content to let you have yours.

Once it is felt between a group of people, it sings to everyone's heart in that group. A drumbeat that is felt by and played by all. It brings a natural power to a person that is unquenchable and unwavering. When all else is in doubt it is Belief that carries a person through.

I have experienced total Belief and a loss of Belief and I can tell you that when there is a loss of Belief, it literally can crush a soul. It's at these times that a person has to find that small spark, that ignites and starts the fire anew. You can't teach that.

5. Attitude.

Among all, I really want to have the ability to teach Attitude. You could point out to someone what Attitude looks like and say things like "He/She has a great Attitude, you would do well to be like this" and the person would say "Oh, I see. No problem. Attitude is adjusted to maximum. Thanks." And it would be.

Or say something like "Study this book, read chapters 3 and 4, answer the questions at the end of the chapters and you will have the Attitude you need to make it through life." Right. The world would be a much more interesting place if all of our Attitudes where in sync and working towards a common goal.

" Imagine," as someone once said. You can't teach Attitude in Customer Service.

If you are trying to teach one of these to your personnel in the hope that they will morph in Customer Service Professionals, forget it. You have a better chance of seeing Santa Claus, The Tooth Fairy and The Easter Bunny playing ball on your front lawn one morning.

Concentrate on finding those people who best demonstrate these traits.

Help them grow their own Enthusiasm, Happiness, Commitment, Belief and Attitude. You will be much happier with the results. (Or Enlightened).

This article is written with the hope that you do something with the thoughts and ideas presented here. Take action and make a difference.

Reference:
Leonard Buchholz
About the Author
Leonard Buchholz is a Certified Trainer, Speaker and Author. Seminars include subjects like Customer Service, Management and Communications. Known for "High Touch" seminars, participants have takeaways that include 3 immediate goals and long term learning. Leonard is also a dynamic Keynote speaker that can launch your event with enthusiasm and charisma.

Amazing Story of Koutons.

Story of Koutons.

If you go into any mall watch out for Koutons retail outlets.Why ? Let me ask you a question , which apparel brand has the highest number of exclusive retail outlets?

It is not Levis or Benneton or Arrow , it is Koutons . It has 1000 exclusive stores almost 4 times of any other apparel brand stores. An impossible target for even big spending MNCs.

This is the story of Mr. D.P. S. Kohli. In 1984 sikh riots his television manufacturing venture called Apollo Television was destroyed. Kohli was forced to work as an insurance surveyor to pay off his loans. But his spirit was not broken , he was determined to rise again and he started his jeans manufacturing business, called Charlie Creations, with his brother-in-law in 1991.

He has learnt his lessons and decided to sell from his own exclusive stores so that he has control on his brands. The Koutons story reveals how much a regional brand can grow in a short span of 15 years competing with major corporate brands. Koutons is totally consumer focussed and depends on brand loyalty for it's tremendous expansion and gowth.

TARGETING RETAILERS: Mr H.S. Sidhu (left), Executive Vice-President, Koutons Retail India, with Mr D.P.S. Kohli, Chairman, and Mr Ajay Mittal, Nominee Director, UTI Venture Funds, at a press conference held in Mumbai on Wednesday. - Paul Noronha

The entire idea of Koutons is to give the people the sense of satisfaction and feel that they are owning an international quality brand.Koutons often come up with crazy schemes( 50 % +40 % off) to introduce themselves, or to make the initial push for the consumers to try their brand.
Koutons Retail India Ltd. (KRIL currently has a network of over 1000 exclusive brand outlets of total 8.4 lakh sq ft spread across 221 cities in India.

Koutons was Nominated for "Brand of the Year - Men's Casual Wear (Large)" by the Clothing Manufacturers Association of India.

Changing Tech-tonics of VC land

Changing Tech-tonics of VC land

Venture capital funds are shedding their single-minded focus on technology startups and looking at non-tech sectors such as food & retail.

THE dotcom boom had a lasting impact on the fund-raising scene in India. While bank loans were the primary source of capital earlier and venture capital an increasingly attractive option later, it was during the time of the internet bubble that the rules of the game changed forever. It was not uncommon for venture capitalists to decide funding over lunch with an entrepreneur, sometimes before the plates had been cleared. This led to a mushrooming of tech ventures and the eventual failures, but it also nurtured some very innovative businesses. The losers in this race, some say, were the entrepreneurs looking to start businesses in conventional sectors without the allure of the World Wide Web. Only a small proportion of these business aspirants got funding and others had to make to do with money from friends and banks.

Not any more. Funding for technology startups has reached a more mature stage and venture capital houses now take a much more discerning view of business models. A mere website will not get money now. Old world concepts such as cash flow are back in the reckoning. And early stage investors are also beginning to attach more importance to non-tech ventures, especially the evergreen ones such as food and sectors gaining from the country’s economic rise such as retail. Other sectors including alternative energy, whose importance will be understood in the coming years, are also finding favour.

Arun Natarajan of Venture Intelligence, which tracking the funding industry, says that there has been a very clear shift among the investing community in the last three years with 20% of the VC funds going into the non-tech entrepreneurs. “Three years ago if somebody talked about funding an non-tech entrepreneur, one would find it strange,” but now it is increasingly becoming part of the strategy of a fund provider, he says.

Retail chain Subhiksha was an early bird, winning capital support from ICICI Venture seven years ago. It has obviously been a successful bet for the investor. This sort of strategy could help VCs mitigate some of the risks involved in excessive reliance on technology businesses. It also opens up vistas to sectors that will rule the next decade, just as tech businesses did in the current one.

India’s growing cities are bustling with examples of the new investment paradigm. The Shanghai-like skyline of Gurgaon is peppered with the name boards of Yo China, a Chinese fast food chain that claims to offer affordable eating. Its success in raising capital from Matrix will enthuse fast food entrepreneurs (or wannabes?) to try their hand at their own ventures too.

In the southern city of Bangalore, where technology start-ups are not far behind autorickshaws and flower vendors in number, fast food chain KaatiZone is rolling chappatis for the rushhour commuter. It packs the common Indian bread varieties with tasty stuffings and sells them under a stand-eat-and-run model. Erasmic Investment Ventures, which provided early capital for this chain, is helping it scale up the number not just in Bangalore but in other cities as well. KaatiZone’s founder Kiran Nadkarni says he wants to set up a nation-wide network with international standards.He says a pleasant ambience, good quality food and hygiene should be able to attract the increasingly discerning Indian customer. “Food business is a low entry barrier segment but with high mortality,” he says.

Mom and pop stores have been the mainstay for the Indian household for decades, but this is the age of organised retailing. With big names such as Reliance and Bharti becoming shopkeepers, an ecosystem of vendors serving them has also been created. Like retail outfit firm Dovetail which is riding on the burgeoning demand for quality shopping space. Erasmic has backed this venture also.

Things are just beginning to hot up for Dovetails, says managing director S Sundar. The company had a turnover of Rs 15 crore in 2005-06 and Rs 25 crore in 2006-07. The
heady pace of growth currently sustains a staff of 150, but the orders are growing the day, putting pressure on him to expand faster. “Sometimes our customer asks us
to provide the fitouts for 50,000 sq ft in a week’s time.” Further, the company is also looking to diversify into designer furniture.

Erasmic’s Prashant Prakash says venture capital support has been important to Kaati-Zone and Dovetail not only for the money but also the rigour of corporate discipline that the relationship brought to the managements.

So what kind of non-tech companies attract venture capital funding?
Right now, the hottest thing going around is the India story. The economic upsurge, the loose cash that middle class households want to be seen burning and a furious expansion of consumption are all the underlying themes that VCs want to take advantage of. Businesses built around the domestic market, identifying a niche pain point to address and having the ability to scale up are likely to get the cheque. While investors may look at any business model worth pursuing, service oriented businesses with less capital needs are the chosen flavour.
In technology start-ups, the exit is often an acquisition or a public offer of shares. This could happen in several years or just in a few months. But in non-tech ventures, the rules are slightly different. Venture capital funds play for the medium term here. A three to five year horizon is common. So, it is not enough just to have a cool idea (like a video uploading site or a social networking service). The entrepreneur also has to make that cool idea work, build size and consolidate revenues and take the business mainstream.
These are still early days for non-technology businesses in the age of venture capital funding and the key bridge to be crossed is true corporatisation in terms of processes and systems, says Kanwaljit Singh of Helion Ventures. Many of these businesses are not new to the country, but have been run in the traditional, unorganised manner for years. To develop modern business models for these businesses and bringing in innovation and higher quality would be a challenge. There are many steps that these new businesses will have to go through before being gaining full acceptance among the VC community.Singh says education and health sectors, besides food and retail, could be the areas that VCs would be watching out for great ideas to come from.

As the world’s liplock with technology and internet easing a bit, both entrepreneurs and investors are taking more notice of other sectors. The time was never as ripe as it is now, with the economy booming and rules liberalised. From now on, all it takes is a flurry of ideas that will change the way we eat, shop, learn and live.

Article Resource:
Author: Thimmaya Poojary is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Saving Lives On The Move

Saving Lives On The Move

Taking The Patient To Hospital Safely Is A Mission For Roy & Tripathi

FOR years, calling an ambulance in India has been a painful experience for those needing emergency care and their dear ones. An eternal wait would be followed by the visit of a rickety vehicle lacking much sophistication beyond a bed and siren. Apathetic drivers on the road would ignore the vehicle as they nudge ahead in traffic jams and the golden hour would often be lost before reaching the gates of the hospital. Death would be blamed on god and everything would be back to square one. And nobody did anything about it. Until two years ago.

Then, two engineers without any knowledge of automobiles gave up their engineering careers with German firm Dragger and started selling well-equipped ambulances, in which emergency treatment could be started as soon as the patient is taken aboard. It was a new concept and hard to sell initially. But with their relentless marketing, the duo have made hospitals see the value of treatment on the go and made their startup — Aeon Medical Services — a preferred name among healthcare institutions in the country.

Ranjan Roy and Abani Tripathi, the entrepreneurs, say most ambulances in India are merely passenger transport vehicles and are inefficient in the task of handling the first hour after an emergency. “In most ambulances, there is only an oxygen mask and few other equipment which are not enough to start point of care treatment by emergency response units,” Mr Roy says. Aeon, on the other hand, buys vehicles, imports equipment from Europe and builds integrated ambulances for intensive care, trauma and cardiac care applications. A patient being taken on one of these vehicles would be getting targeted, specialised emergency treatment even in the midst of a traffic bottleneck.

Ranjan Roy Founder, Aeon Medical Services

“Considering the traffic situation in a city like Mumbai or Delhi, if a patient has to go from Borivli to Asian Heart Institute in Bandra, it takes at least one hour. We fit our ambulances with specialised medical equipment such as cardiac revivers and other such type of equipment as is mostly found in ambulances abroad. What this does is that it allows the emergency medical personnel to start the treatment immediately thus improving chances for survival for the patient,” says Mr Roy.

Roy and Tripathi founded the company in late 2005, tapping into a market that was largely dominated by garage owners and local mechanics. “When we entered the market, more than 60% of the industry was unorganised. Doctors and hospitals that wanted specialised ambulances, had no choice but to go to a local auto body-builder to get their medical equipment fitted in the body of a vehicle mostly, a tempo or a large-ish jeep. Moreover, the garage owner would not have much knowledge about medical standards nor were they interested about what are the medical requirements are for an emergency response vehicle. Thus providing doctors with a shabbily made vehicle,” recalls Mr Roy.

Companies such as Tata Motors, Eicher and Bajaj Tempo do offer vehicles that can be converted into ambulances, but selling fully-appointed ambulances has never attracted them as a business. That’s where the two engineers found their opportunity. The medical fraternity was on the look for standardised vehicles matching the quality of those running in the advanced world. Tripathi and Roy used their European connection from Dragger and started sourcing equipment from Italy’s Spencer. “But this was not the tough part. Since both us have biomedical background, we knew where to look for medical equipment, but knowledge about the auto industry was as good as anybody else in the country,” Mr Roy says.

Undeterred, they decided to put up a fabrication unit in Pitampur, an automobile manufacturing hub. “The decision to have a facility in Pitampur proved to a good one in the long run, as we could then source our ambulance bodies from auto sector heavyweights like Tata Motors and Eicher,” Mr Roy adds.

Aeon has already bagged many high-profile customers. Wockhardt group accounted for nearly Rs 7.5 crore in its fiscal 2006-07 revenues. Aeon also services other clients like the Apollo Hospital in Calcutta and Satyam Group’s EMRI in Andhra Pradesh. But the ride for Aeon was not always smooth for Tripathi and Roy. “Getting the right people was a big problem for us. For not only did we need people with the right skill set, we needed them to shift lock stock and barrel to Pitampur,” says Mr Roy. They recruited garage mechanics from Kolkata, Mumbai and North India and trained them.

The customers, too, needed a lot convincing for buying their products due to cheaper competition from local vendors. “We had to convince our customers really hard to buy into our vehicles despite the higher price tag,” says Mr Roy. The local vendors were able to sell at nearly half their prices.

Surprisingly, money was never a problem for these two professionals. Friends chipped in to bolster the starting capital. Aeon was started with an investment of Rs 2 crore including an equity investment of Rs 8 lakh from the promoters, while the rest being in the form of loans from financial institutions and banks. The market for specialised ambulances and medical equipment is still nascent. Mr Roy says that the market for basic life support vehicles is around 500 per year priced at Rs 15 lakh per vehicle while that for advanced life support vehicles is also 500 vehicles per year but priced at Rs 20 lakh per car. Bulk of the business for Aeon now comes, not from hospitals but from emergency service providers like EMRI and Chikitsa.

Now Roy and Tripathi want to bring disaster management portfolio under Aeon’s wings. They are also looking to scale up their pan-India presence. They plan a joint venture with an European firm to trade in medical equipment in India. “We have now trained our guns on Mumbai’s disaster management cell and other such government units across the country. The 7/11 blasts in Mumbai and tsunami in South India have made government realise how important point of care treatment is during such incidents,” says Mr Roy.

Article Resource:
Author: Ritwik Donde is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Seven ways to avoid Growth Traps for Successful Entrepreneur

Seven ways to avoid the growth traps

SO, YOUR startup has become a success and is all set for the growth phase. Good luck, but take care to avoid the following traps.

Underestimating The Cash-Burn Rate

Here’s an all too familiar scenario: Projected revenues start taking off in year five, but it’s only year three, the company is still losing money and it only has 12 months worth of cash in the kitty. Remember: Growth is great, but only if you can survive long enough to watch it kick in. Until then, keep your belt tightened, temper those sales forecasts and make sure customers pay on time.

Misallocating Capital

Once you’ve raised some cash, spending it is all too easy. Too many growing companies end up investing in nonproductive assets, from costly marketing campaigns to fancy new office furniture, while the software they’re selling is still infested with bugs. Best bet: Put a formal system in place whereby any expenditure over a certain amount requires clearance by at least two key people.

Going On An Acquisition Spree

Market share is a good thing, and making an acquisition (or perhaps even forming an alliance or joint venture) can be a way of grabbing it. Shooting stars Cisco Systems and Google successfully inhaled scads of targets in the last decade. But then, those behemoths also used their richly priced shares as currency, making the prices they paid seem a lot more attractive. Sadly, mergers and acquisitions on the whole tend to destroy value, be it because the buyer overpaid or the integration flopped. Tread cautiously.

Forgetting Rules Of Good Customer Service

The first rule is obvious: Don’t be so fixated on winning the next customer that you forget about the ones who already paid and, with any luck, will put in the good word with their friends. But there’s another, less intuitive rule: Don’t be afraid to fire bad customers. These scourges demand lots of service but spend little— or worse, end up not paying at all.

Refusing To Delegate Authority

Sooner than later, a company will grow beyond the core management team’s ability to micromanage it. But learning to let go is harder than it sounds. “There are lots of people that start companies and do very well,” says Paul Marshall, professor of management at Harvard Business School. “But they haven't had to share decision-making authority and responsibility, and they find that hard to do.”

Relinquishing Too Much Equity Too Soon

True, most small businesses fail because they are undercapitalised. But selling off a healthy chunk of ownership and control — either to a venture capital firm or in a public offering — isn’t always the answer to fast cash.

Pocketing A Few Perks

It’s tough running a business, and no one works harder than you. Still, you have to battle the urge to put precious growth capital for that imported car. Investors won't like it — and employees may doubt your commitment to making their financial dreams (read: stock options) come true.

Reference:
(Adapted from Forbes.com)

Healthy Business.

HEALTHY BUSINESS

Dippankar Halder, CEO, Spinach talks about the retail chain’s practice of hiring vendors and making them partners in the business’s growth.

Q: IS THE GLOBAL RETAIL FORMAT CONDUCIVE TO THE INDIA SCENARIO?

As a culture, the retail business in India has been flourishing for four thousand years. Commodities are bought and sold here in a certain way and we’re all used to that. The indigenous Indian retail format is much easier and better than firang models. Its not just about putting goods on a shelf, you need ongoing dialogue with the customer, humility and great domain knowledge.

Q: HOW DID THE IDEA OF HIRING PEOPLE FROM THE UNORGANISED SEGMENT AND ABSORBING THEM INTO YOUR BUSINESS COME ABOUT?

At the very inception, we thought that we could hire veterans from the unorganised food sector (fruit, vegetable and fish vendors), and transform them to heads of departments, since nothing can replace the warmth and familiarity of your neighbourhood vendor. But these vendors don’t have great communication skills or aren’t able to manage their environment well enough. So we have hired about a hundred local kiranawalas, trained them in billing, product knowledge, and soft skills and made them responsible for various roles such as distribution, quality control and front-end co-ordination.

Q: WHAT WERE THE CHALLENGES ASSOCIATED WITH THIS?

From the beginning, outsiders raised many questions about the viability of this strategy; they raised questions about sales and customer acceptability issues. There were some integration troubles initially because of technology and documentation issues and emphasis on certain aspects of customer interaction. There was also resistance from the other employees as they were unsure as to how they would get along with the ex-vendors. But their passion and honesty helped alleviate problems and today our staff and the former vendors exchange knowledge and get along freely.

Q: HOW HAS THIS PRACTICE TRANSLATED INTO PROFITS FOR YOUR BUSINESS? DO YOU PLAN TO HIRE MORE VENDORS IN THE FUTURE?

Because the people we take in have extensive domain experience and on-ground experience, they are very good at their work. People like Sheikh Nadir Ali and Partha Mukherjee, who handle the fruits and vegetables and non-vegetarian categories respectively are invaluable to Spinach. And yes, we do plan to get in more people from the unorganised sector in the future.

Article Resource:
Author: Nikhil Menon is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

When Business Thinking is married to Technical Ideas.

Business Thinking is married to Technical Ideas.

The Indian IT industry is currently witnessing a silent, but very compelling transformation, wherein technology is being viewed as a means to attain business ends, and not an end in itself.

If as developer a product to is he needs being is to developed be clear it in , whom the his mind for why developing , and how it would help the end customer. More than anything else, the focus needs to be on the usability of technology. This calls for a change in terms of the quality of IT manpower. The industry now requires quality brains that can make possible quality deliverance of high-end technical assignments on time and in line with customer requirements. So the pie is gigantic, but grabbing it would remain a dream until the manpower arms itself with adequate skills.

OPERATIONAL DEPTH BECOMES CRITICAL

Indian IT is now being associated with the entire business process, right from developing to the final delivery of a product. For instance, SAP Labs considers Bangalore one of its most important development hubs, since around 10 percent of its patents come from India. Believes Shailesh Shah, Director & Senior VP, Corporate Strategy Group, Satyam Computer Services, “There is greater focus on IT consulting, project management, engineering design and product development leading to substantial revenue streams.”

NOSE FOR BUSINESS IN TECHNOLOGY

So more than just cost effectiveness or technological knowledge, the traits that will set the Indian talent pool apart from other contenders is the ability to understand how the technology they are working on enables business and to think from an entrepreneurial point of view. This means that one needs to be a business technologist to rise in this industry. As Arvind Mishra, Executive VP & Global Head, Talent & Change, Polaris Software Lab Ltd., says, "As the IT industry matures and tries to provide high margin, complex solutions, there is a shift from being purely technical to becoming techno-functional. The software professional today is required to gather domain knowledge. Unlike in the past, when one was called a Java or ‘C’ specialist, the focus today is on whether a person is into banking or healthcare or manufacturing.”

Innovation would be required both in IT services and product development and R&D. Indian IT is already a known name in the ITES space. And in the product development and the R&D space, India has become a hub where the top 10 product companies in the world have set up development centres.

Srinivas Raghavan, VP-MD, Bally Technologies feels quality is becoming the core of Indian services, specially in the area of solution implementation. He says, “The Indian engineer is very good and getting better at implementing solutions on-site wherever the location might be in the world. In future, the number of Indians working at customer locations around the world and implementing solutions for them will only increase.” He feels, nevertheless, that the country should continue to retain its cost advantages.

EXISTING BOTTLENECKS

According to industry estimates, out of a requirement of 2.3 million people, India will fall short by 50,000 relevant IT professionals by 2010. What is to be noted here, is that the fall is not in terms of numbers but in terms of relevance. Only 25 percent of the total technical graduates and 10-15 percent of general graduates are industry-relevant. Added to this, there is no proper grooming of talents at the school/university level.

So what is the way out? Many feel grooming should start at the primary level since logical thinking starts at the primary school level. The need is to address primary education and not build a poor-quality manpower base at the primary level. The industry feels that Indian engineering students, even after four years of studies, are not readily deployable. What’s needed is a close collaboration between the industry, Government and academia to build up a proficient pool that can sustain the growth.

Article Resource:
The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

How 51 Gorillas Can Make You Seriously Rich?

HOW 51 GORILLAS CAN MAKE YOU SERIOUSLY RICH

Or, why so many business books are awful

IF YOU want to profit from your pen, first write a bestselling business book. In few other literary genres are the spin-offs so lucrative. If you speak well enough to make a conference of dozing middle managers sit up, your fortune is made. You can, says Mark French of Leading Authorities, a top speaking agency, make a seven-figure income from speechifying alone.

Given this strong motivation to succeed, it is astonishing how bad most business books are. Many appear to be little more than expanded PowerPoint presentations, with bullet points and sidebars setting out unrelated examples or unconnected thoughts. Some read like an extended paragraph from a consultant’s report (and, indeed, many consultancies encourage their stars to write books around a single idea and lots of examples from the clientele). Few business books are written by a single author; lots require a whole support team of researchers. And all too many have meaningless diagrams. The formula seems to be: keep the sentences short, the wisdom homespun and the typography aggressive; offer lots of anecdotes, relevant or not; and put an animal in the title—gorillas, fish and purple cows are in vogue this year. Or copy Stephen Covey (author of the hugely successful ‘Seven Habits of Highly Effective People’) and include a number. Here, though, inflation is setting in: this autumn sees the publication of ‘The 18 Immutable Laws of Corporate Reputation’ by Ronald Alsop. And Michael Feiner has written a book offering ‘the 50 basic laws that will make people want to perform better for you’.

The fundamental problem is that a successful business book needs a bright idea, and they, in the nature of business, come along infrequently. The dotcom boom brought some, the spurs to Clayton Christensen’s ‘The Innovator’s Dilemma’ or Rosabeth Moss Kanter’s ‘Evolve!’ (accompanied by a CD of the guru herself rapping her message). Since then, new books have tended to focus on three areas: corporate governance; leadership; and how to make money out of bits of the business that were forgotten in the boom.

The first category has produced the most meticulous work, with books such as “The Recurrent Crisis in Corporate Governance” by Paul MacAvoy, an academic, and Ira Millstein, a lawyer. Inevitably, many books have raked over the lessons of Enron, WorldCom and other failures, trying to explain what went wrong.

Some of the leadership books are written (or ghost-written) by the likes of Rudy Giuliani or Jack Welch, to describe the secrets of their success. Others explain the mysterious qualities that successful entrepreneurs/leaders display. Warren Bennis’s ‘Geeks & Geezers’, for example, compares different formative experiences on the way to the top. Of course, the most perceptive leadership literature was written 400 years ago by William Shakespeare; and some of today’s most readable books discuss the techniques of past heroes, such as Alexander the Great. They will teach you history, even if they do not make you Jack Welch.

The sheer number of business books means that the diamonds shine rarely in a mound of dross. One industry insider estimates, on the basis of figures from Nielsen Bookscan and a hunch about Amazon’s sales, which Bookscan excludes, that a total of 8m-10m books that could broadly be defined as ‘business’ are sold in America each year. They are almost all written by North Americans: Charles Handy, the Irish author of ‘The Age of Unreason’, is one of the few non-Americans who has managed to break into this
market.

Including Amazon’s figures, the top 50 business books sold around 4m copies in the first seven months of this year. But many sell fewer than 1,000 in their first year, and the fall-off in sales is almost always dramatic. “The shelf-life of maximum relevance is measured in months,” says Adrian Zackheim, who made his name publishing Jim Collins’s ‘Good to Great’, one of the rare business books that has topped bestseller lists for years.

It is hard to believe that many managers run their businesses differently as a result of their reading. Occasionally, however, a truly great business book will articulate an idea that helps them to explain what it is that they are trying to do. It creates phrases—such as ‘core competence’ or ‘emotional intelligence’ — that fit the moment. But a few lines of ‘Henry IV, Part II’ might well serve the same function, and give more pleasure too.

Reference:
The Economist

Oppurtunities, Now a Mouse Click Away.

Oppurtunities, Now a Mouse Click Away.

Only 1 per cent of the Rs. 1,800 crore online advertising industry in India has been tapped so far. What is the future of this booming industry?

The Rs 1,800 crore online advertising industry throws a huge entrepreneurial opportunity to the creatively enterprising types. You could either create your own online advertising agency, where everything happens online, be it client servicing, ad campaigning, captioning and yes, money making. The start up cost is lesser than that of any traditional advertising agency, and about your target audience, well it’s the whole world!

PLENTY IN STORE

Are there enough opportunities available considering the fact that competition in this booming market is also fierce? But the landscape is changing, as the target audience is transforming its behaviour. Here’s a simple statistic: How much time of the day do you spend on the Internet, and how much of it is occupied in front of the television or reading the newspaper? Probably 8:4? Well, that’s where the space is – the surplus four hours that the viewer spends in front of the computer is on the Internet. Industry statistics say around 70 per cent TV ads are avoided by the viewers, which gives more scope for online ads.

Interactivity too is high while talking about online ads. Traditional ads are more indirect and assumption-based. In case of online communication and marketing, it’s two-way comm unication. Says M Sandeep, Group Head, Account Management of online ad agency Webchutney, “You can exactly track as to how many people clicked on a particular ad, how many people found it interesting and how many of them went a step further. You can also get answers to questions like what is the average age group of Internet users who clicked on a particular online ad, what is it that appealed or didnot appeal to them (by collecting data from the feedback forms they fill in) in a particular ad etc.” The industry numbers gathered through research on online ad industry speak for this optimism.

Although as of today, the online advertisement segment constitutes only 1 per cent of the total $2.2 billion Indian advertisement industry, it shows a promising future. The segment is likely to cross the $100 million mark by 2010!

PRESS ENTER FOR CAREERS

Well, here you get a global audience for your ads, while still spending lesser money than what an international TV ad. India based Ybrant Technologies, a creative service provider to e-marketing, gets 99 per cent of its business from the US. One of the major clients for online ad agencies like Interactive Avenues, constitutes of NRIs and other global citizens. “We are already
working with close to 30 international clients. We are also talking to certain clients in the US and UK who would want to outsource their back-end operations to India especially for search advertising,” informs Ashish Sethia, VP Interactive Avenues Marketing Solutions Pvt Ltd.

Your primary viewer base is that part of the population, which is every marketer’s target – the youth. Pegged currently at 40-45 million, the Internet population is expected to grow to close to 100 million in the next 1- 2 years. A large part of these netizens are within 20-40 age group.
Again you have plethora of options to choose from like building websites, display ads which would further include banners, media planning and buying, designing, mobile marketing, email marketing, search engine optimisation and search marketing. You name it and you have it.

YES, I WANT TO VENTURE OUT…..

Well, if you want to start an online ad venture, you need to understand that a market that is relatively new has slightly different nuances. As Sandeep says, “Online ads are more direct and crisp (contentwise and conceptwise). For instance, a Google ad word count has a maximum of 25-30 characters. The design too isn’t very flashy. The logic behind the execution of an online ad is simple. What might look dull as a TV ad might just work well in the format of an online ad.” Hence, the first step towards instituting an online ad venture is acquiring the required skills:
Thorough knowledge of the Internet is a must. Niche skills like creativity, inclination towards search marketing, technological know how, understanding of consumer behaviour etc. are also needed.

Planning is extremely important. Questions like ‘what is it that I want to achieve out of a particular campaign’, ‘how can I cater to a cross section of my target group’ and ‘how can I tactfully calculate the ROI’ will arise. The number of questions while conceptualising an online advertisement are multifold.

To start the agency on a small scale, the cost would be around Rs 10 lakh, which would cover the cost of computers, Internet connection, and payrolls. In terms of scope of operations, a minimum of certain skills are required – copywriting, designing, accounting, business developing and technical administration.

THE DAUNTING PART

And now the challenges… For one, the attitude and the approach one has towards the industry hasn’t changed. The unfamiliarity with the new medium, lack of understanding of its reach, fear of venturing into a new area that hasn’t been tappped before are a few reasons that sometimes make it difficult for marketing executives to get clients. As Dr. Subho Ray, President, Internet and Mobile Association of India (IAMAI) opines, “The market at large is still not ready to see the value proposition of online advertisements.”

Constantly keeping pace with the rapidly changing landscape of online advertising is another daunting task. So, one needs to be prepared.

But the above mentioned challenges can be overcome if we understand some of the basic nuances of online advertising and explore various opportunities that this vast industry has to offer.

Article Resource:
Author: Jhinuk Chowdhury is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

If Wishes were VCs..

IF WISHES WERE VCS...

A Young and successful entrepreneur can be a charmer or a bungler. It is easy to tell when the person faces venture capitalists. Jacob Cherian sits through a mock deal flow session.

YES. I do.” Those three little magic words that embark a person on the matrimonial pulpit on a journey full of uncertainties and hopefully big rewards. In the world of business, they are very occasionally uttered by venture capitalists to an entrepreneur who had fallen in love with their money. But when they nod, they walk into a relationship as complex as marriage, only with a higher failure rate.

It is quite natural that they relish saying “No, Forget It” much more frequently.
Making a neat, quick pitch to potential investors is one of the key skills that an entrepreneur must cultivate. The future of one bright idea or an early stage marvel may very well depend on those few minutes. Venture capitalists will refuse a proposal even if they have a slight doubt about its viability or the business leader’s ability to execute it. In many cases, the refusal may not amount to the rejection of the idea itself, but a safe option for want of conviction.

It is in this context that the event the other day in Mumbai was keenly watched. It had the tone of a high-profile conference or the mood of a law school moot court. It was Red Herring Atre 2007’s final event — Meet the Money — where entrepreneurs faced a panel of three venture capitalists, arguing why they must invest in their businesses.

The learnings were typical of what it takes a startup to succeed in attracting other people’s money and how easy it is to botch it all up. At the ballroom in Taj Land’s End Hotel, the air was thick with the talk of money. Except that none was involved. It was an event where the VC pitches would be heard and decided, but no money exchanged at the end of the day. It was just a game after all, we were told.

But the three entrepreneurs and the venture capitalists were real. Ajay Kumar Kapur, CEO of Sidbi Venture, Promod Haque, managing partner at Norwest Venture Partners and Harshal J Shah, CEO of Reliance Technology Ventures played the potential investors, judging whether the entrepreneurs deserved funding to scale up their operations.

Alex Vieux, CEO of Red Herring, spelt out the rules of the game and acted as the moderator for the evening. Each aspirant had to make a 60-second presentation and answer queries over a fourminute session.

First on stage was KP Vinod, director of BigTec. He sauntered on to stage, probably rehearsing his pitch but wasting some of his 60 seconds. He had a faint smile on his face, almost betraying a casual approach that this is only a game.

Describing his company as a diverse portfolio company, Vinod said, “We fund products ourselves,” and asked for VC funding so his company, in turn, could put the money behind innovative ideas. He went on listing the areas the company was interested in, from software engineering to biochemistry.

The short presentation over, Vieux asked, “How much money are you looking for?” Vinod popped out, “Ten million dollars.”

On being asked about the team, Vinod related the names of all the people involved in the company and who headed which department. “But you’ve said only the names of the team member. That doesn’t tell us anything,” protested a panellist. Then, Vinod went on to relate the names of departments attached to each name. “But what is their background?” an impatient Vieux asked. Vinod was obviously nervous and could muster enough of an answer.

“You’re basically an incubator,” Norwest’s Haque said.

“We wouldn’t call ourselves an incubator. We are a product innovation company,” countered Vinod.

“But you are basically an incubator,” Haque insisted. “For a startup incubator, why are you spreading yourself across three different sectors?”

“We have the option to shut down all the other technologies and focus only on one thing. I think that innovation is a fundamental part of our DNA. And that means we have a pipeline.”

Not much impressed, the panel quizzed him on cash flow and he said his company would go on incubating early stage and late stage innovations. Eventually, the technology would be spun off as a product and money would, one day, surely come in.

Vieux asked the three-member panel to vote. “NO,” “NO” and “NO”.

“Here is the issue,” said Vieux, taking charge of the floor. “When you communicate your value proposition, you make your company seem more unfocused than it is in reality. You are in the bio-tech sector. You are in a very good niche. You want to make it look bigger than it is, and because of that it, seems like you are doing something very fuzzy. And there’s another thing VCs don’t like. VCs don’t like people who do their job with others’ money. It is their job to fund companies and fund innovation. And you are then telling them that you want to take their money so that you can fund innovation. So you are in a genre that they don’t like.”

One of the VCs then took over. “I know someone who relocated from the UK for his company. He said this is all I’m going to focus on. He was like ‘I am either going to make it or break it’. That is the kind of passion and dedication we want to see. If you’ve got that, then you’ve got it. You want to diversify your portfolio for us, remember that we are already good at diversifying. It is better for you to focus on one thing and gain that market.”
Vieux continued: “If you are an entrepreneur, burn all your ships.

Don’t worry. If you are going to sink you are going to sink. But burn all your ships. Go for it and go for that one thing that you are good at it. Don’t hedge yourself. If you hedge yourself, it means you are not sure that you are going to succeed. If you want someone to invest in you, you have to be that sure.”

Up next was Netalter. Its vice president for communications, Gurudatt Shennoy, unveiled his wooing plan. “We have some very innovative solutions for the internet. We are developing the Netalter browser. Our mission is to have the Netalter browser on every computing device in the world. We are also looking at having our solutions for the enterprise market. We are talking to a couple of major players in Europe who are interested in our P2P technology. Their clients are interested in this. We will get our revenues from this by licensing our technologies. But we need funding so that we can get the human resources and set up the infrastructure there.”

Sidbi Venture’s Kapur asked, “What pain point are you dealing with? Why would people want your product?”

“With current browsers there are security issues, spam, cookies and privacy. We have a secure P2P technology that we have invented and patented. This will create an opportunity for a more organised network than the current network.” This was Shennoy.
“Do you have beta customers?”
“No. That is why we are seeking funding. Because we believe that we can come out with our product within three months. The key thing would be to get them to shift over to this. It could be for e-commerce or social networking or other such things.”
“Who will be your beta customer?” the panellists wanted to know.
“People who are not satisfied with the internet. People who feel that their time is wasted on the Net. For instance, I get a lot of spam in my mail and it wastes my time. It would be for both individuals as well corporates. The basic browser would be free. For the corporate to work on the browser, it can be customised.”

Then came the inevitable question: “How will you get your revenue if you offer it for free?”

And then the familiar answer. “We want to create the market first. We are already tied up with content providers. When we launch we will tie up with job-portals, travel sites and such like.”

“Who are your competitors?” asked the VCs. “There are no specific competitors currently. However, as we develop up all the big companies will develop similar technologies. We will have a search engine, a browser. The P2P platform can be converted into a grid. We call it a democratic grid. If you participate in the grid, you can use it to search for information using other computers as well. The results can also be outputted on your mobile phone.”

Clang, and it was time up. Again, all the three said No. However, Kapur did seem a bit interested and said “No as of now, but possibly with another round of discussion. I still do not have clarity on what this is about.”

Shennoy attempted a quick exit with a “Thank you” but Vieux cut him off and said, “Don’t go. Time to debrief. Don’t be too intelligent for your own good. You are trying to hedge. You have a first product and a second product and a whole lot of other things. My advice to you is to do one thing and do it well. People don’t understand why you have different things. This communicates a lack of focus and VCs don’t want to see that. This makes you too intelligent for your own good. You ought to focus on creating differentiated value.”

The final aspirant was from MAIA Intelligence. “You have had companies before you and the VCs are used to saying no,” Vieux said welcoming CEO Sanjay Mehta. A confident Mehta was unruffled. “Let’s see if we can change that.” Meanwhile, pamphlets describing MAIA’s product were being distributed among the VCs.

“We are in the intelligence space. My background: I am a serial entrepreneur with four startups behind me,” Mehta said. “We entered this space as we saw that people have issues in reporting their progress on the operational front. We saw that they typically use excel or people are writing queries. So we decided to target this space. We already have this product out and some of our clients are Reliance Capital, Edelweiss Capital. With one of our clients, we have 1,200 users. We are looking at becoming the largest BI user base in India. We have just got our first customer in the US,” he says.

“Are you looking for money?”
“We are looking for $15 million as we are looking at marketing and branding, not product development.”

Reliance Tech Ventures’ Shah asked, “How much of your revenues comes form Reliance?”
“We have 37 customers and one of them is Reliance. And every deal is around (Rupees) 9 lakh each,” Mehta replied.
“Can you tell me about your team?”
“We are six people. Totally we are two chartered accountants, three on the technical side and one on the alliance side.”
“What are your plans for the $15 million? How are you going to take it?” the VCs asked.

“We can take it $5 million at a time . The product is already ready. We need the funding to take it to market.” At this point, Vieux interrupted.
“Twenty years ago I used to work with enterprise software. My first company went public. From that experience, I know you don’t need that much capital.”
Then, Kapur asked the entrepreneur what was the market size for a product like the one being described. To which, Mehta began citing a Gartner study but Kapur cut him off and asked, “What is your number?”

Mehta conceded that he didn’t have a number, but “by 2009 March, we should have 400 customers with an average deal size of Rs 15 lakh.”
Time for the final vote of the day. And at last, those magic words of approval were heard. Shah of Reliance Tech Ventures said. “Yes, but I want to qualify my ‘yes’ because I would always like to look at a company that has managed to sell to Reliance. I know how strict Reliance is when deciding a purchase. Also, I’ve seen a domino-effect happen with other companies in the past. Get Reliance as a customer and their competitors want to have a look at you.’

“Yes, this is true,” said an obviously relieved Mehta.
Haque then gave his verdict. “No. I would not invest in a company that is built around a reporting product. I have experience in this field myself.”
And thus ended a session that saw virtually every trick in the book that wouldn’t work while talking to venture capitalists. As a parting advice to Mehta, Vieux said: “When you go and talk to a venture capitalist, do your homework. For God’s sake, do your homework. Come out with market size, numbers, percentages, your plan of action, your team. Be crystal clear and crisp. You aren’t prepared even though you knew that you had to make this presentation for the past few days. When you talk to those people, you need to be prepared with your numbers. You have three things going for you: You are a repeat entrepreneur. The second thing is that you have a proof of concept that is selling and you sold to one of the most difficult companies. Finally, you are at the right place at the right time in business intelligence space.”

Article Resource:
The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

7 ways to Stretch your Marketing Budget

7 ways to stretch your marketing budget

MARKETING isn’t just an expense; it's an investment. The key is to market smarter and fully utilise your marketing budget. Here are seven ways to stretch your marketing rupees and increase your bottom-line profits:

Use free publicity:

It costs you nothing and builds credibility and awareness. So look for opportunities to be involved with community activities.

Speak at local organisations:

Every organisation is looking for speakers for their monthly meetings, so offer to share your knowledge with them. You'll get exposure to groups as an expert and meet lots of new people who might be potential clients.

Write articles:

Contribute to newsletters, newspapers, industry journals and your own Web site. Sharing information builds name recognition, which helps bring in clients.

Create a web site:

Websites are a must. You’re missing a great opportunity if your business doesn't have a presence on the web. It’s a very cost-effective way of letting people know about you and your products and services.

Partner with others:

Look for businesses with complementary services to create cooperative advertising campaigns so that you have a pool of money.

Participate:

Look at ways that you can get more involved in the organisations you already work with. This helps build your name recognition by being involved on committees.

Connect:

Networking is the most effective way to meet people. People like to do business with others they know. Networking takes little money, but it does take a time commitment because you must be consistent in your networking efforts.

Marketing is an important part of any business operation. The challenge is finding cost-effective ways to get your name out without going over your allotted budget. Strategic planning is important so that you have a purpose with each marketing dollar you spend. Some people will just randomly select marketing activities, which is a huge waste of dollars. Creating a marketing plan that incorporates the above seven tips will help you have a focus and a variety of venues to reach existing and potential clients and keep your financial picture on track.

Reference:
(Adapted from Entrepreneur.com

Banking on IT for Drug Discovery

Banking on IT for Drug Discovery

DISCOVERING India’s first ‘new medicine’ is perhaps the greatest dream of the country’s medical scientists. Leading Indian companies like Dr Reddy’s and Ranbaxy are yet to stun the world with an innovative medicine, despite a decade or more of research efforts. Their global success, so far, has come from copycat generic drugs. So then, why is Supreet Deshpande, who trained to be a mechanical engineer, sporting a happy smile?

For one, his radically different approach to the pharmaceutical industry has begun to pay off. Shunning the easy street to generic drugs business, that so many Indian companies have embraced, he started a purely research-based drug firm five years ago. His venture, VLife Sciences, has managed to discover 12 potential drugs, two of them entirely new and the remaining tweaked forms of existing drugs capable of treating diseases different from the ones initially targeted. And he hopes to take his first finished drug to the market within three or four years.

Mr Deshpande, a graduate from Bhopal University, stands out in his basic approach to business itself. His motto: The solution to a scientific problem may well be a non-scientific one. Says Mr Deshpande, “Look, I was never a scientist and I am not a scientist. But what I have realised in the course of the past five years is that a non-scientific perspective to a scientific problem is as important as a scientific perspective to a scientific problem... Common sense is more valuable than anything else, whether it is in farm equipment, technology or pharmaceuticals.”

Supreet Deshpande VLIFE SCIENCES TECHNOLOGIES

This difference in approach is evident as you walk into his research lab. There are no scientists in white robes, no one handling tubes with plastic gloves and masked faces, but a small team of people busy at their computers. Here, every scientific experiment is simulated on computers.

After several years with Bajaj Auto, Mr Deshpande joined Mahindra British Telecom in Pune in 2001, where he was responsible for exploring new growth opportunities for the company. “We had a small group of PhDs in science who were hibernating in that organisation, trying to develop software capabilities to implement complex algorithm. These guys were working in a corner and nobody paid any attention to them,” explains Mr Deshpande.

With their help, Mr Deshpande quickly identified pharma as an area where technology could play a significant role. “I was reading a lot of articles on the incapability of technology to deliver the desired results in the pharma sector... And the thing that did the trick for me was a significant lack of common sense while employing technologies in the pharma sector... Any decision was so much driven by science, that sometime people forgot why they are doing sciences. Is it for building more knowledge or for building an application that is beneficial to the patient?”

But he says Mahindra British Telecom did not share his enthusiasm about the project. He left the company, and decided to take his project forward on his own. “When I moved out, I spent six months at home, creating a blue print of what technology interventions I would think logical from a non-scientist perspective into the pharmaceutical discovery process,” says Mr Deshpande.

In 2002, he created VLife Sciences Technologies Pvt. Ltd and invested all his savings into his new company. At that time, his friend Atul Aslekar, a trained engineer then working in Japan, joined Mr Deshpande, adding his savings to the company’s initial capital. Initially, Mr Deshpande’s idea was to develop an algorithm that would enable pharma companies to use computer aided techniques to design new molecules. While pharma companies around the world already use similar software for a part of their research, Mr Deshpande’s ambition was to develop a software that would give him results so close to reality, that it alone could relied on, to identify potential candidates.

“This allows a lot of speed, in a day you can make hundred thousand molecules, which is not possible in a lab,” says Mr Deshpande. Once the molecule has been designed on the computer, it is chemically synthesised and tested on animals. “If that data is initially what we had expected, we go further, but if it is not then we study experimental results and go back improve its design,” explains Mr Deshpande. The software was then sold to several academic institutions, including IITs.

In 2005, the company started its own research programme. In two years, the company was able to come up with 12 potential drugs. Out of these 12 drugs, 10 are actually existing drugs, but that no one thought to use to treat a different disease, like its diabetic wound candidate, expected to enter the first phase of clinical trials on humans shortly.

In April 2006 Kotak Mahindra private equity fund invested in the company. Though the amount of the investment was not disclosed, then Vlife Sciences was valued at around $5 million.

Last month, the company was reorganised into two separate companies. VLife Sciences spun off its research division into a wholly owned subsidiary, NovaLead Pharma.

The company has focused its research effort on very specific areas. “We have thought it differently,” says Mr Deshpande. At a time when new drug applications are under increasing scrutiny from the US Food and Drug Administration (FDA), NovaLead is working on drugs for which the FDA provides ‘fast-track approvals’ and a limited amount of clinical trials are required. To qualify, these drugs must be effective in the treatment of either rare diseases, which are markets too small for large pharma companies to invest, or diseases where the existing treatments are not effective.

“We have spent only eight hundred thousands dollars to take our diabetic wound drug to the first phase of clinical trials,” says Mr Deshpande. The pre-clinical studies were conducted in Boston by Dr Krishna Menon, a doctor who has to his credit three drugs, including Eli Lilly’s cancer drug Gemzar. (Incidentally he is also on the board of the company). The company is confident of taking the drug to market within three to four years.

Article Resource:

Author: Noemie Bisserbe is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

On Wings of Social Entrepreneurship

On Wings of Social Entrepreneurship

Corporate Professionalism Is Spreading To The Social Sector, As Professionals Give Up Comfortable Corporate Careers To Work With The Masses

WHEN 24-year-old Anand Shah was flying out of India back to America, another Indian sitting next to him on the flight was complaining. “The taxi drivers, they fleece you. The food, the water… oh, I was sick for four days out of ten.” Born in the USA and trained at Harvard as a biologist, Shah thought to himself that criticising came easily to us, but not the initiative to change things.

Mr Shah, on his part, decided to do something for the country of his parents’ origin. He looked around and realised there was a huge need for talent to work at grassroots organisations in India. “What India needs is people time. Very rarely would you see very talented people getting their hands dirty,” he says. Thus was born IndiCorps, which works to bring the brightest and best people, often lost to the management consultancies and investment banks, to work in social development.

Mr Shah is not alone. An increasing crop of professionals are sacrificing lucrative corporate jobs to become social entrepreneurs. They blend the entrepreneurial skills of the business world with the social purpose of non-governmental organisations to create unique solutions to India’s problems. For decades, social work in India meant charity, but the economic changes of recent years have brought hardnosed business sense and professionalism to the social sector.

Like Mr Shah, Mumbai-based Venkat Krishnan quit a nice job to start a company that brings together donors and social organisations that need their money. His company, GiveIndia, works with about 100 organisations that have projects ranging from environmental protection to child welfare.

Social entrepreneurship is no different from starting a profit-motivated company-the challenges are perhaps only tougher. They grapple with problems of retaining people with motivation, scaling up viable business models and of course, raising resources. But the modern day social enterprise has one advantage compared with a conventional NGO-it is run by a professional who understands target setting, performance and accountability.

For instance, Mr Krishnan opted to set up his venture as a company rather than as a charitable trust. The company has on its board, strategy consultant Rama Bijapurkar, ICICI chairman N Vaghul, Tarun Das of CII and Kishore Chaukar of the Tata group-well-known people who brought credibility to a start-up and also a specific set of skills to the table. “To some extent, being from IIM-A helped to establish my seriousness and get them on board,” says Mr Krishnan. Like any corporate, GiveIndia also periodically works out the cost of raising funds and compares with other ways of raising funds. The goal being to raise funds in the most the cost efficient and effective manner.

Employee retention is the next challenge. Vineet Rai, whose organisation Intellecap acts as an advisor to firms with a social-focus feels human resources is the number one challenge most of them face. This is where organisations like Indicorps come in. The Indicorps fellowship programme is an intensive two-year programme that involves a selection process to identify the best talent-those selected work for 1-2 years on the project of their choice with grassroots organisations.

While volunteering for social work is not new, getting the brightest and best minds to do it and tapping their potential at a costs lower than consultant fees is the crucial differentiator for IndiCorps. “This is not volunteering. These are fellows,” says Mr Shah, who calls what his organisation does “service for the soul”. The basic requirement for the Indicorps fellowship, apart from being a person of Indian origin, is a university degree or five years of work experience. Interested candidates need to fill out a 20-page application form, pay their own way to India for the interview. So only serious candidates apply.

Initially, Mr Shah found NGOs were not very excited about the idea. “But once you give them (the NGOs) the basic management skills, you suddenly find they are very hungry for talent,” he says. Unlike traditional businesses, that can use compensation and stock options to employ good talent, social entrepreneurs have to rely on other incentives to retain people. “Usually, we find we lose people to other organisations in similar fields,” says CRY (Child Relief and You) CEO, Ingrid Srinath.

CRY, one of India’s better known organisations working for child welfare, commissioned Ernst & Young to do a study to reduce its employee turnover which had gone up to 25%. In response to the findings, it increased salaries by 40% across the board in 2006. “We were able to bring attrition down to 6%, and compared to before, when we had 46 vacancies, we have under 20 now,” says Ms Srinath.

CRY was a first mover in many ways. It was among the first entrepreneurial efforts in the social sector that was professionally managed and run. It was also among the few organisations that built a strong brand presence that was bigger and better known that its shy and retiring founder Rippan Kapur.

“Most organisations are board driven or CEO-driven. It is rare to find the ideal combination where the board is involved in the governance and the CEO in the management,” says Noshir Dadrawala, who advises charitable organisations, and who has authored a number of books to help them. Even today, CRY is among the most professionally run and managed organisations.

In 2000, it commissioned IMRB to study donor habits and found that the biggest block to making donations was inertia. The intent existed but few people translated it to action. Acting on this, CRY put in place mechanisms to make the payment process more convenient, and also put in place an online payment system. Confesses Ingrid, “When we outsourced our cards business to Archies, we also introduced a voluntary retirement scheme.”

Compared to 1979 when CRY was started, there are now many more resources for social entrepreneurs. There are courses run by management institutes such as NMIMS on social entrepreneurship, as well as hand-holding and consultancy that organisations such as Noshir’s Centre for Advancement of Philanthropy provide for free. Even venture funding is available if it is a for-profit socially focused venture, apart from organisations such as Ashoka that fund deserving individuals in social work. The time for social entrepreneurship has come.

Advice and help on how to go about it
Centre for Advancement of Philanthropy. Cap India
Intellecap. Intellecap
Networking, Funding Ashoka. Ashoka
Funding Accumen Acumen Fund
Aavishkar. Aavishkaar

Article Resource:
Author: N Shivapriya is the cheif editor in the Economic Times, Mumbai and the article appeared in one of their successful columns called "Starship Enterprise.

A Leader Should Know How to Manage Failure

'A Leader Should Know How to Manage Failure'

(Former President of India APJ Abdul Kalam at Wharton India Economic forum , Philadelphia , March 22,2008)

Question :

Could you give an example, from your own experience, of how leaders should manage failure?

Kalam : Let me tell you about my experience. In 1973 I became the project director of India 's satellite launch vehicle program, commonly called the SLV-3. Our goal was to put India 's "Rohini" satellite into orbit by 1980. I was given funds and human resources -- but was told clearly that by 1980 we had to launch the satellite into space. Thousands of people worked together in scientific and technical teams towards that goal.

By 1979 -- I think the month was August -- we thought we were ready. As the project director, I went to the control center for the launch. At four minutes before the satellite launch, the computer began to go through the checklist of items that needed to be checked. One minute later, the computer program put the launch on hold; the display showed that some control components were not in order. My experts -- I had four or five of them with me -- told me not to worry; they had done their calculations and there was enough reserve fuel. So I bypassed the computer, switched to manual mode, and launched the rocket. In the first stage, everything worked fine. In the second stage, a problem developed. Instead of the satellite going into orbit, the whole rocket system plunged into the Bay of Bengal . It was a big failure.

That day, the chairman of the Indian Space Research Organization, Prof. Satish Dhawan, had called a press conference. The launch was at 7 : 00 am, and the press conference -- where journalists from around the world were present -- was at 7 : 45 am at ISRO's satellite launch range in Sriharikota [in Andhra Pradesh in southern India ]. Prof. Dhawan, the leader of the organization, conducted the press conference himself. He took responsibility for the failure -- he said that the team had worked very hard, but that it needed more technological support. He assured the media that in another year, the team would definitely succeed. Now, I was the project director, and it was my failure, but instead, he took responsibility for the failure as chairman of the organization.

The next year, in July 1980, we tried again to launch the satellite -- and this time we succeeded. The whole nation was jubilant. Again, there was a press conference. Prof. Dhawan called me aside and told me, "You conduct the press conference today."

I learned a very important lesson that day. When failure occurred, the leader of the organization owned that failure. When success came, he gave it to his team. The best management lesson I have learned did not come to me from reading a book; it came from that experience.

Power Of Excellence....

Health and care for all.

Health and care for all

THAT India’s primary healthcare is in dire straits is well known. While the affluent sections are being overwhelmed with the choice of superspeciality service, there is a widely held belief that there is no money to be made in providing healthcare to the bottom of the pyramid. Some entrepreneurs are challenging this as a myth and trying to improve the health of healthcare in India.

Ziqitza Health Care Services, the company behind the 1298 emergency ambulance service in Mumbai, has shown the way that it is viable to provide services at a subsidy or for free. Anyone can avail of their dial-in ambulance service, and the company has made it clear that ability to pay will not be a defining factor for using the services.

It was a few years ago that five individuals decided to junk their corporate careers to start the company. Shaffi Mather, Manish Sacheti, Ravi Krishna, Naresh Jain and subsequently Shweta Mangal came together in 2002 to begin Ziqitza.

The first four knew each other from their studies in the US in the mid-90s. Says Mr Sacheti: “We had all decided that we should go back to India and do something in healthcare.” Shaffi Mather and Manish Sacheti met during their MBA at University of Pittsburgh’s Katz School of Business, and quit their respective jobs with Reliance Industries and The Aditya Birla Group. Naresh Jain, who graduated with an MBA from University of Maryland, College Park left GE Plastics and along with Ravi Krishna formed the core team.

The statistics they found were startling. Just 6% of all people in India have access to ambulances with emergency services, which meant that there were several individuals that perhaps lost their lives just en route to hospitals. The point was further driven home when Shaffi Mather’s brother nearly lost his life as a result of poor medical services. Says Mr Sacheti: “Having come from the US and observed the way the health care system works there, we definitely felt that we could do something in India.”

They swung into action by 2003. Shaffi Mather, the CEO of Ziqitza, had worked with the London Ambulance Service as part of a threemonth training at LSE. This proved to be handy as Ziqitza and London Ambulance Service entered into a tie-up in India for paramedic training. Mr Sacheti says: “They even offered us an ambulance, but we refused.”

They then studied the ambulance service in Hong Kong and a subscriptionbased service in South America, but junked the latter because it wouldn’t work in a system where people just couldn’t afford to pay. Finally, they decided to settle down on a ‘sliding scale’ model of payment. In effect, people that could pay would be charged higher, while those that couldn’t were subsidised. But all callers would be able to use the 1298 service regardless. The five-member management team decided to divide the calls into two categories, cardiac calls and basic calls. Says Mr Sacheti, “The cardiac calls require medical intervention. So an ambulance for a cardiac call requires a doctor, a ward boy and medical equipment.” The basic calls won’t require the bells and whistles that a cardiac ambulance requires.

Although their initial studies suggested that the service would be profitable at Rs 5,000 per call, Ziqitza priced its services at Rs 1,500 for a cardiac call and Rs 750 for a basic call for the first 20 km. Mr Sacheti says: “We have discovered that it’s a sustainable business model even at this price.” In a sense, the ambulances break-even, but the company has got four sponsors, Tata AIG, HP, SBI and Playwin that keep the corporate office running. Curiously, it’s been the more affluent bunch that haggles with the ambulance operators when it comes to payment, whereas several lower-income patients from areas like Dharavi have paid up to Rs 1,000 without any hesitation.

The 1298 service was formally launched in 2005 in Mumbai by the Maharashtra chief minister Vilasrao Deshmukh. Ziqitza scaled up their ambulances from one to ten, and established a network of another 10 ambulances and omnis. As Mr Sacheti says: “We needed to have an ambulance for anyone that wanted the service and we can’t refuse calls. So we need to have other ambulances that will take up the load.” But Ziqitza makes it a point not to outsource the cardiac calls. On average, the service gets nearly 40-50 calls a day. But the service suffered some initial pangs. According to Mr Sacheti, “We would let the doctor decide whether the patient should be subsidised or not, but we found that the doctors were actually overcharging the patients and keeping the difference.” Now, all calls are screened. If they’re from the government or BMC hospitals, the fee is immediately waived off or cut.

Recently, Acumen, a not-for-profit equity fund, invested $1.5 million in Ziqitza to aid its expansion from 10 to 70 cardiac ambulances in Mumbai alone. The 1298 service will make its debut in Kerala as well by December. Mr Sacheti says that merely providing the service won’t be enough, it has to be world-class. Hence, the next target — get the patient to the hospital within seven-nine minutes of the call.

That would, perhaps, be the Formula One of emergency healthcare.

Article Resource:
Author: Irshad Daftari is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Making Money with the Click of a Mouse.

MAKING MONEY WITH THE CLICK OF A MOUSE

Ads remain the main model of making money from the Net. But, now the advertiser is demanding more tangible benefits from the site owner

IN THE heady days of the dotcom bubble, when the flow of venture capital burst the plumbing, online businesses started in every street corner with the idea of deriving revenues from advertisements. To say that ads will bring in the money was easier than designing a cash flow model for the raw business. Though the ensuing bust thankfully put an end to such websites, Internet businesses and online advertising have continued to evolve. Today, at least half a dozen portals and websites in India have demonstrated that successful business models can be built around advertisement revenues. And some estimate online promotional spending has grown 100 times in the last seven years. Good time to toe the line? Yes... well, may be.

Industry players say the Internet industry in India as well as the advertisers who patronise it have matured, leaving room for only serious players to succeed. It will be a hard and tortuous path to build a sustainable revenue flow and it takes more than a mere IP address to get advertisements. While there are ventures that offer a unique value to customers and thus justify the ad spend on them, there are many who are in the bandwagon just for the heck of it and run the risk of failure.

From bloggers leveraging Google AdSense to techies running YouTube clones to entrepreneurs innovating ever newer online business models, a lot of people are starting web ventures depending on advertisement spending as their principal revenue source. Take Bloozler, for instance. It is a tool that puts blog posts into an e-paper form, story placements prioritised on the basis of user ratings. Or, consider Vakow, a web and mobile-based service dedicated to forwarded text messages. Bloggers and SMS forwarding users are not likely to be vigorously interested in paying subscription fees and these unique ideas must depend on online advertising to have a chance at becoming big businesses.

Yet, go online and you would find several me-too websites that are also tapping the ad world. There are at least 20 ‘Indian’ YouTubes — dekhona, meravideo, videochutney, videocurry, merovideo, punjabitube and so on. Most seem to be driven by dreams high valuations like the $1.6 billion Google dished out for the video sharing service it bought.

In India as in many places else, advertising is the most popular revenue model for Internet businesses. Subscriptions and commissions on transactions are difficult to enforce or represent a much smaller potential market. The new rules of the game require the website owner to present a tangible benefit to the advertiser and be accountable for results. Industry experts list a few of the rules as most crucial:

DEFINE AUDIENCE

Too many online businesses try to capture as many visitors as possible and end up diluting the appeal. A successful website clearly defines its audience and is able to sub-divide its visitors into packages for advertisers. These subgroups are redirected to pages that suit both sides. “The entrepreneur needs to know clearly who his audience is, what is it that he is providing and how is he going to source it… Service the audience right and everything else is a byproduct,” says Dinesh Wadhawan, MD and CEO of Times Internet.

Sometimes, the solutions purportedly offered by online businesses is fuzzy and advertisers don't see a point in communicating through them. “People are trying to fix problems that the consumers don’t even know about,” says Suvir Sajan of Nexus India Capital. “They first come out with a solution and then try to educate people about the problem. For instance, we were once presented with the idea of a start-up that came up with a single page to manage their whole lives. My question to them was ‘why would anyone want to use that?’ After all it isn’t so difficult to check your mail on one site and news on another.”

KEEP ADVERTISER IN MIND

Websites often create content that cannot be matched with relevant advertisements within a page and presented to the reader. Often, they do not have content that go along with the advertisements in hand. The online property must be designed not only with the readers in mind, but also factor in the interests of advertisers, experts say. Advertisers can be fastidious. “They want to see that the content, the look and feel of the pages goes with their brand. For instance, the page which suits an Asian Paints ad, will be very different from one that suits Goldman Sachs,” says Pratap Bose, CEO of Ogilvy and Mather. In websites offering a rainbow of content, classification and clear separation of modules will be crucial to attract advertisers.
Sulekha.com, which began during the dotcom years and survived to tell the tale, suggests a modular approach. “For instance, if you clearly categorise the film section, or the book section or the classified section, this would be beneficial for the advertiser,” says its founder Satya Prabhakar. This will be particularly useful for small businesses, because it is cost-effective for them to advertise online than in conventional media. Leverage this advantage.

BE ACCOUNTABLE

At the end of the day, advertisers want their ad spend to convert into business transactions. An online business owner must actively engage to lead this conversion. Gone are the times when advertisers went by the number of visits, or eyeballs as they called it. Now, they insist on measuring the time spent on each page and the number of unique users. “The industry has gotten more systematic. Advertisers now have the ability to track clicks, clickthrough leads, clickthrough conversions and transactions. this has made the industry more accountable,” Mr Prabhakar says.

BUILD TRAFFIC

The raw material for an online business trying to attract advertisers is the traffic. Content business is not about selling content to readers, but selling audiences to advertisers. “Worry about advertising after building the traffic. But the first rule there is to create a solution that solves a lot of people’s problems,” Rajesh Jain, who started Netcore, says.
Traffic won’t come if visitors don’t see value in coming back. Many entrepreneurs have tried to ape models that worked abroad and build copycat sites for Indians. These have now fallen by the way side. Venture capitalists, too, don't touch these clones any more. Advertisers won’t come where even investors fear to tread. One key trick to build good traffic is to let the website be simply organised and easy to navigate. There are many content-rich websites that are a surfer’s nightmare and it shows in their poor advertisement appeal.

INNOVATE

TV show hosting site, Nautanki.TV, has let its platform by used by content creators who, in turn, can make some money too. “People who wish to use our site as a platform for their content, will have to pay us a basic platform fee. Whatever they earn from the advertisers they bring, they can keep,” says Nautanki’s founder Sunil Nair. Look for going beyond the pricing-per-click model and innovate to give better value to advertisers, content creators and visitors.

At an annual spend to just Rs 450 crore, the Indian online advertisement market is still a tiny, nascent segment. But the bitter after-effects of the dotcom bust has forced the industry to grow up quickly. As the economy grows at a scorching pace, the need for web-based solutions and online advertising is headed only skywards. Time was when the bubbly first mover into a web business idea walked away with rich valuations, but the online world has come a long way since. It is now a place only for steady, long-term players with a cool business sense.

Article Resource:
Author: Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Financial well-being.

Financial well-being

IS YOUR startup spending unwisely, taking on orders it cannot execute or sitting on underutilised assets? Monitor the following ten parameters continuously to ensure the financial health of your company.

1. What are your assets?

Yes, yes, we all know that assets are the things that a business owns. Tracking your equipment, furniture, real estate and other holdings should be easy. But to have a true idea of the value of your business, you also have to track changes in the value of those assets. More than one small business has found itself located on a piece of land that’s worth more than the business itself. Similarly, you also will want to track the declining value of assets such as computers and office furniture.

2. What are your liabilities?

Again, on the face of it, this is easy — liabilities are what you owe. But what you owe isn’t always as obvious as a bill from your landlord. Payroll taxes are a liability that you might be able to put off on a monthly or quarterly basis, depending on the size of your payroll. Loans are a clear liability, but in repaying them you’ll want to be able to track how much of a payment is applied against principal and interest.

3. What’s it costing you to produce what you sell?

If you’re buying a finished item for resale, this is relatively easy. It’s trickier if you have to calculate all the factors, such as labour, that go into manufacturing a product.

4. What’s it costing you to sell what you sell?

Advertising, marketing, labour, storage and the catchall category of overhead — it’s useful to know how much it costs you getting a product out the door as well as what it costs you in creating it.

5. What’s your gross profit margin?

This is calculated by dividing your total sales into your gross profit. If your gross profit margin is staying consistent or trending upward, you’re probably on track in terms of adjusting your prices appropriately to reflect changes in what you pay for what you sell or produce. Being able to track a declining margin can give you a headsup that you must adjust your prices or your costs. In the worst cases, of course, your gross profit and your profit margin disappear altogether. At that point, you’ll be like the fellow who lost money on every sale but figured he could make it up in volume. Don’t go there.

6. What’s your debt-to-asset ratio?

This ratio can let you know how much of the stuff you have in your company is actually owned by someone else — your lender. Having this ratio climb can be a bad sign — it can happen as part of a major expansion, but it can also indicate that you’re getting in over your head.

7. What’s the value of your accounts receivable?

This is the money that you are owed. Value of being able to track it: If accounts receivable are on the rise, you may be getting a warning that the folks you sell to are starting to stumble. That’s especially true if your accounts receivable, as a percentage of total sales, are increasing.

8. What’s your average collection time on accounts receivable?

This is probably one of the most aggravating pieces of information for cashstrapped businesses, because it tells you how many days you’re acting as “banker” for the people who owe you money. To calculate it, you’ll need to know your average daily sales and then divide that number into your accounts receivable.

9. What are your accounts payable?

The flip side of accounts receivable. An increase in your accounts payable may merely reflect a policy of taking a little longer to pay bills, or of a larger amount of purchases overall. But an increase that hasn’t been planned or managed can be an internal warning that your company’s financial strength is waning.

10. What’s happening with your inventory?

There are occasions, even in this just-in-time business world, when building up a significant inventory can be a good thing. If prices for items you sell or use in production are relatively low, putting some of your money into inventory may make sense. Being able to track your inventory, and how long it takes to be sold or turn over, can tell you whether business is increasing or slowing down. It also tells you how much money that might be used for other payments or investments is tied up in this unproductive asset.

Reference:
(Adapted from Microsoft’s Small Business Centre website)

Building A Core Team.

START-UPS NEED TO WAKE UP TO THE IMPORTANCE OF BUILDING A CORE TEAM

It’s the quality and performance of the top few executives that decide the success of any new business, says S Srinivasan

FOUR months ago, Bangalore-based optical networking company, Tejas Networks, staged a coup of sorts by roping in 46-yearold Rangnath Salgame as its president. Mr Salgame had made his name by developing a $1 billion business in India for global networking giant Cisco. Technology industry veterans were surprised to see him move to a company with revenues of less than $100 million.

Mr Salgame had then said he was surrendering to his entrepreneurial impulse and the temptation to build a product company out of India. Tejas was lauded for getting a visionary leader for its core team. The next news, many expected to hear from the small company, was how it had crossed another revenue milestone.

But, the news that came out of Bangalore was different and stunned the industry. Mr Salgame suddenly quit Tejas under conditions that neither he nor the company explained. His profile was removed from the company website and Mr Salgame was tight-lipped. A job that was negotiated over a year crumbled in just 16 weeks. Was it a clash of vision, a clash of personalities or a systemic defect at Tejas? But one thing was clear: the core team that Tejas was putting together failed to stick together.

The incident highlighted how difficult it is even for a company, with a solid grounding, to build and keep a core team. For a startup, the difference between success and failure is primarily the result of the quality of its few top champions and their collective endeavour. But entrepreneurs often grapple with issues within this small group and lose much energy that could otherwise be spent on building the business.

“Some entrepreneurs think they need to know and do everything. This is wrong,” says business mentor Saurabh Srivastava, who has proven his team-building skills at a number of technology companies and also in the founding of software trade body, Nasscom. He says it is not practical for a business executive to have all the skills and strengths required to take a start-up to success. A small team with common beliefs is a key necessity.

Founders must evaluate their strengths and weaknesses objectively before deciding to build a core team, he says. This exercise will expose the gaps that must be filled and the areas that must be reinforced. MS Pillai, founder of Sadhana Centre for Management and Leadership Development, says that many great businesses have failed for want of a cohesive top team. “You may be anybody. But without collaboration, without mutual dependence within a small group of people with complementary strengths, it is extremely difficult for you to achieve lasting success,” he adds.

A human resource expert, who specialises in senior executive search, said one-man shows may be good enough to achieve the proof-of-concept in a business, but a core team, often with skills brought from outside, is necessary for the firm to move to the next level. “As an entrepreneur, you may be the initiator of business. But it is not the rule that you must be the leader too. The leader can be another person in your team,” explains founder chairman of Executive Recruiters Association and Sampoorna Computer People managing director Satish Doshi.

Many first-time business dreamers start with the support of family and friends. It is a natural choice for those who start operating out of their homes. This strategy has both positives and negatives, experts say. The founder can use a family member, who will fill up a talent gap and communication will be easy between them, but personal relationships and professional co-existence can weigh heavily against each other, they say. So, what are the golden rules of core-team building?

FINALISE MEMBERSHIP

Entrepreneurs must draw up a list of the most crucial skills necessary for the business and assign job positions to them, experts say. For instance, writers and creative talent may be crucial for a content company, but back-end process management may be the one crucial aspect for a travel agency. So, having a clear list of priority skills is the first step. The talent mix must be individually intensive and collectively exhaustive.

SET INSPIRING GOALS

Any business idea has to be larger-than-life and even slightly unrealistic, says Mr Doshi. If a business idea was easily achievable, why would anybody want to do it? A core team comes together when there is a larger purpose they all want to serve together. A lack of this inspiration will make it impossible to attract outside talent and may eventually lead to the company straying into unimportance.

SHARE AUTHORITY AND OWNERSHIP

If an entrepreneur builds a core team and then decides to keep all the strings in his palms, his colleagues will feel under-used and lose their connection with the company’s vision. The attitude to keep all the profits and all the power to oneself has destroyed many business aspirants. “The question is simple. Do you want to have full control over a small pie or part-control of a larger pie, where that part is significantly larger than the small pie?” asks Mr Doshi.

HAVE A CLEAR LEADER

Many entrepreneurs assume they are the leader for their business. Experts say this need not be the case. The best entrepreneur hires people better than him or her and lets them direct the journey. This would lead to a situation where there could be multiple leaders within the team. The issue must be quickly resolved and one person assigned the task of leading the core team.

SET CLEAR RULES OF ENGAGEMENT

Great teams fail to deliver when they start quarrelling over a decision here or a plan there. Mr Doshi feels before the team starts its first discussion, the ground rules must be set on how the members are going to work together. It must be made clear that all criticisms and suggestions are welcome and none would be taken personally. Mr Pillai says there have been start-ups, where family members got together with good intention, but suffered a fracture in their relationships due to workplace stress. Complaints about some member not contributing enough or another taking advantage of the business abound in such enterprises, he says.

ACHIEVE ENTREPRENEUR-PROFESSIONAL MIX

All core teams have to start with high entrepreneurial focus, taking calculated risks and being flexible to move fast. But as the business begins to grow, there is an immediate need to put systems and processes in place. Professional managers free the entrepreneur’s time so that he can focus on the long-term strategy. Businesses often go haywire when they fail to bring in the discipline of professional management, Mr Pillai says. “A professional in a start-up team must be the personification of an entrepreneur himself. The professional need not have a Harvard-qualification, but must have passion to create something new.”

BE REALISTIC

When hiring an outsider, it is important to understate the benefits of being in your team, because over-promising will lead to failure and frustration, experts say. Mr Doshi says it is a good idea to leave a positive surprise, such as a better title, company-paid house or a training programme, open and unsaid at the beginning. People will like them that much better if they earn it for their performance.

Even after all this, it is possible that a core member could leave. It is a contingency that a start-up must learn to tackle, but the larger question the entrepreneur must address is whether it was because there’s something wrong with the business. “If the dream had been sold and the partner dropped everything to join you but still left midway, then something may be going drastically wrong. You must ask yourself if you are being fair as a leader. Are you tolerating competing agendas? Are you not able to give direction? Are you not able to resolve conflict?” says Mr Doshi.

Article Resource:
Author: Srinivasan S. is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

A Doctor’s Journey from Pain to entrepreneurship.

A doctor’s journey from pain to entrepreneurship

Dr Patil Uses Acupuncture To Cure His Migraine And Set Up A Flourishing Business

IT WAS 1966 and 26-year Ratnakant Patil had to leave his examination hall. A severe headache made his final-year MBBS exam at the Kasturba Medical College in Mangalore a nightmare. He had a severe migraine attack and was vomiting. His sympathetic professors, who had been treating him over the previous few years, let him wait out this bout at the back of the hall. When he felt better a few hours later, they let him finish his paper in an empty hall.

Little did they realise that a couple of decades later, this experience would push Dr Patil to start his own business of curing people, just with a set of pins and needles.

Stress had kick-started the migraine, and for a while, the young Patil thought it was incurable. He had never met a doctor who could help him. Then, he decided to help himself. “Allopathy has no cure for these migraines. They can only give you pain killers,” says Dr Patil, who today heads a busy acupuncture clinic in Bangalore specialising in cures for pains and aches.


In the early seventies, while working in Denmark as a gynaecologist, he began to read about the benefits of acupuncture. He didn’t really believe in the benefits of some pinsand-needles therapy. However, all this changed when he and his fellow doctors at the Copenhagen City Hospital began to lose patients to the Swedish and Norwegian hospitals, which offered acupuncture. He went up to the hospital administration and suggested that they allow him to study the technique and bring these skills to the hospital to help retain patients.

Today, the soft-spoken doctor admits that his primary reason was to find a cure for his own affliction. Since he opened his own clinic in 1982, he has had the satisfaction of helping several victims of migraine, among other chronic aches and pains. He does acupuncture for pain management and practices from Kampo Clinic on Cunningham Road, in Bangalore. The word ‘kampo’ means ‘healing’ in Japanese.

He first worked from a rented room from the same location. As soon as he opened his doors, he says he saw an immediate surge of patients, who wanted to benefit from this ancient Chinese treatment.

“All these people had read about acupuncture and were readily willing to try it out,” he says. He used to treat 10 to 15 patients a day and charged them a fee of Rs 50 per sitting. Soon, he had to build his own clinic and hike the fee to up to Rs 75 per sitting. Interestingly, the cost of the treatment was Rs 100 until 2003. In the past five years, his fee has climbed five-fold and he still doesn’t treat more than 15 patients a day.

Over the years, Dr Patil has added to the services that he offers. These include multiple-Chinese needle treatment, the Japanese single-needle Royodarku method and Depo-acupuncture, where a needle stays in the patient for three days. He has combined these with modern machinery to offer sono-puncture-ultra sonic sound waves.

His latest addition came two years ago in the form of his Sonotron machine. This machine emits radio frequency waves and is described as a “totally non-invasive alternative medical therapy for patients with chronic and acute pain in their joints, and other soft tissues, without needing to use drugs.”

Article Resource:
Author: Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Dealing with investors on the board.

Dealing with investors on the board.

SOME tips to help you make the most of your board when your investors become directors. Advisors are not directors, and directors are not advisors. As an entrepreneur, if you’re looking for an advisor, get a consultant. Don’t rely on your board to give you advice. Their job is to hold you accountable for goals that drive your business’ success. Most entrepreneurs like the idea of recruiting an advisory board. Often, it provides instant credibility. For first-time entrepreneurs, it also gives them confidence that smart people believe in their business concept and are willing to lend their reputations to help the company grow. In reality, it takes a lot of work to make advisory boards give advice that’s helpful to your company.

GIVE YOUR INITIAL DIRECTORS A TERM LIMIT

During the founding stage of your business, some attorneys will encourage you to expand your board to include more people than just the founders. If you’re like most entrepreneurs, you may be tempted to ask your closest advisors to join your board even if they aren’t investors in the enterprise. This isn’t a horrible idea, despite the guidance provided above about keeping advisors and directors separate.

However, if you do invite advisors to join your board, be sure to set a term limit. This is simply a matter of setting expectations through an e-mail or letter. Also, ensure that your attorney has drafted your bylaws and financing documents with the appropriate governance rules giving stockholders and founders the ability to change the composition of the board.
You very likely will want the ability to change directors as you get close to a round of financing. Even if you don’t plan to seek future financing, you may find that the advisor-director is no longer very helpful after a few months, and it will be much easier to have the conversation about parting ways if it’s associated with a pre-planned end of term.

ENSURE DIRECTORS ARE WELL-EQUIPPED

A large part of a director’s job in a start-up is to sign legal paperwork. If you plan to raise money from angel investors without changing the make-up of your board, then your directors will need to approve option plans, capitalisation tables and stock charters, and various corporate resolutions. Avoid directors who are inexperienced and too cautious. It is good to have at least one process-oriented director, who likes to follow the rules of good governance. It will instill good habits at your company, which in the long run will save you legal bills and avoid administrative costs.

INVESTMENT IS THE KEY

When you invite an investor to join your board, the dynamic of board meetings is likely to change from an advisory, problem-solving environment to a performance, accountability-driven environment. However, this only happens when you invite larger investors with more at stake. Angel investors, who have contributed $25,000, tend to behave more like advisors even if they’re on the board.

LEARN TO BECOME A CHAIRPERSON

One of the hardest lessons for entrepreneurs is to learn to balance the roles of a CEO and chairperson of the board. Since you spend 99% of your time serving as CEO and chief bottlewasher in your enterprise, the ability to act like a board chair for a few hours every quarter is not easy. To do the job well, you have to remember that most directors who attend board meetings aren’t thinking about your business between meetings, so you need to remind them of the corporate objectives regularly and take full ownership. During the start-up stage, the essential administrative roles of a board chair are to run the meetings, set the agendas and oversee the fiduciary responsibilities of the board. One way to get some insight is to attend board meetings as a guest at other companies — or by joining a non-profit or charitable board.

Reference:
Adapted from entrepreneur.com

Sporting encounter:Today’s player,tomorrow’s star

Sporting encounter:Today’s player,tomorrow’s star

GloboSport’s Anirban Follows His Love And Sets Up A Market Leader

FOR an entrepreneur in waiting, inspiration can come from just about anywhere. For sports lover Anirban Das Blah, it came in the form of the 1996 movie Jerry Maguire, starring Tom Cruise as a struggling sport agent with a struggling sportsman as his lone client. It eventually set him on the path to sports management business. “You will either be an entrepreneur by your mid-20s or after the age of 40,” Mr Das says, recalling those days when he decided to take the plunge at the age of 26.

Mr Das had returned to India from a stint with Ericsson Telecom in Sweden and was looking for the next opportunity, when he had a chance meeting with tennis star Mahesh Bhupathi at a boutique advertisement agency in Bangalore. The two got talking and their ideas converged on the possibility of a talent management firm. Mr Das joined Mr Bhupathi’s new venture, GloboSport, betting that sport and entertainment endorsement will become a major business in a country, where action was hotting up in both fields.

Today, GloboSport has evolved into a diversified company with endorsement management for celebrities, events, new media, sports and academies. It is a leader in most of its chosen businesses.

“I’ve always loved sport, and all sports lovers, who have seen Jerry Maguire, have always envied Tom Cruise’s job,” Mr Das says. He had to grapple with his priorities and the urge to start on his own. “The opportunity rarely comes across and people are afraid to take the plunge, to take that financial hit or a leap of faith. Especially, when you are young and you’ve tasted success.”

Having taken it up, Mr Das and his colleagues didn’t find the going easy. The team had little experience in business, let alone the business of sport. Pundits looked at them and wondered what Mr Bhupathi was up to. “At the end of two years, we hadn’t achieved too much, but we had a better sense of where the market was headed,” Mr Das says.

The first turning point came when cricketer Zaheer Khan signed up GloboSport. The fledgling firm didn’t have a long client list and had not yet got big deals, but Khan put his faith behind it. This was just the auspicious beginning the firm was waiting for. Soon, more and more sports personalities signed up and the business began to expand. One of GloboSport’s early clients was the then lesser-known tennis player, Sania Mirza. She had not yet become a star and it was up to GloboSport to manage the endorsements of a player ranked 140th in the world.

And that proved to be the second turning point. When Sania Mirza started winning tournaments and a country of one billion people started following her and her game, GloboSport’s day of glory arrived. With every notch that she moved up, the endorsement value exploded and there has been no looking back since then.

“Three things came together at end of 2004 and the start of 2005. One of the first calls Mahesh and I took was to move into entertainment and not just be a pure sports play. We, at that point, could not afford the big players, and hence we ended up signing on obscure domestic and junior players,” Mr Das says. The move proved successful and today, the company’s client list has extended to Saif Ali Khan, the third busiest endorsing celebrity in Bollywood.

The five-year old company today has an estimated billing of Rs 200 crore and is in a phase of transition. At the end of the day, celebrity endorsement is not scalable beyond a point and a company needs new avenues. GloboSport is now moving into film production, leveraging on the celebrity relationships it already has. Building original content is one of its game plans for the future. It also has a sports infrastructure business, which it is extending to retail with plans to open fitness and health centres.

Article Resource:
Author: Sonali Krishna is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Beginning Of A New Financial Year.

IT’S THAT TIME OF THE YEAR TO PAUSE & MARCH ON

Start-Ups Need To Realise The Potential The Beginning Of A New Financial Year Brings And Gear Up To Tap It.

THE passing of March is the death of weariness and the birth of April the start of hope all over the world. Centuries ago, Geoffrey Chaucer opened his Canterbury Tales expressing his love for the sweet showers of April and the drought of March that pierce to the roots. For businesses, it is the end of the financial year, time to close old books and open new ones. It is when one squares off pending transactions, be they receipts or payments, evaluates performance, takes stock of inventory, realigns talent pools and makes strategic corrections. While big corporations have evolved time-tested models to take advantage of the changing of the fiscal baton, first-time entrepreneurs often tend to overlook the opportunity that March-April present to renew themselves.

Running a start-up from her basement in Bangalore, Rashmi, the 26-year-old founder of Rage Chocolatier, is one such entrepreneur. Her company, which is run by an eight-member team, is about to see its first year-end. She, like almost every entrepreneur that ET spoke to, was not fully prepared for the event. Fortunately for her, she had the mentorship of her father to guide her through her first year. “What we did was simple. All the bills we paid were put in one file and all the sales receipts were put in another. Now we are gathering them and running them through Tally, an accounting software. We have just got a CA to look into it, but I’ve realised that I need to hire a permanent CA to look into this all year round.” Keeping track of stocks and money is a full-time job by itself.

Keeping your tax record updated is important, not only to be taken seriously by potential business partners, but also to keep regulatory headaches away. The IIMA team that founded Ten-ADay has also just hired a CA. The Mumbai-based company is also set to see its first financial year draw to a close. The company produces preparation material for the Common Admission Test. The company is looking at collecting income and professional taxes from its employees as it hasn’t been done yet, says co-founder Vishal Prabhukhanolkar.

Calling in the CA only at the year-end seems to be a common practice. This is usually because of oversight. Apart from this, a start-up that’s strapped for cash is working on a lean team. The team is usually just meant to focus on the company’s offerings. But unless systems are put in place for corporate governance early on, things might just get unwieldy when the business grows to the mature phase.

Ideally, start-ups need to focus on governance from day one and not just at the year-end. This includes keeping the books in order. “A system of governance does not generate revenue and, therefore, people don’t focus on it. Putting everything on paper is essential as it will give you credibility. This is a year-long process,” says Bharati Jacob of Seedfund. She has invested in a couple of start-ups and says she noticed that at the nascent stages, the focus tends to be on here-and-now and not on long-term things like orderly books.

Not all first-time entrepreneurs are looking at last minute book-keeping. “On the accounting front, there isn’t much to do if you’ve kept your accounts in order since day one,” says Sriram Vaidyanathan. He and his partner run a coffee shop that seems to cater to the techie crowd in Bangalore. They are about to see their first year-end as well. For his coffee shop, BrewHaHa, he says this time of the year is good to review and refine their offerings.

Veteran entrepreneur and founder of Ferns ‘N’ Petals, Vikas Gutgutia, recalls the days he set sail with his venture 12 years ago. He says he neglected simple things like collecting bills during the venture’s initial years. This made book-keeping difficult. “When you start a business and success is coming your way, it is very easy to lose sight of keeping accounts. Two to three years down the line you begin to see that you need to pay as much attention to the accounts as the business itself.” Things have come a long way since this company started out with just Rs 5,000. Today, a consultant ensures transparency in its Rs 60-crore business.

National Entrepreneurship Network (NEN) executive director Laura Parkin says, “This time of the year is a really good time to pull out the weeds, as it is usually the time for year-end financials. It’s a good habit to have an end-of-year meeting to review performance. You can look at your key-performance indicators and resources based on this cycle.” NEN helps facilitate entrepreneurial-related programmes in over 200 education institutions across the country. Key performance indicators for the organisation are active members, activity levels and dropout feedback.

During the past three months Mohit Dubey, the founder of CarWale, looks at whether his company has met the milestones that he set 12 months ago. He then goes to his clients to check whether they have any left-over budget that could be utilised. This is his first yearend as well. With the Budget speech around the corner he has his ears peeled for auto-related recommendations from the finance minister.

Experts say March is the time that entrepreneurs must take a step back from their business and look at the overall form and structure of their organisation. The business must be a clean financial entity, getting payments on time, paying out its own liabilities on time and developing a system to do this throughout the year. Tax evasion may be appealing in the short-run, but can keep a company from growing into a major force over the long term. Spending a few extra bucks on organising the financials will pay over time, they say.

Next, it is also the time to reward top performers and weed out the bottom of the pile. Companies must evolve objective systems for performance appraisals so that when a two-person team becomes a 200-people company, the management does not lose sight of who is doing what and how well.

It is also a chance to work out new tactics. Tax rates may change, taking away one benefit but bringing in another. The government may announce schemes to support economic activity and a start-up must lie in waiting for business opportunity in them. This period is more like the periodic servicing that a car might undergo, when jerky parts are fine-tuned and essential systems topped up. The onward journey can be that much smoother.

Article Resource:
Author: Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Tips to tally year-end accounts.

Tips to tally year-end accounts

MANY small business owners have to manage with minimal staff strength. They often leave the function of transactions, record keeping and accounting to inexperienced staff. Depending on how the accounting documents are filed and kept, the accounting personnel may face the following three scenarios:

FIRST SCENARIO — THE WORST CASE

Here, the owners have little or no knowledge of accounting and transactions record keeping. No accounting records or transaction records listing are kept. No separate recording of receipts and payments made. All the accounting documents, including receipts and invoices, are in a mess. Before you bring order to the accounts, the three steps to follow are: sort all the accounting documents by types and in chronological order; identify any obvious missing documents and take action to get a copy, and key in transactions in the accounts.

Start with the cheque butts and bank statements by entering transactions into the cash book and the relevant accounts in the general ledger. Since there was no recording of transactions throughout the whole financial year, it serves little purpose now, if you chose to record the transactions the conventional way to the books of original entry (Sales day book, purchase day book) and then post the transactions to the general ledger.

Before closing all the accounts and preparing the balance sheet and income statement, identify the credit transactions. Use journal entries to record and post these credit transactions in the respective accounts in the general ledger. Also, the financial year end inventory balance is required to be ascertained.

SECOND SCENARIO — MODERATE CASES

Accounting documents are filed by types and in chronological order. No cash book was maintained but a listing or book, which was used to record and describe each receipt and payment was maintained. In a way, this serves the role of cash receipts journal and cash payment journal. You need to go through the receipts and payments listing and segregate all the transactions into the respective types or groups and compute the total of each type or group of the transactions in accordance with the general ledger accounts items.

You just need to post the total of each type or groups of transactions by way of journal entries the cash account and the respective general ledger accounts. This should be performed month-by-month and also ensure the bank reconciliation is also performed month-by-month.

THIRD SCENARIO — ORGANISED AND GOOD TRANSACTIONS RECORD KEEPING

Cash book is used to record all receipts and payments and proper columns in the cash book are used to record each type of group of transactions in accordance with the accounts items in the general ledger. In these cases, the total of each column in the cash book is readily available at the end of each month. Most likely the monthly bank reconciliation statements are also prepared. You just need to record the total of each column in the cash book in the general ledger using journal entries.

Reference:
Adapted from www.learnaccounting.wordpress.com

Start-ups Seek an Enabling Environment.

START-UPS SEEK AN ENABLING ENVIRONMENT

What does the forthcoming Union Budget mean to an entrepreneur and how do this year’s wishlists look like.

FOR long, union finance ministers have been presenting budgets to stimulate government revenue flow or exports or consumption or revival of sick industries. But increasingly, they face one more priority. It is no longer enough to announce a few concessions, rejig taxes and leave the rest to god and a compliant citizenry. The primary objective of a modern day budget is not just to balance state revenues and expenditure, but to nurture an ecosystem for economic activity. It is natural that entrepreneurs expect the budget to ease conditions for business, so they can go ahead and give expression to their ideas. This year, finance minister P Chidambaram’s budget will be keenly watched for what stimulus it provides to entrepreneurship. The ecosystem for entrepreneurs has always been challenging in India and should ideally have improved with economic growth and increasing interest among the salaried class to start on their own. A lot of bottlenecks have been removed over time, but the basic complaints remain. Difficulties in raising capital, tax burden, inability to tackle currency fluctuations, wage costs, lack of impetus to research and a framework that favours big business.

For instance, selective tax benefits are a contentious issue when the government puts out a positive list of eligible industries, business mentor Pravin Gandhi, who is also the president of The Indus Entrepreneurs (TiE), Mumbai says. “There is a lot left to interpretation, which eventually leads to complexities, discussions and even litigation,” he says. Small businesses are often unable to benefit from such concessions if their business idea strays from the strict definitions of what qualifies. “A negative list makes a lot more sense than a positive list. Sector specific allocations should not be encouraged,” Mr Gandhi suggests. Also, when these tax benefits expire, it might hurt the new, smaller players more than the large, established ones and actually work as an entry barrier.

But industry experts say an entrepreneur, while looking to benefit from budget proposals or trying to protect one’s business from a new clause, should not fashion the business model around concessions. Many small businesses stop growing after a point, either because the entrepreneur becomes too comfortable with the concessions available only to small players or is afraid of the enhanced risks growth will bring. At the end of the day, entrepreneurs must follow what they want to do on their own and not depend on government’s crutches.

One crucial limiting factor is the lack of tax compliance. Some early stage businesses may believe in saving the money that otherwise would go to the income tax department and indulge in a range of practices to conceal revenues. This not only exposes them to penal action by authorities, but also rules out the potential for partnerships and participation in bigger business opportunities, because mature organisations will not do business with tax evaders. The government has been investing heavily in technology to improve tax policing and remaining on fringes is not going to be possible much longer, in any case. There are a few things that the government can do to reward tax-compliant start-ups in various sectors, experts say.

A lot is said about innovation, and finance ministers have set aside varying amounts to foster research in the country. But, the country remains a research-poor economy, where the potential for volume multiplication is often the driving factor for investment. The government, industry and venture capital houses all work separately, pursuing their own logic and there is little to show on the ground.

For instance, in the pharmaceutical sector, entrepreneur-driven ventures are not even recognised by the Department of Science and Technology. “The department should have a scheme to support these start-ups,” says Indian Pharmaceutical Alliance (IPA) secretary general DG Shah. The funding needs of such units are typically small and the government should be able to give them as grants, of course taking precautions to ensure it goes only to serious ventures. “An institute should be set up, which can evaluate the process, vet the applications and make grants accordingly. These steps are essential to be a player in the knowledge economy,” says Mr Shah. But, “when it comes to providing support, the government develops cold feet,” he adds. It is imperative that these startups are given a free hand along with easy access to funds.

India’s drug firms have gone overwhelmingly the way of generic drugs. They are more interested in making cheap copies of drugs whose patents have expired. While mastering reverse engineering, even the largest of them have not come out with an entirely new drug that the likes of Pfizer and Sanofi-Aventis are able to churn out. The government must push-start research in pharma sector to attract ambitious entrepreneurs, say experts. “If this was to happen Indian pharma research will grow manifold in no time,” says Novalead Pharma CEO Supreet Deshpande.

Venture capital funds typically avoid business ideas that have a long gestation period and highly research-oriented ventures are often a casualty to that approach. “Venture capital funds in the pharmaceutical sector are few and far in between,” adds Mr Deshpande. It makes sense for a venture capitalist to invest in an outsourcing firm, which generates cash registers quickly rather, than in a pharmaceutical research company, which will start seeing cash flow after 10 years. “This is the period when we need assistance. Tax sops are popular instruments, but they are not required for discovery research to flourish,” says Mr Deshpande.

For some years now, new-age entrepreneurs may have spoken as if starting up has to do only with internet, mobile technology and the typical online stuff. But, for economic growth to be wellrounded, a spurt in small business activity in the manufacturing sector is crucial. “The key issue here is that a large part of capital goods are coming from other countries. That means huge imports,” says Sarita Nagpal, deputy director general of the Confederation of Indian Industry (CII). The chamber has presented a voluminous, clause-by-clause memorandum of pre-budget recommendations to the finance minister, suggesting ways to ease customs duty and currency burden on the capital goods front. Also, “there is a significant need for a technology opportunity fund, which can play a role in developing the competency of these small units and which can finally augment capacity of the big players in the industry,” says Ms Nagpal.

Industry bodies have also been making the usual noise about extending tax holidays, providing interest rate subsidies and protecting exchange rates, but it is in the improvement of infrastructure and enabling conditions that an entrepreneur must base his or her strategy on. A new business is born to thrive in a competitive landscape, not a cocooned one.

That means, there will invariably be budget measures that a small business owner must accept and learn to adjust to. All is not lost for the export sector if the tax benefits are taken away, say industry veterans. In any case, plain services are increasingly becoming pointless and products are becoming cheaper by the day. And customers are demanding fresh value and innovation. This would call for entirely new products and services designed for the global market. For example, in the pharmaceutical sector, Deshpande’s Novalead is already showing that sound business models can be built around pure research. The company has shunned the undifferentiated generics business and has charted its own course in drug discovery. The same model could work in a variety of other industries.

The budget is at best a boost to business and at worst, just a bend in the corner to circumvent. As General Electric founder Jack Welch once said, “You’re either the best at what you do, or you don’t do it for very long.”

Article Resource:
Author: Ashish Kumar Mishra is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Unleash the innovator within

Unleash the innovator within

Five key ways to unleash the hidden potential for innovative thinking in your business and achieve high levels of success:

THINK TWO GENERATIONS AHEAD

Envision your company 50 or even 100 years from now, even if you don’t foresee your product or service lasting that long. Such forward-looking reflection creates an umbrella for long-term innovation to occur. Working back from your 50-or 100-year vision plan in 10-year increments, ask and answer the critical “who, what, where, when, why and how” questions about your business. For instance, who will your target demographic be; what will your core products and business focus be; where will your office(s) and facilities be located ; when will key business milestones be achieved, why will your business matter 10, 15 or 50 years from now and how are you going to achieve your business goals.

CONFRONT & PARTNER WITH THE UNCONSCIOUS

Experts suggest that of all the experiences, knowledge and data stored in our minds, we are only “conscious” of and actively use just 10% of it. The other 90% resides in our “unconscious” — it’s this part of our mind we can tap into for valuable insights daily. For the next 21 days, write one paragraph about some aspect of your leadership process that you want to improve. The more you write about a problem, the more you’ll tap your unconscious for innovative ideas about solving it.

AIM TO INCREASE ENERGY, NOT JUST EFFICIENCY

Do a quick energy audit of your employees to understand what energises them and fuels their personal growth. If you understand what energises them, you’ll be able to implement actions that motivate your employees and increase productivity. Ask every employee to identify the three things that energise him or her the most about their jobs. Also ask them to identify the things they’re not currently doing that would energise them. Then match your employees to the energising activities that best fit their talents and skills and needs. Also ask your staff to identify the three things that steal their energy. Help your management team reduce the activities that de-energise the workplace.

ESTABLISH THE FREEDOM TO INNOVATE

Creativity drives change. So tap into your employees’ intuitive side by ritualising “ingenuity time” on the job. Utilising creative techniques can often help people see issues more clearly. Set aside enough money for your team to compete for an industry-related contest. It will keep your top people on their toes. Encourage people to draw a diagram or depiction of their business problem or challenge in the form of a character or situation. Then ask that they sketch the conclusion they envision that would resolve the matter. Seeing their problem put to life often helps people envision the best solution.

START TAKING RESPONSIBILITY

Any problem you’re directly involved and which you wish to solve requires reflection on your role and responsibility related to that problem. While you may not be the primary cause of the problem, reflecting on your role will help you better understand and acknowledge how you may have contributed to it. When you have a problem employee, start the fix by asking yourself: “What changes do I have to make in myself to help this person perform better?” You may not always identify something that needs changing, but the mere matter of asking and spending some time on reflecting will make you a better leader.

Reference:
(Adapted from http://www.entrepreneur.com/ )

Direct Logistics Derives A Sizeable Amount Of Its Revenue From China.

A soldier charges ahead on his own & tames the Dragon

Direct Logistics Derives A Sizeable Amount Of Its Revenue From China

IF CAPTAIN Sunil Devrani of Indian army of the early 1990s had said that one day he would set foot in China, his listeners would have read war in his prediction. Go to China he did, but in a more peaceful way, as an entrepreneur many years later. Direct Logistics, which he started with a capital of Rs 20,000, after quitting the armed forces, is the only Indian logistics firm to derive a sizeable revenue from China.

Mr Devrani says after leaving the army, he had no idea what he was going to do next or whether he would be able to adjust to the “world outside”. The pyramid-like hierarchy of the armed forces bothered him. “Only a few make it to the top and I wasn’t sure about myself, so I decided to quit even if it meant being jobless,” says Mr Devrani.

The ensuing period of idleness, though, didn’t last long. He landed a job as a sales executive with a freight forwarding company. “The transition was tough” but Mr Devrani believed that if he could work his way through an arduous sales career, then the going would be a lot easier later.

Two years on, he quit once again, this time to branch out on his own. “It was a spur of the moment decision,” he says. He had to rely upon capital that was not much more than a month’s salary, the loyalty of two friends and an appetite for risk. “We had a pact. If we didn’t make money in the first month, each of us will put our CVs in the job market and shut shop,” says Mr Devrani. Happily for the trio, November 1997, the first month, turned in a handsome profit. “It was a sign that we were cut out for the job,” says Mr Devrani.

In a decade, Direct Logistics has reached a turnover of nearly Rs 120 crore and is the only freight forwarding & logistics company to have set foot in China. Almost 40% of the company’s revenue, today, originates from its Chinese operations. “China happens to be the largest market for us and the kind of business that we did in India in seven years took us only two years in China,” recalls Mr Devrani. Moreover, in October 2007, Direct Logistics acquired Shenzhen Dida, a Chinese freight forwarding, logistics and international transportation company, with a turnover of Rs 25 crore. This was the first-ever acquisition by an Indian company in the freight forwarding sector in China.

The strategy at Direct Logistics has been simple. To get more business by setting up one branch office in a major port or airport destination every year. “This has been our methodology right from the start,” says Mr Devrani. Today, Direct Logistics has its presence in India, China, Singapore, Hong Kong and Taiwan through its fullyowned offices. An expansion that has kept up pace with robust growth.

Ever since Direct Logistics set shop out of Mumbai in 2002, the topline growth has been almost 100% year-on-year. Says Mr Devrani, “From Rs 9 crore in 2003, we clocked revenues of Rs 19 crore, Rs 40 crore, Rs 65 crore every successive year to Rs 120 crore last year.” Perhaps, one of the reasons why the company has witnessed keen interest from financial institutions.

Early last year, the company received Rs 10 crore as its first round of funding from SIDBI Venture Capital, the venture capital arm of Small Industries Development Bank of India, after diluting a 10% equity stake.

Mr Devrani wants to take the turnover to Rs 1,000 crore by 2012. The key challenge will be talent management. “Ours is a people-sensitive business and managing them will be our biggest challenge,” adds Mr Devrani. However, he believes his core team will take the company there. “If I was in the army, I would like to take them with me to war.”

Article Resource:
Author: Ashish Kumar Mishra is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

It Pays Rich Dividends To Stay Ethical.

It Pays Rich Dividends To STAY ETHICAL

It May Be Painful In The Short Term, But A Strong Ethical Code Is What Builds Lasting Value For A Start-Up.

“It is better to lose a billion dollars than a good night’s sleep.” NR Narayana Murthy

IT TOOK place nearly a decade ago, but is still fresh in the mind of R Satya Narayanan, founder of Career Launcher. Officials from the income-tax department were scrutinising the account books of his online education services firm, when an officer suggested he planned to disallow some expenses and impose tax on them. Mr Narayanan argued the expenses deserved to be tax-free, but the officer didn’t agree. After much haggling, the officer suggested he could allow the expenses if a certain sum was paid to him. It was the entrepreneur’s moment of truth. He had to decide whether to pay the bribe and get rid of the headache, or refuse and face the consequences.

“It is one thing to talk about ethics, but quite another to deal with it when you come face-to-face with such a situation,” recalls Mr Narayanan, whose fledgling firm was then still trying to find its feet on a modest revenue of Rs 4 crore. His company needed to move fast, and focus on growth. It simply could not afford to lose valuable time and energy on income tax procedures and litigation. The tax official must have reckoned he had the firm cornered and Mr Narayanan would simply pay up.

But Mr Narayanan disappointed the official. “I said I want to build the company on certain values. So, I told him you are not the final authority. We will appeal and see, but we won’t pay,” says Mr Narayanan. The officer disallowed the expenses and slapped a tax demand, but Career Launcher accepted the challenge. It won an 18-month long legal battle and got the decision reversed. Mr Narayanan believes the incident sent a strong message to everybody concerned: The taxmen knew this company can’t be bullied and the employees knew that there was no place for unethical practices here. Today, Career Launcher has an annual revenue of Rs 70 crore, operates from 130 locations and serves 50,000 students each year. Honesty has not dragged down the company’s growth, but has reinforced it.

The biggest question before most start-up entrepreneurs in India is how to tackle corruption in the government and a propensity for unethical behaviour among, at least, a section of employees, vendors, customers, competitors and everybody else. Unfortunately, many business leaders choose the easier answer. They factor in some amount of cheating at all levels and start playing by the system. They vigorously take part in cutting corners — be it in taxes, product quality, paying out liabilities or in their treatment of employees. They bribe their way through. They cheat to avoid being cheated. In the short term, these practices save money and thus look attractive. With everybody else also in the game, it becomes easy to justify one’s poor conduct by blaming it on the society.

In the long term, however, this race to the bottom hits back with a cancerous force. Employees figure out that the boss has lost the moral high-ground and start imitating the entrepreneur in their own dealings with the company. It may start as an inflated expense bill or a quickly stolen long-distance call, but the cheating spreads in scope and reach. Customers, government officials, shareholders and all other stakeholders imbibe the poisonous spirit and resort to I-Squeal-Before-You-Do game. Exploitation becomes the norm and the company self-destructs. Some victims end in the start-up stage, while others hold on longer and go bust only after they become Enrons or Arthur Andersons. But fail they do.

“It may be the tougher path, the road less travelled, but good ethics is an important element for long-term survival,” says Satish Doshi, founder-chairman of Executive Recruiters Association, and a fellow of the Computer Society of India. “What it means to an organisation is that you don’t need to look from behind the shoulders of people to see if there are any vested interests at play. Ethics build a trust-based environment.”

To build this ecosystem within one’s company, an entrepreneur must start by formally writing down a code of conduct for all employees and be the first to start practising it, say experts. Such a code of conduct must be fully aligned with the personal value system of the entrepreneur and it helps if one is honest to start with. “It is painful to see entrepreneurs say they are in business to make money. I tell them, first define what is money,” says MS Pillai, founder of Sadhana Centre for Management and Leadership Development, and a member of The Indus Entrepreneurs. “Is it just the currency notes or is it the wealth of goodwill and respect you build for your company?”

Mr Pillai says an entrepreneur must check if he or she has the “inner stamina” to sustain an ethical business and if not, should stay out of business. Great companies have built this strength among their entire workforce and do not tolerate any violation. Mr Pillai cited the example of a fast-moving consumer goods company, one of the largest in India, which sacked a general manager for accepting a forbidden Diwali gift. A reputed vehicle maker sacked two top performers for touching women colleagues in an indecent way at a cocktail party. Both these decisions came less than 24 hours of the violations. “The message to the employees was loud and clear. There will be no compromise if certain things take place,” recalls Mr Pillai.

Just like financial, marketing or production plans are written down, a company needs to write down its ethical policy too, say business mentors. This will communicate the code of conduct across the organisation, offer an objective frame of reference and stipulate proper responses for specific situations that arise. For this reason, a code of conduct is a highly customised document for each company, reflecting its own peculiar needs.

The right time for a start-up to institute of a code of conduct is before the first employee is hired, say human resource veterans. It may be easy for an owner to hire like-minded people when the company is small, but the personalised approach won’t work once staffing reaches double-digits. Thus, a strong human resource head must be employed as the company’s gatekeeper to avoid bringing in dissonant attitudes in the first place. Wipro is a good example of a company that follows this approach. It puts candidates through a test of honesty by verifying their testimonials. It not only denies employment to those who had forged documents, but also hands them over to the police. Nowadays, candidates with less than proper documents fear walking into Wipro’s campus.

Mr Doshi says a successful code of conduct starts with a top-down approach. It all starts with the actions of the entrepreneur. The set of all choices that the leader makes, eventually becomes the code and culture of the company. However, it should not stay top-down for ever. There should also be a feedback system that lets employees shape the nuances of the code and take the firm’s objectives further. “The code has to evolve but you won’t evolve it all the time. We at Career Launcher evolved our code until we were 40 people. When we arrived at that number we got down to broadcasting and implementing it. Of course, we are alive to feedback that will make the code better suited to our company,” says Mr Narayanan. The ethical code is a generic guide based on values and principles, but a code of conduct is the specific dos and don’ts of corporate behaviour. So, it helps to start by defining the business’ value system and then get down to finding answers for specific situations that may arise. Mr Pillai defines business ethics as management by truth, transparency, partnership and collaboration. Mr Narayanan says the value system of his firm is founded on five pillars: risk-taking, openness, ownership, honesty and commitment, and innovation.

The biggest danger for a start-up, or for any company for that matter, is to have a code of conduct, but not implement it vigorously. There are many companies that have one set of rules on paper and another set of rules in practice. Again, this deception may prove profitable in the short term but over time, all those coming into contact with the firm will realise its true worth and pay it back in its own coin. As big companies realised that markets reward companies seen as ethical, they have unleashed a marketing propaganda to manage their image along ethical lines, without changing their core business practices. The fashionable concept of Corporate Social Responsibility, or CSR, as spin doctors call it, comes in handy. What started as a theme for good corporate behaviour that must start with reforming core business processes, has now become the buzzword for donations, tree-planting, sponsorships and other trivial exercises. Genuine CSR must begin by making benign products and selling them ethically. Hence, a code of conduct is not merely a smart marketing tool, but a deeper value that guarantees all stakeholders a predictable, fair and uncompromising behaviour pattern. The reward for the entrepreneur is a good night’s sleep.

Article Resource:
Author: Srinivasan S. is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Eight Costly Marketing Mistakes.

Eight Costly Marketing Mistakes

MARKETING ONLY IN THE SLOW TIMES

To grow your business, you need an ongoing, targeted marketing programme you can manage year-round along with the day-to-day demands of your new business. One mistake start-up entrepreneurs often make is to put marketing on the back burner and focus exclusively on the few customers they’ve got. Marketing only during the slow times dooms you to living on an economic roller coaster.

FAILING TO FOCUS

Often, start-up marketers fail because they try to tackle too many types of prospects on a limited, start-up budget. Going after everyone who will listen is a shortcut to failure. On the flip side, when you narrowly focus your marketing efforts on a qualified target audience, you’ll get spectacular results.

OVERLOOKING TESTING AND RESEARCH

So you think millions of people will want to buy your product or service. What makes you so sure? Before committing lots of cash to launching your new business, do some market research. The internet is your best source of published information. You can test the market using surveys. Testing can keep you from making costly mistakes based on false assumptions about your product, service or customers.

RELYING ON JUST ONE OR TWO TACTICS

It’s only natural to rely on the marketing tactics you’re most comfortable with. If you like meeting and talking to new people, you may focus on networking. If you’re shy, on the other hand, you might rely solely on direct mail. Such singlemindedness is a major marketing mistake because it prevents you from exposing a full range of prospects to your message.

UNDERSPENDING ON MARKETING

It’s just as important to set aside marketing funds as it is to budget for tools you’re going to need to run your business. If you go to a bank for financing, you’ll be expected to show the banker your marketing budget — because without marketing, there’s very little chance you’ll be able to repay your loan. Even if you’re funding your company without help from a bank or other lender, you need to follow the same guidelines.

FAILING TO PRESENT A PROFESSIONAL IMAGE

Your marketing materials sell your company image to the world. To be successful, you need a cohesive family of tools that stand up to those of even your largest competitors. If you hand out shoddy, poorly produced marketing materials to prospects, don’t expect to be picked for plum jobs. Also be aware of how your company ‘sounds’ when prospects call.

IGNORING CURRENT CUSTOMERS

As your business grows, you may become so focused on getting new customers that you overlook current customers. That is a major mistake, since it generally costs more to win a new customer than to ‘resell’ to an existing one.

OVERLOOKING WHAT TECH CAN DO FOR YOU

Contact management software and e-mail marketing are just two options that can streamline your marketing efforts and improve your productivity. Without a good contact management programme, business contacts may be lost and call-backs missed. Don’t overlook these valuable tools that can help your business grow.

Reference:
(Source: Microsoft Small Business Center)