Entrepreneurship 1.0


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Presentation by Sreeraj S,CTO of Ordyn at Model Engineering College on March 6th,2009

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Entrepreneurship 1.0

  1. 1. Entrepreneurship The path less traveled Sreeraj S Co-Founder & Chief Technology Officer, Ordyn Technologies Pvt. Ltd.
  2. 2. Agenda <ul><li>Definitions and Scope </li></ul><ul><li>The Need </li></ul><ul><li>Challenges </li></ul><ul><li>The Entrepreneur </li></ul><ul><li>Startup </li></ul><ul><li>Operation and Growth </li></ul>
  3. 3. Entrepreneurship Definitions & Scope
  4. 4. Entrepreneurship <ul><li>Wikipedia: “ the practice of starting new organizations or revitalizing mature organizations , particularly new businesses generally in response to identified opportunities ” </li></ul>
  5. 5. Entrepreneur <ul><li>Wikipedia: “ Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome ” </li></ul>
  6. 6. Scope/Focus <ul><li>The need </li></ul><ul><li>Entrepreneur’s life </li></ul><ul><ul><li>Challenges, Qualities, Rewards </li></ul></ul><ul><li>Growth companies </li></ul><ul><ul><li>Enterprises with potential to grow BIG </li></ul></ul><ul><ul><li>How to start and build them </li></ul></ul><ul><ul><li>Will discuss operational aspects </li></ul></ul><ul><ul><ul><li>What to do and mistakes to avoid </li></ul></ul></ul><ul><ul><ul><li>Will not discuss administrative, management and legal issues </li></ul></ul></ul>
  7. 7. Scope/Focus <ul><li>Help in a deep understanding of what entrepreneurship means </li></ul><ul><ul><li>Take a decision whether entrepreneurship is for you </li></ul></ul><ul><ul><li>Work towards building the required attitude and skill set </li></ul></ul>
  8. 8. Entrepreneurship The Need
  9. 9. Importance <ul><li>Ventures lead to economic prosperity </li></ul><ul><ul><li>Create jobs </li></ul></ul><ul><ul><li>Improve quality of life </li></ul></ul><ul><ul><ul><li>Ideas/Products/Services </li></ul></ul></ul><ul><ul><ul><ul><li>Telecommunication, Internet </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Transport </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Computers </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Entertainment </li></ul></ul></ul></ul><ul><ul><ul><ul><li>EVERYTHING similar that we take for granted!!! </li></ul></ul></ul></ul><ul><ul><ul><li>Creates wealth </li></ul></ul></ul>
  10. 10. The Other Option <ul><li>Government Owned Enterprises </li></ul><ul><ul><li>Works best in protected markets/ monopolies </li></ul></ul><ul><ul><li>May not provide the best for the customer </li></ul></ul><ul><ul><ul><li>Quality </li></ul></ul></ul><ul><ul><ul><li>Price </li></ul></ul></ul><ul><ul><ul><li>Choice </li></ul></ul></ul><ul><ul><li>Less motivation for innovation and competitiveness </li></ul></ul><ul><ul><li>May not self-sustain and will then drain wealth </li></ul></ul><ul><ul><li>May be essential in some sectors </li></ul></ul>
  11. 11. Entrepreneurship Challenges
  12. 12. Challenges <ul><li>Very risky </li></ul><ul><ul><li>A majority of new ventures fail in spite of the entrepreneur’s competence and perseverance </li></ul></ul><ul><ul><ul><li>Need to have a detached view point </li></ul></ul></ul><ul><ul><ul><li>Must plan for contingencies </li></ul></ul></ul><ul><ul><li>Statutory non-compliances can land you in court or even in jail </li></ul></ul><ul><ul><ul><li>Understand the law and operate within it </li></ul></ul></ul><ul><ul><li>Financial and operational risk taking can lead to extreme stress </li></ul></ul>
  13. 13. Challenges <ul><li>Not a favored or respectable career in society and most families in India/ other countries </li></ul><ul><ul><li>Support from family and friends is probably important </li></ul></ul><ul><ul><li>Considers entrepreneurship as an option pursued by the maverick (eccentric?) </li></ul></ul><ul><ul><ul><li>And probably true – how many would choose this path? </li></ul></ul></ul><ul><ul><li>Venture or adventure? </li></ul></ul><ul><ul><ul><li>While there is venture in adventure, a venture aims at generating profit . Adventure is just an exciting undertaking. </li></ul></ul></ul>
  14. 14. Challenges <ul><li>Sweat equity </li></ul><ul><ul><li>Somehow, the creation and building up of a successful enterprise inevitably requires an enormous amount of sacrifice and hard work from the entrepreneur </li></ul></ul><ul><ul><ul><li>May have to perform a lot of roles in the initial phase till the business shows profit and grows. </li></ul></ul></ul><ul><ul><li>Lesser time to spend with family and reduced social life </li></ul></ul><ul><ul><ul><li>Conflicts in personal life </li></ul></ul></ul>
  15. 15. Entrepreneurship The Entrepreneur
  16. 16. Why <ul><li>Personal expression </li></ul><ul><ul><li>Pursuing a vision </li></ul></ul><ul><ul><li>Contribute to improving the world </li></ul></ul><ul><li>Money </li></ul><ul><li>Fame </li></ul>
  17. 17. Qualities <ul><li>Risk taking ability </li></ul><ul><ul><li>Able to confront and go through adverse situations </li></ul></ul><ul><ul><li>Assume responsibility and accountability for the outcome </li></ul></ul><ul><ul><li>Calculated risks – not recklessness </li></ul></ul><ul><li>Perseverance </li></ul><ul><ul><li>A die hard attitude </li></ul></ul><ul><ul><li>“ Rome was not built in a day” </li></ul></ul>
  18. 18. Qualities <ul><li>Must be a good learner </li></ul><ul><ul><li>Voracious reader </li></ul></ul><ul><ul><li>Learning=study + understanding + application </li></ul></ul><ul><li>Problem solver </li></ul><ul><ul><li>Must have the attitude to meet problems head on and solve them </li></ul></ul><ul><ul><li>The attitude “Where there is a will, there is a way” </li></ul></ul>
  19. 19. Qualities <ul><li>Work with others </li></ul><ul><ul><li>One-person ventures do not have the potential to grow big </li></ul></ul><ul><ul><li>Various skill sets required in an enterprise </li></ul></ul><ul><ul><ul><li>Management, Finance, Sales and Marketing, R&D, Purchase, Manufacturing etc. </li></ul></ul></ul><ul><ul><li>You are good at developing technology, but lack management skills </li></ul></ul><ul><ul><ul><li>Find a partner who can complement your skills </li></ul></ul></ul>
  20. 20. Qualities
  21. 21. Qualities <ul><li>Self-Confidence </li></ul><ul><ul><li>“ Whether you think you can or you can’t do it, chances are high that you will be proved right” </li></ul></ul><ul><ul><li>Not over-confidence </li></ul></ul><ul><li>Leadership abilities </li></ul><ul><ul><li>Ability to communicate ideas and plans </li></ul></ul>
  22. 22. Entrepreneurship Startup
  23. 23. Define the Business <ul><li>What will be bought? </li></ul><ul><li>Who will buy it? </li></ul><ul><li>Why would they buy it? </li></ul><ul><li>Scaling up </li></ul><ul><ul><li>How will the business grow? </li></ul></ul><ul><li>NOT “What will I sell?” </li></ul>
  24. 24. Building the Primary Team <ul><li>The primary team </li></ul><ul><ul><li>Shares initial ownership </li></ul></ul><ul><ul><li>Takes management decisions </li></ul></ul><ul><li>Choose people </li></ul><ul><ul><li>Who shares the vision on what the enterprise must achieve </li></ul></ul><ul><ul><li>Who can contribute directly to the vision in complementary roles </li></ul></ul><ul><ul><li>Avoid just choosing friends and relatives </li></ul></ul>
  25. 25. Building the Primary Team <ul><li>Get experienced, maybe retired people on the board of directors as advisors </li></ul><ul><ul><li>Will provide better direction </li></ul></ul><ul><li>Requires the right number of people </li></ul><ul><ul><li>Lesser people will increase risk of failure </li></ul></ul><ul><ul><li>More people will create confusion </li></ul></ul><ul><ul><li>The needs of all involved must be compatible </li></ul></ul>
  26. 26. Building the Primary Team <ul><li>Creative conflict </li></ul><ul><ul><li>“ Yes-people” rarely contribute well to the decision making process </li></ul></ul><ul><li>Limit equity to primary team and angel investors </li></ul><ul><ul><li>Support employees should be given stock options only when they have proven themselves and have long term value </li></ul></ul>
  27. 27. Importance of Focus <ul><li>Limited resources </li></ul><ul><li>Concentrate on accomplishing two or three defined goals within a specific timeframe </li></ul><ul><ul><li>All actions performed must take the organization closer to the defined goals </li></ul></ul><ul><ul><li>Do not focus just on day to day activities </li></ul></ul><ul><ul><li>Revise goals only if market demands it </li></ul></ul>
  28. 28. Importance of Focus <ul><li>“ If you don’t know where you are going, any road will take you there ” – Alice in Wonderland </li></ul><ul><li>Avoid distractions (the fun stuff) </li></ul><ul><ul><li>Pick out offices </li></ul></ul><ul><ul><li>Design letterheads, logos </li></ul></ul><ul><ul><li>Whatever is not priority at the moment </li></ul></ul>
  29. 29. Written Business Plan <ul><li>Prepare a written business plan </li></ul><ul><ul><li>Who will do what and by when </li></ul></ul><ul><ul><li>Cash flow </li></ul></ul><ul><ul><li>Revise when changes are required </li></ul></ul><ul><ul><li>“ Until committed to paper, intentions are seeds without soil” </li></ul></ul><ul><ul><li>Would you construct your house without seeing a blue print? </li></ul></ul>
  30. 30. Written Business Plan <ul><li>Contents </li></ul><ul><ul><li>Overview (Executive Summary) </li></ul></ul><ul><ul><li>Concept </li></ul></ul><ul><ul><li>Objectives </li></ul></ul><ul><ul><li>Market Analysis </li></ul></ul><ul><ul><li>Production </li></ul></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Organization and People </li></ul></ul><ul><ul><li>Cash Flow and Financial Projections </li></ul></ul><ul><ul><li>Ownership </li></ul></ul>
  31. 31. Written Business Plan <ul><li>Executive Summary </li></ul><ul><ul><li>Probably written last although the plan begins with it. </li></ul></ul><ul><ul><li>Will provide a brief on the concept, market and strategy, economic viability and the team </li></ul></ul><ul><ul><li>Must be good enough to get people interested in the venture </li></ul></ul>
  32. 32. Written Business Plan <ul><li>Concept </li></ul><ul><ul><li>The long term concept for the business </li></ul></ul><ul><ul><ul><li>Intel : Automated computing engines (Not microprocessors) </li></ul></ul></ul><ul><ul><ul><li>Sony: High Quality Consumer Electronic Goods </li></ul></ul></ul><ul><ul><ul><li>Nokia : Mobile Telecommunication (Not Wireless Telecom!) </li></ul></ul></ul>
  33. 33. Written Business Plan <ul><li>Objectives </li></ul><ul><ul><li>These are the end results that will be made to happen </li></ul></ul><ul><ul><li>Sales, profits, market share, margins </li></ul></ul><ul><ul><li>Big capital gains or moderate steady income </li></ul></ul><ul><ul><li>Entrepreneur’s personal objectives </li></ul></ul><ul><ul><ul><li>Build personal net worth </li></ul></ul></ul><ul><ul><ul><li>Gain personal control over others/ events </li></ul></ul></ul><ul><ul><ul><li>Gain independence/ freedom of action </li></ul></ul></ul><ul><ul><ul><li>Achieve professional/ technical satisfaction </li></ul></ul></ul><ul><ul><ul><li>Reduce frustration with current activities </li></ul></ul></ul><ul><ul><ul><li>Secure/ increase annual income </li></ul></ul></ul><ul><ul><ul><li>Contribute to society </li></ul></ul></ul>
  34. 34. Written Business Plan <ul><li>Market Analysis </li></ul><ul><ul><li>Need for the product does not mean that there is a market </li></ul></ul><ul><ul><li>Which market segments will be the target </li></ul></ul><ul><ul><ul><li>Teenagers, kids, mothers, travelers etc </li></ul></ul></ul><ul><ul><ul><li>North India, Asia pacific etc. </li></ul></ul></ul><ul><ul><li>Size of market estimated or known to be available </li></ul></ul><ul><ul><li>Growth projections </li></ul></ul><ul><ul><li>Types of funding possible (banks etc) </li></ul></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>Sales channels (Dealers, distributors etc) </li></ul></ul><ul><ul><li>Government regulations </li></ul></ul>
  35. 35. Written Business Plan <ul><li>Production </li></ul><ul><ul><li>Outsource/ in-house </li></ul></ul><ul><ul><li>Make vs Buy </li></ul></ul><ul><ul><li>Equipment required </li></ul></ul><ul><ul><li>Processes involved </li></ul></ul><ul><ul><li>Sources for raw materials, labor </li></ul></ul><ul><ul><li>Schedules </li></ul></ul><ul><ul><li>Personnel </li></ul></ul><ul><ul><li>Budget </li></ul></ul>
  36. 36. Written Business Plan <ul><li>Marketing </li></ul><ul><ul><li>How will customers be created </li></ul></ul><ul><ul><li>How will their loyalty be maintained </li></ul></ul><ul><li>Organization and People </li></ul><ul><ul><li>Board of directors, general management, functional specialists </li></ul></ul><ul><ul><li>The right people make the right things happen </li></ul></ul><ul><li>Cash Flow and Financial Projections </li></ul><ul><ul><li>Cash in, cash out and timing </li></ul></ul><ul><li>Ownership </li></ul><ul><ul><li>What percent of the company will be owned by whom </li></ul></ul>
  37. 37. Entrepreneurship Operation and Growth
  38. 38. Hiring Employees <ul><li>Hire people with proven records of success at doing what needs to be done </li></ul><ul><ul><li>Must have the attitude to pitch in and do what is required for building the enterprise </li></ul></ul><ul><ul><li>Do reference checks </li></ul></ul><ul><ul><li>Multiple interviewers </li></ul></ul>
  39. 39. Reward Performance <ul><li>Set performance standards </li></ul><ul><li>Reward individual and team performance that exceeds the set standards </li></ul>
  40. 40. Expansion <ul><li>You cannot accomplish everything you want simultaneously </li></ul><ul><ul><li>Plan for incremental growth </li></ul></ul><ul><ul><li>Seek logical extensions of existing activities </li></ul></ul><ul><ul><li>Bigger is not automatically better </li></ul></ul><ul><ul><li>Walk before you run </li></ul></ul><ul><ul><ul><li>Focus on making the venture profitable before expanding </li></ul></ul></ul>
  41. 41. Cash Flow <ul><li>Cultivate financial sources while you are doing well </li></ul><ul><ul><li>“ Cash is the blood of a growth business” </li></ul></ul><ul><ul><li>Get credit from suppliers </li></ul></ul><ul><ul><li>Get advances from customers </li></ul></ul><ul><ul><li>Credit from banks </li></ul></ul><ul><ul><li>Private and Institutional investors </li></ul></ul><ul><ul><li>Joint ventures </li></ul></ul><ul><li>Ability to continue operations depend on cash available </li></ul><ul><li>Monitor the cash flow carefully and plan ahead </li></ul><ul><li>Collect receivables as soon as possible </li></ul>
  42. 42. Maintain Detached Point of View <ul><li>Managing a growing enterprise </li></ul><ul><ul><li>Requires unyielding dedication </li></ul></ul><ul><ul><li>Can take your mind and body to extremes </li></ul></ul><ul><ul><ul><li>Health is at stake </li></ul></ul></ul><ul><ul><li>Growth implies and entails risk </li></ul></ul><ul><li>Ventures can succeed or fail </li></ul><ul><ul><li>“ You fail only when you quit ” </li></ul></ul><ul><li>The entrepreneur is not the company </li></ul><ul><ul><li>The company has a life and soul of its own </li></ul></ul><ul><ul><li>They are different legally too. </li></ul></ul>
  43. 43. Detached Point of View <ul><li>Build layers of management </li></ul><ul><ul><li>Hire competent people </li></ul></ul><ul><ul><li>Delegate work and decision making </li></ul></ul><ul><ul><li>Plan for making the enterprise independent of you </li></ul></ul>
  44. 44. References <ul><li>The Internet </li></ul><ul><li>Entrepreneuring: The Ten Commandments for Building a Growth Company – Steven C. Brandt </li></ul><ul><li>Further Reading </li></ul><ul><ul><li>Books on entrepreneurship, business administration and management, accounting, company law, contract law … </li></ul></ul><ul><ul><li>Books in your chosen domain area </li></ul></ul>
  45. 45. Look Out <ul><li>Do not blindly believe or apply what you find in books </li></ul><ul><ul><li>Use your discretion and common sense </li></ul></ul><ul><ul><li>What works in one scenario may not work for you </li></ul></ul><ul><ul><li>Believe in yourself </li></ul></ul><ul><ul><li>When everything seems to be going wrong (which they will), please see point above. </li></ul></ul>
  46. 46. Indian IT Industry <ul><li>Predominantly service oriented </li></ul><ul><ul><li>IT Coolies? </li></ul></ul><ul><ul><li>Labor arbitrage – turnover directly proportional to number of people employed </li></ul></ul><ul><ul><li>Very little Intellectual Property </li></ul></ul><ul><li>No visible technology product company from India </li></ul><ul><ul><li>Few companies are trying to move up the value chain </li></ul></ul>
  47. 47. Questions
  48. 48. Thank You