The success of an Entrepreneur

How do you quantify your #success as an #Entrepreneur?

Starting or running a company is not a huge task. But running a successful company is the matter here.

But again what is a success?

In today’s hyper entrepreneurial world, success means “boatload of money” and for some getting “funded or acquired”.

But

Did we ever think that there is another Entrepreneurial world still exists where their Success is not quantitative and only qualitative?

The company where I started my career was shut down in just 5 years. We all were asked to search for the job and we did. 20 years after, we are now in a WhatsApp group with the #CEO , #CTO , #CMO , and #CFO of that company. The then employees started a private chat and that is when we realized that everyone is having the same feeling. Yes, we are in this successful top management position is because of the foundation we got in the first company.

Does this not the great success of that company and the management? Of course, with the stereotype entrepreneurial current world, that company is an utter failure.

I am not an entrepreneur. But I am a successful professional person. I have handled more than 2000 team members in my 22 years of career and I am very proud and happy that I am able to show the right path to my team members all these 22 years and they are doing super duper well. I am not claiming their success is because of me. But, I am convinced that I am also a minuscule reason for their success.

Maybe the world can say the other way.

But, Do I need to worry about that. If my mind is happy to think of that then what more do I require to caliber my career as a success? Someone else’s valuation? Then I won’t be a successful professional personal throughout my life.

If a company is a shutdown due to financial problem or by any other failure, at first, it will be very painful and take us into inferiority complex. But that is going to be only at the starting stage. If your self-consciousness tells you that you have done your best that didn’t affect anyone, then you learned a lesson with that venture. That’s all.

We are listened to watched to heard to, only stories of successful persons in terms of money and not in terms of good deeds. That is the problem of society and not us.

Millions of #startups are getting started every year. If you keep on counting only the successes, then you are fooling yourself with the real success of your career or profession.

Funded or Loaned – Assumptions

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Getting Funded

Rather than considering Success as the ultimate goal of any business, the New Age Entrepreneurs are considering “Getting Funded” is the ultimate success of their business.

Yes, your business will not get funded unless they see some flesh on the bone.

If you are getting funded for the expansion of the business on the basis of the success it has shown, then it is acceptable. But if you are not able to run the company because of financial crunches and then going for funding, will not be considered as an intelligent move of an entrepreneur.

Business getting sliced

Another important point to be noted here is, your hard earned business is going to get sliced and shared with another one, just for the money. From that moment, you cannot have the pride to claim this as your brainchild because the other person is rightfully going to take his slice out of it. Apart from this you will loose your freedom on running your business.

Loaned rather than Funded

There is another hidden drawback in this. If the person going to fund you is not having any basic knowledge of your business, then your freedom is totally screwed. Here it is better to be called as Loaned rather than funded. Also, if you are getting funded from small VCs, their own work tension, and pressure will also impact your business.

End of the day, your pride, and satisfaction as a business person itself will be in a stack.

Can you avoid this?

Yes, you can.

You need to keep the concept of Funding on a back burner until you have used all your trump cards.

As how the VCs choose to fund, you need to choose to whom you are going to get funded. Seldom, just shutting down will solve many problems than running on a funded money.

Keep in mind. If you have shut down your first business without getting funded, then understand, you are the best to run the funded company at a later stage.

If you take “pride” as the yardstick and go for funding rather than shutting down, your self-esteem will be lost and will eventually halt you in getting into any new venture.

If you keep “getting funded” as the goal of your business, then you are reinventing the wheel again rather than reading from the past market during bubble burst.

So don’t get into the wrong assumption as “Getting Funded is Success”

 

 

Confused to express our line of service due to lack of clarity?

mhGxSg4.jpgWhere will we place ourself by the type of service we do.

If a company is doing custom software development and one fine day they find easy money in doing body shopping rather than focusing on development requirements, then should we still call this company a Software Development Company?

Many successful Software Companies in the industry were started as a pure development firm and in due course, they started giving man power to the client instead of doing development themselves.

They do both custom development and body shopping. Can we still call them as software firm if their major revenue started coming from body shopping?

Different types of IT Services 

1. Custom Software Development

2. Maintenance and Support

3. Product Development

4. Body Shopping

5. Staff Augmentation

Earlier there were differences between them. But today most of the Software Company is doing all of these except Staff Augmentation.

Is the trend changing? If so should we need to coin new terminology to call these companies?

When we expand are we getting more confused to express our line of service due to lack of clarity?

 

Technology Driven or Technology Focused?

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The definition of this will slightly vary based on whether you focus on Service based or Product based.

If we are a product based company then we should never consider the technology as criteria at the first stage itself. Any product based company should be focusing on Market-based rather than technology based. The success of the market-based product is much, much higher than the product of technology based.

Technology should be determined based on the market need of our product and market should not be determined based on the technology proficiency of our company.

Example: A product should be analytics based and not big data technology based. Hope you can understand the difference. We cannot build a product on top of the technologies of big data. But we can leverage the advantages of the various technologies of big data to develop our product.

So the steps would be:

Market need – > technology selection – > Development Methodology – > Goto Market strategy

If we are developing on these steps then we are driving on the freeway to success. This is well experienced on large scale products and for any quick product, we can derive our own steps.

Now lets us analyze the same for a Service Based Company

Service based company can be a Technology Focussed (TF) or Technology Driven (TD). There are many differences between TF and TD. A TF company will be built on a specific set of technologies only.

TF example:

A company will say they are CRM specialized or E-commerce specialized or M-commerce specialized or Mobile App specialized, so on and so forth. Here they have to focus only on the technologies required for their specialty of service they provide.

TD example:

Any company which brings their core value as providing End-to-End Solution for the client would be automatically a TD only. Here they will suggest the client on which tool or technology would be the best fit based on the requirement of the client. Example: Based on the past experience a TD company would be in a commanding position to suggest on which Framework on which CMS on which Payment gateway a required E-commerce or M-commerce Web or Mobile App can be built with maximum efficiency and optimal utilisation with TCS (total cost savings)

If someone still says, “Jack of all and good for none” then consider he is still living in the past and this phrase has no meaning in the current trend of the technology world.

Also, this phrase is still used by the Technology Focussed companies only.

They should understand that even the developers are now “Full Stack” and not focussed on one specialty. It means you cannot get a developer on board for a long period in the name of technology focus. The percentage of people sticking to one technology is now draining fast and because of this trend, they will tend to move where they have enough for their appetite.

A Technology Driven service based company is a most versatile company to build our product rather than arguing with technology specific company.

The TD companies are on a fast track of new technology adoption and they bring more value to the table rather the technology focussed management companies.

Especially on developing countries like India where the opportunity for the developers are huge to learn new technologies and if we restrict them from getting involved in new technologies based on our company focus we will see more brain drain than the industry standard.

The most used Big Data and Analytics are gone and we are in the world of integrating technologies and concept together. Yes, we are now stepping fast into the IoT (Internet of Things) and image where we will stand if we still speak about technology focusing.

IoT is nothing but the combination of Targeting the Customer with the Electronic Gadgets into Data Capturing. Can we now say, IoT is a combination of Marketing, Electro-Mechanical, Software Development, and Analytics?

So is it now possible for us to restrict our service based on one set of technology alone? The answer MUST be an NO for any Technology Driven Company who see their company’s growth in next generation vision and mission.

If we still say that we are a Technology Focussed Company then will miss our right bus at the wrong time.

If we are a Service based company with tomorrow’s vision working with SME or SMB companies then we need to be having Full Stack Developers driving our Technology Driven company.

 

Repeat Vs New Business

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During the initial stage of your business, you will concentrate only on revenue. Later this will move to profitability. But once you reach a stage of a steady stream of revenue with profitability you will start slicing and dicing the revenue. This is when you will first concentrate on the share of revenue from repeat business.

New business gives room to your growth acceleration. But repeat business gives the stability to your business.

Take, for example, if your total revenue is 10M and if you have a track record of having 4M as your repeat business from year after year then you should never reduce your yearly target as 6M new businesses. You should again keep 10M as the target for the year from New Business.

This will give a huge growth acceleration and out of my experience, I will say that you should concentrate to have your operational cost within the repeat business revenue and should use the revenue from new business in venturing out new ideas or expansion.

Apart from the revenue part, there are also other important key factors we can get from our repeat business.

1. Strategy

Repeat business is the best contributor to design the growth strategy of your company. You can get an in-depth vision on analyzing the data of the repeat business in terms of Technology, Customer Satisfaction, and common need of these customers so that even with a very small tweak you can do magically positive changes to your business.

2. Understanding about the work culture difference

This has proved to be the most important factor in any success or failure of the relationship.

It will take time for the customer to understand your work culture and the same way for  you to understand the work culture of the client. I have seen many business relationships fails during the trial project or after the first project itself.

It will take its own sweet time to understand both sides and particularly if it is offshoring then it will take much longer time than near-shoring. Once you both cross this chasm then it will save a lot of time in the execution of the project.

3. Best Practices

Even if you have a defined business practice for your company, because of the repeat customers and businesses it will be easy for you to adopt a different practice with different clients. This is initially not possible for new customers as it may sometimes hurt the relationship itself.

How can you increase your repeat business?

It is not an easy task or a quick task to be accomplished. To understand this you should understand as when you will call your business a successful one or not.

The best answer I can say is the quote of Ilya Lichtenstein  “it usually takes at least 5 years to build a company to exit or profitability. They’re built piece by piece, making one user or customer at a time, getting to the next milestone and waiting for the next major opportunity to reveal itself”

What is the right percentage to have repeat customer or revenue?

It is practically true that you have to run a business for 5 years to take a call whether it is a profitable one or not. Until then you have to struggle and put in your best possible efforts to accomplish the task of running it.

There is no exact percentage to be capped for this. But the industry norm is to be between 25-50%.

If we have to take a call at the end of 5 years then you should be getting between 5-10% of your revenue from repeat business or at least at the end of the third year your repeat revenue should be above 25%.

If you are able to cross 50% in the 5th years, then you are very well placed in the market for the next 3 -5 years minimum on profitability. If this task is achieved then your concentration should be focussed on New Business with 30% growth every year.

If the above is reached in a Small and Medium Business in the IT service Industry, then you will be at the employee head count of 150 in the 3-4th year, 250 at the 5-6th year and would have crossed 500 by the end of 7th year.

So concentrate on New Business for the first 2 years then Repeat Business till the 5th year and then onwards your business will accelerate exponentially as you have already started splitting the revenue between new and repeat businesses successfully.