Written Agreements

There comes a time in business when it grows to the extent that you need systematic systems and processes to manage it, and if you don't put them in place, things get out of hand. One such important process is having clear legally binding agreements with clients, business partners, employees, vendors, stakeholders etc.

In India, where people are more relationship focused, agreements are seldom written down, and business is done based on a word, or a handshake, some times in coffee shop. However if an agreement is not written down, there is ample scope for future misunderstandings and mismatch in expectations from both parties on what is expected, what is covered, and what is not. In the case of a person who is self-employed, the worst loss due to such misunderstandings is of one's own time or a small amount of resources, however if the contract is a high value one undertaken by an organization that extends over several months and involves a high investment of time and resources, the loss could lead to employees careers being affected, and the future of the organization itself could be in jeapordy.

Hence although both parties must put in place measures to ensure good relations, clarify expectations and establish trust in each, they must also insist on a written contract. A good amount of time can be spent in negotiating such a contract, but once the contract is in place, it saves time on renegotiating and reduces chances of relationships being damaged due to misunderstandings or gaps in perception.

Early in business, one must choose clients wisely. If you or your client are not in a position to sign a contract due to uncertainties of any kind, then it is best to not enter into any medium or long term engagement at all.

7 Characteristics for Entrepreneurship

Being an entrepreneur is tied to a state of mind and a self-image. One need not be born with the state of mind and identification with being an entrepreneur. This can be cultivated, and once you cultivate the state of mind of an entrepeneur, entrepreneurship will be a part of your identity and your self-image.

One can easily distinguish a serious entrepreneur from someone who is temporarily passing through a stage of entrepreneurial activity based on how deeply ingrained entrepreneurship is in his/her psyche.

Some characteristics that indicate that one is suited for entrepreneurship long term, include

a) Ability to take charge of a business from start to finish (not just in parts) - One need not be an expert in all departments (e.g., HR, Marketing, Finance etc), but needs to possess a working knowledge of all departments and see the big picture of how they are inter-related and lead to the success of an enterprise. One should be able to have a balanced view of all departments and not a skewed one. Some people give excess credit to business development related contributions as compared to execution and HR and vice versa. A balanced view is required.

b) Ability to generate revenues and profits on your own - This is a strong indicator of entrepreneurial capability. If you are capable of heading and taking charge of a profit making center and scaling it up without being dependent on other business units to sustain, you are a strong candidate for entrepreneurship

c) High level of ambition and aspiration - If you are not content with a steady income. Do you need constant growth to such an extent that you reach increasing levels of discontent with stagnation?

d) High level of disdain for being an employee - If you cannot imagine yourself in a job either now or ever. If you feel like showing contempt for any competitor who offers you a job (no matter how lucrative).

e) Good people skills and ability to work well in a team - If you get along with clients, partners, employees, consultants etc well and are able to complement others in a team environment to achieve a common goal, you can be a successful entrepreneur.

f) Commitment to a goal and passion to achieve it - If you have a vision and a goal and you are passionate to achieve it. The goal may be part monetary and part game changing. Pure monetary goals or pure non-monetary alone may not be sufficient. A balance is required between making money and impact on the industry and society. If you are committed to make an impact on the industry, generate employment etc and you are passionate to do what it takes to make that impact.

g) Responsibility and proactive attitude - If you avoid blaming external circumstances, employees, clients, partners, investors etc and take responsibility for the outcomes of your actions. You believe that you can make a difference and do what it takes. If you make a mistake, you admit it, learn from it, and move on.

If you look at only one piece of the puzzle at a time and blame the inputs, resources etc that you were given for your lack of success, perhaps a job with limited responsibility would be good for you. If you have a 'chalta hai' (It's alright. That's the way things are) or 'main kya karoon' (what can i do? i am helpless) attitude, entrepreneurship is not for you.

Mahesh Murthy on Marketing your startup

I saw this video on blip.tv (proto.in's official channel)
http://blip.tv/file/1995301

These were the main points in his talk that i could gather
1) If you don't have a product that is insanely great, don't bother. Only if your product is great, the first customer will recommend you to 5 others. The most successful companies are those that can run for 3-4 years without advertising. If you need to advertise, you need to die. Advertising comes into play much later. Get customers to viral you. Spend as little time as possible on advertising and as much as possible on the product.

2) Charge, Charge early, and Charge a lot. When you don't have advertising, the only thing that builds your brand is your pricing. Have super premium products and super premium pricing. You can win against the market leader by outcharging them. Price is a very powerful positioning weapon. It should appeal to the customer and make your competitor nervous. Price is not a function of cost plus some profit margin. No company has won by being cheaper. First badge on quality is the cost.

3) The UI has to be much better and classier than the competition.

4) A great place to get customers is at conferences. Find out where your buyers are and meet them at conferences. The best way to attend conferences without paying is to become a speaker. Carve a niche for yourself as an expert. Go to places where your customers have stalls, and sell to them. Be where your customers are and where your audience is

5) Use funds to build a great product and not for marketing. Your competence as a marketer is inversely proportional to your marketing budget. The more the budget, the smaller your marketing brains and the crappier the product. Build a great product and people will line up to buy it.

6) Be seen in your field as a thought leader. Present credible information to journalists. Do research, industry studies and data and present it to the audience. Position yourself as a thought leader. Carve a niche for yourself.

7) Don't be a trend follower. Be a trend setter. If you are not the 1st, 2nd or 3rd company in the field, get out of there. A really bad idea is to start a company is based on what you read in the press. If someone has written about a trend and showed you the top 3 trend setting companies, it is already too late. Do not expect to be covered for the 1st 2 or 3 years of your life.

8) Don't do the .....of India. The ..... of India is ..... There is almost no merit in copy paste. Where there is a need to be local and there are barriers for foreign companies, you can enter.

Hiring & managing senior employees

In an entrepreneurial organization enthusiasm, eagerness to contribute and make a difference, passion, and desire for growth count for more than paper qualifications. Even senior persons need to be directed, motivated and managed to help them achieve their goals. An entrepreneur cannot assume that an executive can share the same desire to contribute as the entrepreneur. An executive also cannot be expected to see the big picture and to balance the short term with the long term. For this, it is important to constantly share the organization's vision and mission, list short term and long term goals, and constantly track progress with respect to these goals.

Managing expenses and cash flow

The economic recession has affected all business, some more than others. As a startup, managing cash flow is critical to survival. For a self-funded startup, apart from savings, there is nowhere to turn to when business slows down. If timely and systematic action is not taken to manage expenses, there may no alternative but to shut down abruptly These are some of the things a startup can do to manage cash flow and improve efficiency

1) Track and chase receivables
2) Ask for advance payments where possible
3) Complete pending projects at the earliest
4) Communicate to all team members transparently about the cash flow situation and tell them to take necessary steps to minimize expenses and maximize productivity.
5) Set clear and bigger goals and targets with timelines for team members
6) Measure performance of team members
7) Mentor/guide team members who are lagging behind
8) Plan to let go of those team members who are unable to cope with the revised goals and targets
9) Try to negotiate rent for infrastructure
10) If rent is too high, look for options to share office space with other startups
11) If sharing is not possible, move to a smaller space
12) Delegate operational aspects to senior team members and focus more on business development