Tuesday, January 17, 2012

For Budding Entrepreneurs - Ten pieces of advice that should be ignored - Indian Real Estate Forum - www.indianrealestateforum.com

For Budding Entrepreneurs - Ten pieces of advice that should be ignored - Indian Real Estate Forum - www.indianrealestateforum.com:

Came across this very meaningful article in today's newspaper. Thought of sharing with all our friends here, who are an Entrepreneur in reality or Entrepreneur in thinking process.

I am impressed with simple yet realistic views.

It is just as well don’t listen to advice – because a lot of it is bad. I have received some very poor guidance over the years from various sources (who shall remain nameless), and I itemise here my greatest (or worst) hits. The dispensers of advice know who they are.

Don’t leave the day job: if I had remained as an employee I would have always felt disappointed. The dangers of becoming your own boss are exaggerated – especially in an era when no job is safe. Fortunately I took the plunge anyhow, and despite plenty of mishaps, have never seriously regretted the decision. As Jack Welch said, “control your own destiny, or someone else will”.

Never borrow money: you are unlikely to succeed in a serious way with your own enterprise unless you obtain bank debt of one sort or another. But I was told that taking on overdrafts and even mortgages was akin to committing a mortal sin. Of course you can choose to stay small, or try to raise equity and dilute your shareholding, or perhaps fund growth slowly through retained profits. But if you are ambitious and restless, then I suggest you become acquainted with various bankers, and when the project is right – ask them for cash.

Don’t enter the restaurant trade, because everyone goes bust: certain industries have a reputation as a graveyard for owners and investors. Partly as a consequence, they can offer rich pickings. There will always be idlers, fools and amateurs at work in every profession, and if you are prepared to work hard and apply yourself, then there can be overlooked rewards. I have certainly found that to be the case in the hospitality sector.

You can trust people: unfortunately, when it comes to large sums of money, or cash in coins and notes, then you must adopt a cautious attitude. I received a frightful shock in my mid-20s, when I suffered my first case of bare faced lies about substantial amounts of money, from someone who should have known better.

Profit is all that matters: these are unwise words on many counts. Firstly, cash is much more important than accounting profit, since the former is truth whereas the latter can be fiction. Secondly, profit – especially, short-term, temporary profits – can be much less significant than market share, or revenue growth, or net assets, or liquidity, or many other measures of business success. I find that individuals who adopt this creed tend to enjoy mediocre business careers.

It’s an ex-growth industry: I have heard this about so many activities that I could scream. In some cases the sector concerned is unquestionably mature – but it can still offer huge opportunities. In other circumstances growth has only just begun. I was told the tile business had reached saturation ten years ago – yet it has continued its relentless expansion to this day.

Follow your passion: this recommendation is repeated everywhere – but it can get you into truckloads of trouble. For me, when it came to bookshops, my emotions blinded me to the obvious pitfalls. I failed to acknowledge that the trade is in swift and terminal decline. I prefer a business which you enjoy, but where you can remain disciplined and rational, and hence avoid getting carried away. Keep your passions for holidays.

Don’t worry about your competitors: every great chief executive I’ve ever partnered has been obsessed by his or her rivals. These bosses study their rivals’ every move – product ranges, pricing, marketing techniques, new hires – you name it. I have always been deeply suspicious of any entrepreneur who is arrogant enough to claim that their operation is unique, and that the competitors are therefore irrelevant.

Don’t work with partners: I prefer to share the journey, rather than pursue the chase alone. A combination of skills, and the fun of doing it with companions, improves the odds and makes business more pleasurable.

Now you have enough: unfortunately this observation lacks insight; the entrepreneurial personality is never satisfied, because fulfilment comes from participation, rather than reaching a fixed destination. Entrepreneurship is not a job, nor even a calling – but a hunger.

A great thanks to

The writer runs Risk Capital Partners, a private equity firm, and is chairman of the Royal Society of Arts
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