Monday, March 19, 2012

The 2 most critical things to do for Entrepreneurs

What can an entrepreneur do to succeed? Success depends on a lot on factors - some under your control and some outside your control. As is the famous saying - "Success is 90% luck and 10% perspiration" - you can only control the perspiration side of it. It does not guarantee success, but it is the best you can do.

Internet is full of tips for entrepreneurs - top 10, top 20 things to do. But the following 2 things are the most important for an entrepreneur to focus on:

1. Spend at least 70% of your time selling: The core business of business is to sell. Every entrepreneur should make it a point to spend time on sales - selling to customers, investors, employees, family members and friends. 'Sales' does not only include talking about your product/services to bring in revenues, but it also includes selling your ideas, your company, and yourself to others. It also includes changing the way you think about your product - how to better understand customer requirements, how to change features to bring in new revenue streams, how to change your business model, etc.

Entrepreneurs, who come from development background (or think themselves of as 'geeks'), get lost in the development process and completely lose track of sales. Others get lost in day-to-day operational activities. If it happens, alarm bells should be ringing.

2. Evolve: Entrepreneurs should be ready to evolve with time. Evolution can happen on multiple fronts:
  • Product or service model
  • Business model
  • Field of business itself (as dramatic as it may sound, entrepreneurs should not limit themselves to one sector. They should follow any opportunity, where they can play a role)
  • Founding team
  • Investors
  • Employees
  • Your own style of work and thinking
If you do not change with time, time will not be on your side.

Saturday, March 17, 2012

Thinking like an owner vs. a worker

I have been pushing myself hard to write about my entrepreneurship experience. This is the first post and I hope to post more. Hopefully my experiences and thoughts will benefit somebody out there.

This post is about thinking like an owner. Plenty has been written about the difference between a leader and a manager. Many believe that successful entrepreneurs are leaders, rather than managers. I think that this debate is abstract and does not offer practical solutions/actions to an entrepreneur. Of course, he can aspire to be a leader - but he should survive to have somebody to lead!

In a startup context (and even for bigger corporations), the more important question is - Are you able to think like an owner of a business? Owner's mindset is the foundation on which an entrepreneur can succeed. He can be either a good leader, or a good manager or both. It does not matter. Leader vs. manager is more about personal execution style, rather than mindset. It is also not related to whether you are a core geek or an MBA.

As simple as it sounds, it is not an easy mindset to have. Most of us come from middle class families with little or no business background. Our parents and relatives have been in a job for years. Right from our childhood, the concept of 'ownership' has not been very familiar to us. Let us ask ourselves - 'How many evolving things (includes things like a business or an event, a pet, etc. and excluding depreciating things like vehicle and toys) have we really owned in our life?' Many of us come after doing a 'regular job' - where we do not or are not expected to think like an owner.

I have found some of the best examples of entrepreneurship among small businesses in India. Consider a real estate broker, construction contractor, CA, doctor, or a small factory owner - listen to their conversations very carefully. They will talk about 'my business grew', 'we have grand plans', 'I just opened a new branch' - and compare these to conversations with an employee 'my manager sucks', 'my company did that', 'my bonus was great', 'I got promoted', 'Lifestyle is bad'. The tone is very different.

So what does it mean to think like an owner? What is the difference between an owner and a worker?

1. Owners think about tomorrow, workers think about yesterday and today: Owners always think about future growth, future revenues, future products, future trends, future opportunities. While workers are always stuck in today's work, today's TODO list, this quarterly results, this year's bonus.
Owners think about growth, workers think about survival.
It does not mean that an owner just day dreams about future, or just doesn't care about today. As an entrepreneur you have to be ready to sweat it out daily. But at the back of your mind, are you planning for your future always? Are you trying to be always ahead of competitors and time? Do you spend thinking and action time on future plans?
People just get stuck in day-to-day things. This happened to me, and I have always seen this happen to others. If you are spending >80% of your time on just thinking about today, you need a shake up. You are becoming a worker, not acting like an owner.

2. Owners think about company profits, workers think about their salaries: Owners are worried about company's profitability and cash flow, and not their own salaries, bonuses and increments. When owners think about finance, they start with company's balance sheet and not their own balance sheet.

3. Owners design the bigger picture, workers are too busy in details: Owners know the bigger picture / vision / path of their company and business environment. While workers just want to get the current task done, or achieve the current goal. Owners design a realistic dream of future, while workers think about going home today.

Ever wondered why small mom-and-pop shopkeepers continue to remain the same size for years and generations. I think that one of the main reason is that shop owner himself becomes a worker, and stops thinking like an owner. He doesn't delegate work, he doesn't think about growth - he gets too stuck up in his day-to-day routine.

As an entrepreneur, you need to act like an owner first (and a critical thing for an owner to succeed is to have good workers :-)).

A final point here - There might be no difference between the effort and motivation level of an owner and a worker - the subtle distinction is in the mindset - that's it!