Entrepreneurship creates wealth and value for the entrepreneur and society at large, and fulfils a market need.
While the urge to set up a business of one’s own comes naturally to enterprising people, not all are guaranteed to succeed.
Indeed, failed start-ups are common in the world of entrepreneurship, much more than successful ones. So, what separates the winners from the losers? Here are five commandments of successful entrepreneurship that will stand the entrepreneurs in good stead.
Vision – Execution = Hallucination; Execution – Vision = Devaluation
It is most critical for any entrepreneur to understand that “execution” is the key to success. That said, the execution strategy and methodology need to be deeply aligned with the vision of the entrepreneur, for them to be able to survive in these testing times of disruption and innovation. Young entrepreneurs would do well to add a co-founder to their management team who has a body of rich execution experience. This way, they will be able to insulate themselves from all kinds of situations that occur on ground during implementation of their business. The game is not about the bat and ball as much as it is about the player.
Stand up and be Counted; Seek What You Pursue
Back yourself. Courage of conviction is essential for an entrepreneur to ensure that their vision and mission do not get hijacked along the way through the recommendations and advice of family, friends and well-wishers that there will be abundance of. While having advisors is important, an entrepreneur has to be malleable and agile to be able to adopt relevant guidance and adapt as per conditions without deviating from their core mission.
Risk Appetite Should be Highest With Own Capital, How Long are Your Bootstraps?
The most difficult aspect about entrepreneurship is organising the initial funding to try and do the initial pilot and proof of concept, and finally build the go-to-market strategy. Cost of marketing, which could include endless travelling, lodging and boarding not just for oneself but also for colleagues and employees, can be an open-ended activity in terms of cost.
The early stage of a business also happens to be the one that bears the highest risk. Hence, it is important that the entrepreneur does not create debt or raise capital that comes with high cost attached to it, whether it is through interest or equity dilution. Therefore, only self-owned capital must be deployed at the beginning. Once an entrepreneur gets invested into or raises debt, the ability to control finances and remain frugal is most critical for growth. Investors detest high-flying entrepreneurs who do not value money entrusted to them for building their business.
There is no Substitute for Bottom Line
Valuations linked to the top-line are most addictive and tempting for any entrepreneur besides being considered as a short cut to glory. Many times, entrepreneurs succumb to securing contracts that are not viable simply because they believe that building a huge order book will make it easier for them to attract investors. However, no business can ever survive without profits. Compromising the bottom line can be disastrous for any entrepreneur and the temptation to do so must be curtailed at all times. Viability, Feasibility and Profitability are the three pillars of creating Sustainability, and an entrepreneur must build a business and operating model that checks all these three boxes.
Invest Like a King, Draw Like a Beggar
Whether it is self-owned capital or that infused into the business by investors, all decisions and pay-outs must only be undertaken keeping the singular interest of the business in mind. Highest level of discipline must be demonstrated while managing money, especially when it comes to creating fixed costs, salary pay-outs and, above all, the entrepreneur’s own withdrawals from the company.
Investors respect the need for an entrepreneur to receive monthly emoluments, as everyone has bills to pay. But the quantum has to always be commensurate with the stage of the business and revenues being generated so that it does not become a burden on the business itself.
Consuming capital for salary pay-outs to themselves is one of the most common blunders that entrepreneurs make and has always proved to be the Achilles heel of their business. That said, the ability to take measured risk and invest money into building the business itself is essential and the key to creating a successful enterprise.
Story courtesy of the Entreprenuer