Striking a balance on the balance sheet
27 Oct 2010
There are two ways to make money; one by earning more money and the other by spending less. The latter is a time tested remedy that gets taken out of the closet whenever the economy sneezes and the business environment feels congested. It’s prudent to keep overheads low at any time, irrespective of the economic climate, as a few saved pennies are always welcome. When you are setting up a small business or running one, money is always tight. Being intelligent and prudent at this time with your resources may mean the difference between eventual success or failure.
Making the dirham go further will be considered value that you will be able to cash in on once the company becomes successful. Doing more from less is an essential part of any business plan for a small enterprise. Usage of technologies and the internet, even if your business is not an on-line business, is a surefire way of saving cost and to generate greater mileage. A mix of technical DIY and a simple search can provide the enlightened entrepreneur with a toolkit of services which are either free or provide great value at a low cost.
Here is a jargon buster tutorial:
Use Cloud Computing and reduce dependence on dedicated hardware and related infrastructure. Services like Google Apps allows you to host a small business e-mail, documents, calendar, etc. for free. This allows you to do most of the tasks the expensive systems that larger organisations utilise. This translates into an edge over others at no cost.
Negotiate
If your company has a few telephones — mobile or land lines — consider negotiating with the telecom provider (yes, even etisalat and du in the UAE) for a better package with special offers such free internal phone calls and cheaper long distance dialling and handsets. The saving such consolidation creates will surprise you by the time the year ends.
This also provides you a dashboard to actually view your usage and to efficiently plan for the future and to plug any holes. At least in the initial phase, try to outsource as many of the tasks as you can — accounting, administration, technical support, IT, cleaning or whatever that is not core to the business. These should not be a load on your time. Whatever anyone says, even if you don’t get involved, there is a certain management overhead that essentially creeps into it and distracts you from the main task.
Social media
Communicate with your customers regularly and use more efficient and economic methods to do so. Technological advances have made it possible to use social media e-newsletters and e-mail to your advantage at almost no cost.
An effective Twitter and Facebook presence clubbed with a simple and informative website will be a great asset to the business. And if you are a social person, it may be an invincible combination and trying it out is usually free.
Find a mentor and guide to take you through the travails that any start-up faces in the early phase. However much you may know about the business, the aid of a sound head at times of challenge cannot be belittled. The idea is to find someone who gives you sound advise because he wants to not because he is enticed to do so by incentives such as stock options or consulting fees. You may even be surprised by people who would give you valuable insight for nothing! Grey hairs count in making things easier, even if it’s because someone else has committed mistakes before you had a chance to do the same. They save you from making one!
Keep your eyes and ears open and network a lot. There is no alternative to making contacts, nurturing them and to build on them. Most business opportunities come your way through people you know. This circle of people is also a gold mine of helpful resources from lawyers to accountants, technology geeks to marketing mavens. Innovators will find a way to encash this valuable asset and create successful enterprises we all will talk about.
This article originally appeared on Gulf News.
Harsh realities of being your own boss
24 Nov 2010
Last week I saw this tweet on my timeline — “Have not had a vacation for three years, tell my why I should celebrate entrepreneurship?”. A very frustrated twenty-something was complaining to whoever would listen about his recent introduction to the hard reality of being your own boss.
I am not sure if you should feel his pain and sympathise, or blame him for jumping into the deep end of the sea with wrong expectations. Don’t get me wrong, I spend a lot of my time evangelising for people to do what they want to do, and not what they have to do — my definition of ‘retirement’.
A lot of glamorous words are used for this state of mind, including entrepreneurship and being in a start-up. I have been blamed to be one of the few people in the world, asking for Techcrunch to be banned by TRA in the quest to create a real start-up eco-system in the region.
The gasp of shock that follows is intended. I am in complete support of freedom of speech and choice, but the lack of local knowledge, local support and role models makes our promising young idea-people to look for more mainstream and international sources and expect the same ground rules here.
Nothing could be further from the truth as it stands here. Setting up a small business here is synonymous with a strong and regular doses of hard knocks. Besides running all around to set up a cost-effective base and getting the first few co-workers, there are an unending number of small, but irritating, procedural issues to keep you busy.
Staying focused
Once you have found the resources, paid the cash deposits (and postdated cheques) to guarantee your up-front commitment to pay the powers that be, you may begin to do what you set out to do. But then, we seem to be digressing.
Let’s go back to our friend and his quest to reach success in his chosen mission of doing a successful start-up. The truth is that a start-up is nothing but a small business like any other and has the same pressures of making ends meet.
Many, in their pursuit of the great idea, forget that the venture has to make financial sense in the first place. That an idea is cool is no barometer for a business to be successful.
The venture has to be based on solid fundamentals and sound market research. The need to generate revenue and to get to a stable footing is essential. Any and all investment into the start-up will be based on its financial potential, and not just the promise.
It would be unreasonable to underestimate the sheer hard yards required to create a successful start-up at any time, leave alone in a recessionary economy.
From failure to success
It is usually a lonely trudge in a dark tunnel for the team that decides to put its faith in its idea and embarks on the path of entrepreneurship. But this step is taken with open eyes and not for the faint-hearted. Competition is severe and the race ruthless and failure has a greater probability than success.
So it’s not unusual to find driven people focusing more on proving a point rather than building something of long-term value.
A far more important requirement in such an environment is to form a formidable team of key people and co-founders, something that is invaluable and provides for the knowledge and management bandwidth required to go past hurdles which are bound to be many.
A frequent reason for failure at this juncture is the so-called “one pillar” venture, too dependent upon a single individual, with the rest being a “hired” team. A single bout of pressure or simply burning out of the main individual may spell disaster.
So, another promising venture dies a premature death, just because the entrepreneur thought he was superman.
So, before you reach this point, let better sense prevail. Go and find yourself some worthy partners and mentors, even if it is just to share the dark, lonely trudge through the wilderness of Planet Entrepreneurship.
This article originally appeared on Gulf News.