In this series of 6 Blogs on “A To Z Of Entrepreneurship” , With the help of alphabets from A to Z, I would be covering various aspects pertaining to Entrepreneurship like Characteristics of an Entrepreneur, How to get success in Entrepreneurship journey ?, What are the traits of a successful entrepreneur? What are the pitfalls of an entrepreneur? etc. This series of blogs may be useful for – Future Entrepreneurs, Existing Entrepreneurs, and Young Students.
The word “entrepreneur” originates from a thirteenth-century French verb, entreprendre, meaning “to do something” or “to undertake.” By the sixteenth century, the noun form, Entrepreneur, was being used to refer to someone who undertakes a business venture.So Entrepreneur means a person who sets up a business or businesses, taking on financial risks in the hope of profit.Entrepreneurship is the process of setting the business or businesses and Enterprise is outcome of the Entrepreneurship.
Over a period of time, many influential business leaders and entrepreneurs have defined “Entrepreneurship” in different ways.
Ideas, Innovation, Risk-taking ability, and Path breaking approach are few of the terms associated with Entrepreneurs. In the last decade or so India has seen the emergence of some of the finest start-ups and e-commerce ventures which are making like of customers easier and comfortable. While Flipkart has changed the landscape of online retailing, whereas Paytm has given a digital option of making payments. Redbus has transformed the intercity bus industry in India and is working towards doing this in International markets and in other segments. Oyo Hotels & Homes is one of the largest and fastest-growing hospitality chains of leased and franchised hotels, homes and living spaces in India and in 10 years Zomato has grown from a home project to one of the largest food aggregators in the world and Ola is India’s largest mobility platform and one of the world’s largest ride-hailing companies, serving 250+ cities across India, Australia, New Zealand, and the UK.
There are many factors that affect the success and failure of an enterprise and one has to plan his or her entrepreneurial journey with utmost caution and vigil.
Being an Entrepreneur is about more than just starting a business or two, it is about having an attitude and the drive to succeed in business. All successful Entrepreneurs have a specific way of thinking and possess certain key personal qualities that make them so successful in business. This series of 6 blogs list all the qualities and insights that Entrepreneurs need to have to establish, succeed, and grow their business in A to Z sequence for ease of use.
Attitude is a very important mindset that all entrepreneurs must-have. Besides having managerial or technical skills, if they do not have a positive attitude, they will not be able to achieve the goals that they want to achieve. Entrepreneurs are full of drive and enthusiasm, at the time when they start their journey, but the real challenges come when they face difficulties or obstacles. Some will eventually lose their drive and enthusiasm as they feel that they have a mistake and they will not be able to recover from it again. This is the moment when having a positive attitude is so important. For people who have a positive attitude, they will know that making mistakes is part and parcel of being an entrepreneur. They will always learn from their mistake and carry on with their life. They will focus a lot of their time on how to find a solution to any obstacles that they face. They will be able to look at things from another point of view and they will be able to find the strength that is within themselves to spur them on. A great entrepreneur is the one who converts obstacles into an opportunity.
One of the most famous motivational stories on the entrepreneurial circuit is that of the two salesmen from competing companies who are sent to a foreign country to assess the market for shoes.
Salesman One scouts around for a few days and then heads for the telegraph office to contact company headquarters. He writes: “Research complete. Unmitigated disaster. Nobody here wears shoes.”
Likewise, Salesman Two does his research and heads for the same telegraph office. Once there, he composes the following: “Research complete. Glorious opportunity! Nobody here wears shoes!”
The point, of course, is that Salesman Two is the real entrepreneur, the person who sees opportunity where others do not. This story is designed to motivate all the wannabe entrepreneurs to find their hidden potential, take risks, and turn obstacles into opportunities.
B- Business Plan
A Business plan is the most important document for any entrepreneurs. A Business plan can be defined as “a written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement.”
Why you need a business plan ?
– To see if an entrepreneur has a viable business idea.
-To identify the strengths and weaknesses of an entrepreneur and his organization.
-To assess the market potential of the product and services an entrepreneur venturing into.
-To measure the competitor’s activities.
-To determine financial needs.
-To attract Investors.
-To set up milestones and monitor the business.
What is to be included in business plan ?
An entrepreneur needs to include below components in his business plan:
Table of Contents: Table containing all the components
Executive Summary: An executive summary is a brief introduction and summary of you and your business plan. It should describe your business, the problems, that it solves, the USP of business, etc.
Mission and Vision: Here you define the purpose of your business (Mission) and a statement about your perception of the company’s growth and potential (Vision). Include specific goals and objectives of the business.
Business Description: Here you describe Industry, your business, product or services, the present outlook of the industry, future possibilities, etc.
Define your market: Here you describe the industry within which your business will operate, identify your target market, provide a general profile of your targeted clients, and describe what share of the market your currently have and/or anticipate.
Industry Analysis: How is the industry structured, trends and statistics, key players, segmentation, sales and distribution channels, etc.
Products & Services: Describe all your products and services, explain how your products and services are competitive including unique features, benefits of the product or service, niche served, stage of product/service development, production, future growth.
Pricing: Pricing strategy, policies, price list, break-even analysis, etc.
Competitive Analysis: Major competitors, strengths, and weaknesses, how would you position yourself against the competition, market niche, product/service comparison.
Customers: Who are the potential customers (demographic data), what do they want, customer buying habits, market share/market size, consumer preferences, etc.
Advertising and Promotion: How will you reach out to potential customers? Where do they currently shop for products/services? Where will you advertise and how will you measure the effectiveness of your advertising and promotion efforts?
Location: Where is your business located? (home-based, retail shop, commercial space etc….), is the location of your business important? Any special zoning, land, or building improvements needed to accommodate your operation? If location is important, what are the features of your location?
Organization & Management: Describe how your company is organized including legal structure (sole proprietorship, partnership, LLP, Limited, etc), identify any special licenses and/or permits your business operates with, provide a brief description of key managers within the company, also include an organization chart if available.
Marketing & Sales Strategy: Identify and describe your market — who are your customers and what’s the demand for your products and services; channels of distribution you will use; your sales strategy specific to pricing, promotion, products, and place, process, people and physical evidence. ( Please watch my below videos for better insights )
Financial Factors: Here you have to provide details about project cost, Working capital requirement, projected sales, Return on investment, etc.
Appendices: This section may include company brochures, resumes of key employees, a list of business equipment, copies of media articles and advertisements (if available), pictures of your business location and products, any other relevant information about your industry and /or products.
C- CAPITAL /FUND RAISING
Innovative products and business models are the foundations of a promising startup or an enterprise. However, to turn an idea into reality an entrepreneur requires a steady flow of funds. For most of the entrepreneurs getting access to funds is a challenging and onerous task. However, in the last couple of years, we have seen a positive eco-system, where good and scalable ideas are getting funded from different channels from banks to angel investors. Here I have listed down different ways of raising funds for an enterprise.
The government of India has started many schemes for funding of start-ups and businesses. Below are two important schemes wherein an entrepreneur can apply for business loans:
Prime Minister’s Employment Generation Programme: Under this scheme, loans can be availed for manufacturing as well as for the trading and service Industry. The maximum loan that can be availed in the case of manufacturing is Rs. 25 Lacs and in the case of the Service/Trading Industry, it is Rs. 10 Lacs. This scheme is applicable for the new projects. Anyone who is above 18 years of age can avail the loan in this scheme. Availing the loan above 10 lacs ( Manufacturing ) and above 5 lacs ( Trading/Service Industry ), the applicant should be at least 8 th standard pass. Subsidy ranging from 15% to 35% is available under this scheme.
Prime Minister’s Mudra Yojna: Under the aegis of Pradhan Mantri Mudra Yojana (PMMY), MUDRA has created products/ schemes. The interventions have been named ‘Shishu’, ‘Kishore’ and ‘Tarun’ to signify the stage of growth/development and funding needs of the beneficiary micro unit/entrepreneur and also provide a reference point for the next phase of graduation/growth to look forward to :
Shishu : covering loans upto 50,000/-
Kishor : covering loans above 50,000/- and up to 5 lakh
Tarun : covering loans above 5 lakh and upto 10 lakh
With an objective to promote entrepreneurship among the new generation aspiring youth, it is ensured that more focus is given to Shishu Category Units and then Kishore and Tarun categories.
Seed Investment / Incubators :
The term seed capital refers to the type of funding used in the formation of an enterprise or a start-up. Funding is provided by private investors—usually in exchange for an equity stake in the company or for a share in the profits of a product. A large number of seed investors are available in India who take 5% to 10% of your equity for the 5 lacs to 40 lacs of funding. A good investor, handholds the entrepreneur at the initial stage.
Angel Investment / Accelerator / Pre- Series A :
Angel investment is a form of equity financing where the investor supplies funding in exchange for taking an equity position ( 10% – 25%) in the company. At this stage, your business starts getting traction and reasonably good sales numbers are achieved. There are so many High Net worth Individuals, Business leaders, and MD/CEO of the companies who are investing money as Angel Investors. Ratan Tata, Amitabh Bacchan, Azeem Premji, Kunal Bahal, Sachin Bansal, Kris Gopalkrishnan, Rajan Anandan, Mohandas Pai, Ganesh Krishnan, etc. are the leading Angel Investors in India.
Below are the leading groups which invest in businesses and startups.
Series A/B/C/D So on ( Venture Capital):
If your growth starts happening naturally you have good things to talk about your company and you would soon realize that you need more capital to take this to the next level. This is where you start reaching out to Series A funding also referred to as institutional funding or Venture Capital. Series A funding can be anywhere for 20%-40% of your company. In a similar way Series B,C, or D funding is done. Please find below a list of few renowned venture capitalists, who are investing a considerable amount of money in businesses in various domains.
What investors look for in the business??
Genuine beliefs and commitments of the founders: Vision and commitment of the founders are the most important factors, on which an investor decides to invest in a start-up or business project.
Traction and Scalability of the project: Business traction is nothing but having the momentum or signs of growing business such as having a measurable customer base, growth in sales, etc. So, the higher the traction, the more investors are attracted to the organization. Scalable business means when a business has the potential to multiply revenue with a minimal incremental cost.
Good Management Team: Efficiency and knowledge of the Management team are important factors for investors.
Size of Target Market: Revenue generation purely depends upon the target market. If your product or service is appealing to a large population, investors would be interested in investing in your idea.
Reasonableness in evaluating your business plan: Be genuine while evaluating your enterprise valuations. It should not be overestimated or underestimated. Proper homework is required to ascertain the fair value of the company.
Viable Exit Options: Investors are patient and willing to invest in the long-term. Though profit is not their main motive, they expect some sort of return on their investment. Therefore it is obvious for them to look for an exit strategy to reap their benefits.
This is the first blog of the “A To Z Entrepreneurship” series. You might have found it useful and Knowledgeable. Please share the link with future entrepreneurs, Existing entrepreneurs, and the young students.
About Author: Author Nitesh Kataria is Pune based, Marketing professional having 23 years of experience in Sales & Marketing, Business Development, Distribution Network Management, Digital Marketing, Advertising, and Branding. He can be reached at 9822918211.