New Entrepreneur

New Entrepreneur is the person who ventures into manufacturing of goods OR providing services without any previous background of running and managing the entire organisation. The person may have passed out of the school or college or university or may have left the existing job to begin the entrepreneurial career.

The person needs to manage lot of activities as can be studied under various sections of the website. Entrepreneurship spirit needs to be respected since the person ventures out to add value to raw material or raw services; generating employment; contributing into the society’s development; etc.

Some of the important practices have been summarised in this article for sake of convenience.

Challenges before a New Entrepreneur

End-success hides the pains and efforts. Success doesn’t come cheap and demands manoeuvring countless challenges. Let’s understand the challenges:

    • Business model identification
        • The market needs to be thoroughly analysed for niche area and demand-supply gaps;
        • Take enough time in identification and analysis BUT don’t sleep over taking the decisions → opportunity needs to be tapped quickly; otherwise, others take advantage of those opportunities.
        • The more has been discussed in “Vacuum / demand” and ‘building Brands
    • Maintaining continuity
        • Continuation into the business is the biggest challenge;
        • Studies show that large number of new ventures close down by the end of third year.
    • Securing the bank balances
        • The funds start bleeding from the day 1 → unless closely monitored → can lead to resource crunch;
        • Essential practice (s)
            • Prudence is essential → don’t over-spend;
            • Look-out for options to save funds → Entrepreneurs have travelled by buses instead of taxies; economy class instead of executive class just to save funds.
    • Identifying sources of funds
        • There may be temporary shortfall of funds OR funds requirement for a promising customer’s order;
        • The more can be studied by accessing the article on ‘Finance function’
        • Essential practice (s)
            • Keeping bank overdraft limit against security of household property OR jewellery OR investments OR fixed deposits, etc.;
            • Identification of friends and relatives who can be of help in lending monies;
            • Creating contingencies fund.
    • Fund forecasting
        • Funds requirement need to be analysed for next 12 months to identify the pockets of fund shortfall;
        • Preparing Budgets can be useful exercise. Read more about ‘Budget function
        • Essential practice (s)
            • Prepare excel sheet
                • Forecast head-wise expenses (salary, travelling, rent, etc.) in next 12 months;
                • Estimate revenue billed  and revenue realisation for next 12 months;
                • Calculate month-end expected closing balances;
                • Create columns for actual billing / collections / payments to make forecasting more meaningful.
            • Be conservative while estimating payments and collections.
    • Product acceptability by customers OR finding customers
        • Organisation can’t run without customers;
        • Customer is called ‘King’ because the purchase made by him results into cash-inflow / profits and thereby brings cheers for everybody in the organisation and their family members;
        • Read more in the articles detailing about ‘Customers‘ and functions of ‘Marketing department’ & ‘Packaging department
        • Essential practice (s)
            • Offer maximum range of products in a product category by designing / sourcing new products → more options; better chances of product sale;
            • Create a pleasing shopping experience for the customer.
            • Products need to be modified at a faster pace to in line with market’s demand;
            • Pamper the customers by giving maximum values of money spent by them;
    • Fast recovering the receivables
        • Receivables or customer outstanding are major blockage of funds inflow;
        • Essential practice (s)
            • Try for taking advances before delivery of goods / services;
            • Ensure proper sale documentation which can withstand disputes for recovery, if any;
            • Regular and rigorous follow-up for realisation of funds immediately from the due date;
    • Accounting
        • Accounting is important to keep a tab on activities and analysing the progress made till date;
        • More details can be studied on functioning of ‘Accounting department’ 
        • Essential practice (s)
            • Prepare excel sheets for
                • bank book (day-wise cheque receipts / payments and closing balance);
                • cash book (day-wise cash receipts/ payments and closing balance);
                • invoice/bill register (alongwith date of collection made);
                • receivables /customer outstanding;
                • payables / vendors’ outstanding.
            • Hire a good accountant for feeding the transactions and maintaining accounting software.
    • Compliance
        • Statutory compliances carry major cost (in terms of interest, penalties, etc.) unless regularly complied with;
        • Law compliances is better than taking a wrong position and putting energies in penalties, etc.;
        • Compliance function’ has also been discussed separately;
        • Essential practice (s)
            • Understand implications of applicable laws to the business from good professionals;
            • Taxes must be recovered from customers’ sale OR deducted from vendors’ payments, wherever applicable and deposited with statutory authorities timely.
    • Multiplying self
        • Organisation has lot of departments and functions in various areas, which need to be managed → team building is important;
        • Person with a right attitude is an asset and needs to be preserved;
        • Efforts to build long-term partnership with team;
        • Importance of manpower and its training, etc. has been discussed through
        • Essential practice (s)
            • Remain in constant search for hiring good people who can become the part of the team;
            • Invest into team’s training.
    • Quality maintenance
            • Include quality in the vision and mission statements;
            • Reiteration for ensuring quality in various meetings;
            • Install quality control checks at various stages of production and analyse the quality reports closely;
            • Carry surprise checking for ensuring quality controls in place.
    • Documentation
        • Documentation are important evidences for proving the genuineness of transactions;
        • Documents are required to prove ownership of assets;
        • Document preparation can be time consuming initially but there are immense benefits of having proper documents in-hand;
        • ‘Documentation’ has also been discussed separately in detail.
        • Essential practice (s)
            • Proper documents need to be insisted from participants of transactions;
            • Documents need to be preserved over a period of time as per statutory requirements;
    • Maintaining balance with personal life

Importance of positive attitude and self-motivation

      • Success (i.e. positive results) and failures (i.e. results NOT as per expectations) are part of any venture → attitude of a person determines how these situations are perceived  → remember the adage of ‘Half-glass full and half-glass empty’;
      • History has innumerable examples of persons breaking the records despite odds and physical challenges;
      • Keeping positive attitude towards self and business venture is very important → don’t be unrealistic BUT don’t be pessimistic also → once ventured into a particular business; have belief that it takes time to build the organisation → after-all, ‘Rome wasn’t built in a day’;
      • Self-motivation by reading positive books / literatures and patting self for each achievement are must;
      • Important to remain in company of positive people who give right advice rather than with the persons who create self doubt about a person’s capabilities;
      • The presence of critics is required to analyse a situation from various angles → their comments / suggestions must be used in analysing the present operations and bringing the changes, if required → BUT, don’t bring self-doubts;
      • The entire team remains composed when the entrepreneur faces the challenges calmly → positive attitude of the entrepreneur during crisis situations is very critical;
      • There would certainly be times when the entrepreneur feels depressed due to results not as per plans → positive attitude and self-motivation are keys for coming out of self-distrust;
      • Remember that all inventions are result of thousands of ‘No Results’ (which people call failures) and one eureka moment of positive result;
      • Keep walking is the way of reaching goals.

Importance of Checklists & Ownership of tasks

    • Checklists standardise the process by defining
        • What is expected from a project?
        • Expected time of completion;
        • Responsibility of a person;
        • Documents to be ensured;
        • Steps to be carried out for completion.
    • Ownership of a task casts responsibilities and accountability on the person → the person becomes clear about the expectations from him / her and his / her job profile;
    • Checklists to be prepared for key tasks and ownership must be fixed to ensure that entire actions listed in the checklist are complete before completion of project.

2 Responses to New Entrepreneur

  1. Gd Mrng Sir!!
    Generally a New Entrepreneurs at small scale comes into the business world to earn at shorter period. They don’t realise the importance of expansion with stability. They want to be only stable in their world but at the time of expansion they are again stuck.
    My Concern is about stability with expansion of business. Beacuse expansion needs 5Ms .
    So New Entrepreneurs must have plan of stability with Expansion.

  2. Laxman Singh says:

    While Creating database of debtor in Tally or any software, always consider the credit period facility allowed to them.
    So, that at any point of time, you have information of overdue debtors.
    It will help in generating fund and Utilisation for the growth of organization.

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