The business blueprint for life
The suicide of Cafe Coffee Day founder VG Siddhartha not only revealed a debt-ridden franchise but also the challenges top corporates face. Five entrepreneurs share their mantra to ride the storm while running a business
India has been coasting on a start-up boom in recent years with some reports estimating that the country is well on its way to establishing itself as the third-largest start-up ecosystem in the world. Entrepreneurs today are far more revered than their more traditional, corporate-bound counterparts.
Their successes are vigorously lauded, and their struggles glossed over — the operative mantra seems to be to "fake it until you make it". Although brave, this mindset comes with more than its own share of pitfalls, says Rishi Piparaiya, a mentor to entrepreneurs, and investor in several early-stage companies. As he points out, in focusing only on the success stories, we often lose sight of the many start-ups that struggle and even shut their doors in less than five years of inception. And, in doing so, we also ignore the many challenges and pressures that come with entrepreneurship, until the pot has boiled over — case in point being the suicide of VG Siddhartha, founder of India's largest chain of coffee shops.
One of India's most admired entrepreneurs, Siddhartha passing sent shockwaves through the country's business ecosystem, where leaders continue to face mounting strain from an economy-wide cash crunch and slowing growth. Entrepreneurs and those responsible for mentoring their journey share their mantras, which, they say, help safeguard their ventures in trying times.
1. Avoid debt
Unlike what they teach at business school, staying clear of debt should be your key priority on the personal and professional fronts, reminds Piparaiya. "Understand that business schools are more focused on maximising wealth than on minimising stress. While playing a high-risk, high-stakes game sounds excellent in theory, the truth is that for most people, debt can be one of the biggest stressors. It's not a good feeling to wake up each morning, knowing that you owe so much money. What is more fulfilling and sustainable is to focus on a smaller business that is founded on happy customers, instead of a large conglomerate built on a mountain of debt. In terms of investment, always prefer equity capital over debt," he advises.
Taniya Biswas, co-founder of Suta, an Indian-wear fashion label, echoes his views. "One of our key priorities is to stay boot-strapped and, therefore, sustainable. At present, we don't have any debt and intend for things to continue that way. Although we do want to set up a store of our own to augment our e-tail business, we won't rush into it until we are completely sure about our finances," she shares. Similarly, Rahul Leekha, director of Coffee By Di Bella, says that the company is adamant about sticking to a sustainable business model that has enabled each outlet to break even within the first quarter of its operation.
2. All investors not same
With start-ups constantly battling for funds in an under-performing economy, the temptation to grab whatever you can, can be strong, says Piparaiya. "If you do have a choice, opt for strategic over tactical investors — the former have a vested interest in the long-term performance of your business. They value your model, customers and employees and, perhaps, they even use your products or services. At some point, they might want to merge their business with yours. For tactical investors, on the other hand, you are just another excel sheet. Such entrepreneurs are only concerned with obtaining a good return on their investment. During the early days of your enterprise, it's best to stick to investors who buy into your long-term vision," he adds.
3. Learn to learn
While perseverance is definitely a hallmark of a sustainable entrepreneur, the key to making failure work for you is to be able to learn from them. "As Albert Einstein said, insanity is doing the same thing over and over and expecting a different result. If your failures aren't teaching you anything new, it's time to swallow your pride and move on to something else," says Narendra Goidani, founder of a start-up called Life School. Leekha adds, "It's important to let things take their time, so that you have enough time to learn. For us, we are adamant about sticking to our 'one city, one market's format, which gives us time to perfect our operations and prepares us to foray into newer markets."
4. Have a support structure
Being a CEO or entrepreneur is a very lonely job. There aren't many people you can talk to — your employees are constantly looking up to you and you cannot divulge your weaknesses or fears to your peers. This makes it especially crucial for entrepreneurs to have a supportive family, a good advisory board and a strong team that you can count on for support and to raise a red flag when things seem to be heading south, says Piparaiya. "As human beings, we tend to rationalise and justify everything. Having your checkpoints in place, whether in the form of your family or team, will make it far easier for you to handle risks and stress," he says. Biswas says, "In addition to maintaining a strong compliance team and having weekly meetings during which we discuss numbers, regulations and cash flow, we periodically also take a step back to assess the situation as a layman. We discuss our business with our closest friends, family and like-minded entrepreneurs."
5. Differentiate between greed and ambition
While Gordon Gekko (played by Michael Douglas) describes greed as "good" in the 1987 movie Wall Street, in the real world, greed is more often a failing that can snowball into so much more, says Goidani. It is important, therefore, as an entrepreneur to differentiate between greed and ambition. The difference between the two, he says, lies in intent. When faced with a decision, ask yourself the following questions:
- What are my goals?
- By achieving these goals, who do I help?
- By achieving these goals, who do I hurt?
- What are the great things I want to accomplish in life?
Biswas illustrates, "When faced with a tough decision about starting a new line or product category, we take a step back to ask ourselves whether we want to do this just because we want more money or because we want to involve a new weaver group in the Suta journey. If the answer veers towards the latter, we take the risk. Otherwise, we take this as a sign to slow down. What keeps us grounded is asking ourselves what we really want and why we quit our corporate jobs to start a sustainable business. To stay true to our ideals, we sometimes have to sacrifice greed and we keep moving while supporting our huge family of more than 1,000 weavers."
Michael Douglas as Gordon Gekko
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