Wisdom for Business Success: Practical Guide for Entrepreneurs and Fresh Graduates

Wisdom for Business Success

Practical Guide for Entrepreneurs

and Fresh Graduates

By:

Dr Barkat Charania & Nuruddin Abjani

AuthorHouse™

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© 2012 by Dr Barkat Charania & Nuruddin Abjani. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

First published by AuthorHouse 01/05/2012

ISBN: 978-1-4634-4744-1 (sc)

ISBN: 978-1-4634-4743-4 (hc)

ISBN: 978-1-4634-4745-8 (ebk)

Library of Congress Control Number: 2011915062

Printed in the United States of America

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Contents

DEDICATED TO

Disclaimers

About Authors

Preface

Acknowledgements

Section One

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Section Two

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Chapter 11

Chapter 12

Chapter 13

Chapter 14

Chapter 15

Chapter 16

Chapter 17

Section Three

Chapter 18

Chapter 19

Chapter 20

Chapter 21

Section Four

Chapter 22

Chapter 23

Section Five

Chapter 24

Chapter 25

Chapter 26

Chapter 27

Chapter 28

Chapter 29

Chapter 30

Chapter 31

Chapter 32

Chapter 33

Glossary and Definitions

of Financial Terms

Other Book and Works by Authors:

•   Entrepreneur’s Guide to Banks Borrowing and Practical World;

Wisdom for Recent Graduates: ISBN # 1420816675, 2006

Coauthor of:

•   Robert Ryan Cancer Protocol 2008;

http://www.scribd.com/doc/48142383/Robert-Ryan-Cancer-Protocol

•   Role of Lady Health Visitors in Primary Health Care; UNICEF and AKDN publication 1981

Scientific Publications:

•   Anaphylactic Reaction to Bovine Insulin; Pak Jour Sur, 1986, 2, 22-23

•   Giant Cell Tumour of Patella, Pak Jour Sur, 1987, 3, 26-28

•   A Study of the Results of Ten Years Supply of Iodized Salt in Gilgit and Hunza, Eastern Mediterranean Region Health Surveillance Journal Alexandria, Egypt, EMR Health Serv. J. No.5: 12-18; 1988

Guest Editorials:

•   Keeping Pace with Medical Innovations; Jour Sur Pak, 2005,

•   Stem Cell Research, Jour Sur Pak, 2006

•   Surgical Training - Academics vs. On-hand Practice, Jour Sur Pak 2007

Websites:

•   www.DrCharania.org

•   www.PowerofThought.org

DEDICATED TO

To our parents who equipped us

with worldly wisdom,

To our family who sacrificed and allowed us

time to prepare this,

To our business friends from whom we

learnt by interactions,

To our Bankers who supported with

their advice and direction,

To our professional colleagues who were

always at hand to counsel,

To our customers and vendors, winning whom

was continuous learning,

To our readers and students whose inquisitive minds

made us discover a lot,

And above all

To Almighty God who enabled us to present this to you.

Disclaimers

THIS BOOK IS MEANT TO CONTAIN ONLY THE BASIC INFORMATION FOR THE BUSINESS BEGINNERS ON MANY PERTINENT TOPICS. ENTREPRENEURIAL INDIVIDUALS CONTEMPLATING THE START OF A BUSINESS MUST SEEK THE ADVICE AND CONSULTATION OF LEGAL, FINANCIAL, AND TAX EXPERTS ALSO.

Gender Discrimination

Masculine or feminine gender distinctions used in the text in different places are merely arbitrary and not meant to be discriminatory. Male and female references are interchangeable in most instances

About Authors

Barkat Charania started his business debut by selling candies at the age of 12. He got involved in the family’s trading operations from an early age, dealing in cloth, automobile tires, hand knotted carpets, metals, pesticides, medical equipments, gasoline, diesel etc.

Dr. Charania was trained as Orthopedic Surgeon in UK and practiced for 30 years. He established a 200 bed hospital and was its CEO for 16 years. Though he pursued Surgery and did degree in Law, he is a student of Islamic History, Philosophy, Sufism and Entrepreneurship.

He was on faculty of Aga Khan University and College of Physicians and Surgeons of Pakistan. His research papers are published in Medical Journals and guest Editorials in Surgical Journals. Dr Charania has been a social worker from young age with Aga khan Development Network (AKDN) institutions and is a Certified Voluntary Mediator, which he practices with passion.

Dr. Charania was advisor to International Council for Control of Iodine Deficiency Disorders (ICCIDD), World Health Organization (WHO) and UNICEF and attended their consultation meetings in many countries. As an AKDN volunteer he headed the project to eradicate IDD from northern areas of Pakistan in collaboration of National Institute of Health, Aga Khan University and UNICEF. Results of its 10 year intervention were published in WHO Eastern Mediterranean Region’s Journal in 1988.

Dr. Charania serves on several Boards. He was also the President of South Asian Chamber of Commerce, and President of Karachi cancer Society. He also writes a blog,

www.DrCharania.org.

Dr. Barkat Charania

Nuruddin Abjani is an Entrepreneur, Motivational Speaker, Blogger, Musician and a Social Worker. The beginning to his ‘practical life’ was at the age of 11, selling decorated vases in Karachi. He began his corporate career at Berger Paints Pakistan as Management Trainee and soon became the National Sales Manager. In 1999 he joined Michelin Tire’s Sole Distributor for Pakistan, Anis Tyre Corporation, taking charge of its new subsidiary Tyre Sales International (TSI) as General Manager. With inborn entrepreneurial spirit Abjani became the Managing Partner and CEO of TSI. Currently TSI’s presence exists in Pakistan, UAE, China, Africa and North America, selling many known and private label brands of tires.

Nuruddin is a dreamer and dreams to see TSI as one of the largest tire distribution company in the world. He also instills the same desire of dreaming, positive mental attitude, passion, happiness and hard work in his listeners at his training workshops and motivational speeches. His speeches are interesting, funny and enjoyable. He has spoken at several educational institutions and has been interviewed several times on TV and radio.

He writes an interesting blog-www.PowerOfThought.org. He is a voracious reader & enjoys playing golf. Nuruddin is happily married and lives in Karachi, Pakistan with his wife and two daughters.

Nuruddin Abjani

Preface

In most countries school education is compulsory and university education is encouraged. Usually students and their parents plan and aspire to get a nice job to shoulder future responsibilities of family. However, at some point in their life a significant number of students want to be an entrepreneur or a businessperson and be one’s own boss. Educational institutions are focused on teaching practical, day-to-day knowledge useful to majority to find and keep a regular job. At the end of their education, or even sometimes in the middle (if they drop out), students suddenly find themselves facing the real and practical world. Although well-educated and fired up to attain their goals, they still require practical worldly knowledge to succeed.

Everyone possesses basic commonsense and wisdom. These attribute are natural gifts and needs used to its maximum. Such usage requires practice and repetition. To be able to think clearly is by itself an asset. More we observe and experience more general knowledge we gain. Result will be for the person to be more credit-savvy, insurance-informed, and a relationship expert. All this may be learned through developing a good network and benefiting from the experience of others. Whether you are doing a job or involved in a business, inquisitiveness is your best tool. More you think more questions will surface; more questions you can find and get answered by your senior colleagues, faster you may grow.

The content of this book is based on firsthand and personal experiences of successful entrepreneurs. Much of the advice that a reader can find in this book is based on our experiences in a broad variety of business fields, everything from trading to manufacturing to service industries, including administration, real estate management, and banking and borrowing. While details of approaching any practical matter may differ from reader to reader, basic principles of how any situation should be dealt with are standard across the board. Young entrepreneurs will find a wealth of information in this book that we acquired by experience and making mistakes and would like to share these with readers.

In addition, this book may be particularly relevant as a primer for young school and college graduates who are new entrants into the real world and about to taste the experiences of a tough practical world. It is important and prudent for the unwary to start understanding the practicalities of the world as quickly as possible to avoid big blunders, which may be too costly in terms of time and money wasted over them.

Today, banks are a part of our daily lives. Basic and the most important function of the bank is still a depository. Many other functions are now incorporated into it, such as consumer and commercial lending, credit-card processing, remittances, and insurance and investment services. Entrepreneurs and fresh graduates should acquaint themselves with banking as early as possible.

One of the most common needs of an entrepreneur is to borrow funds to turn his/ her dreams into reality. Lending being an important function of the banks coincides well with the entrepreneur’s needs and, along with other services they provide, banks attempt to satisfy diverse needs of present-day business requirements. We shall deliberate in this book mainly on the commercial-lending function of banks for business needs of entrepreneurs. These deliberations will also focus on creating and maintaining banking relationships. It will also include procuring conventional and Small Business Administration (SBA) guaranteed loans.

As emphasized in the book, bank’s and borrower’s relationship is mutually complimentary. To maximize the benefits of banking relationships, the entrepreneurs ought to understand their responsibilities and obligations to banks. We shall try to evaluate this relationship from the banker’s as well as from the customer’s perspectives. Once the reason behind a bank’s expectations is understood, your banking relationship will become friendly, pleasant, and mutually beneficial, creating a better bonding between you and your banker. In short, this book is about being street smart with your lenders.

A successful business is the final product of many factors put together. Aside from financing practical experience and knowledge of the business that one wants to pursue are the most important ingredients. When proper planning is added to these variables, the mixture is then a ripe recipe for success.

That said though, success in business is the end result of many other ingredients acquired from simple general knowledge. This book includes some chapters that deal with such knowledge on a variety of subjects, like credit scoring, limited-liability entities, tax benefits that may be obtained by using them, and bankruptcy protection laws. Though they are basic, even seasoned businesspersons may also find the contents of some of these chapters interesting with some new concepts.

In this post global recession time we have included some thoughts on how it happened and what could have been our response. For your convenience, we have added a summary of many chapters at the end for easier review of those chapters.

Many entrepreneurs, professionals, and experienced well grounded businessmen have read the manuscript and offered many useful suggestions which are included in this book. These invaluable wisdom and experience will be most useful to the readers

We would welcome further suggestions to improve this further to make this book more helpful to entrepreneurs and young graduates. Thank you all for your support. Best wishes to you, wherever you are in your personal development and goal achievement. Good luck and Godspeed.

Nuruddin Abjani: www.PowerOfThought.org

Dr Barkat Charania, www.DrCharania.org

Acknowledgements

We would like to humbly convey our sincere thanks to all our friends and acquaintances who have directly or indirectly contributed to making this book a reality.

This book is a result of personal experiences, extensive interviews, and discussions with relevant people and close friends like bankers, accountants, attorneys, entrepreneurs, and veteran business owners. All of them have been excited by the outcome of our various encounters in the shape of this book, and they have very willingly advised, commented, and critiqued the material being presented here. We are grateful to all of them.

We are thankful to Imran and Afshi Charania, Saleena and Rahil Jafry and Sayeeda and Shakil Kurlawala for their suggestions from their practical experiences. Feisal Shariff, Shahnawaz Bhamani and Faisal Amin have been good guide for bouncing off ideas and understand how young entrepreneurs think.

Young entrepreneurs continue to amaze and impress us with their agility, willingness to commit to hard work and learn quickly, their desire to embrace technology, and their superb education. Many Individual names come to mind whom we have interacted with in our work. We admire their entrepreneurial initiatives. Their determination to succeed is striking.

We feel that some people have a gift of tackling any business issue with an angle of a resolving it. They understand and can analyze the intricacies of business much easily because of their experience. Abdul Lalani is one of them with many others, like Anis Charania, Adil and Rahil Jafry, Noordin Gilani, Inayat and Jigar Lakhani and Karim Dadwani. They all have been a continuous and invaluable source of interaction while writing this book.

Many close friends, professionals with great wisdom, have been directly and indirectly a source of encouragement for me. The first one that comes to mind is Naeem Kohari, a finance wizard, who supported the idea of writing this. I would also like to thank many other experts in different fields whose advice has been invaluable. These are Asif and Musa Dakri, William Yeh, and Nasrullah Khan in the banking industry; Haroon Shaikh and Naushad Kermali in the accounting profession; and Anwar-e-Qadeer, and Celina Charania Shariff (my daughter) in the legal profession and Dr Donald bates and Dr Shabnam Lutafali in education profession.

We would also like to thank and acknowledge Mr. Berny Dohrman, of CEOSpace (www.CEOspace.com) for introducing me to yet another entrepreneurial success that Berny has personally innovated. Dr Charania graduated his 1209 class. We are thankful to Chris Ryan, Dr Mahesh Kanojia (who recently passed away, may God rest his soul in peace, Amen), Jeff Blake, Erin Saxton and Matt Dahse for introducing us to this amazing phenomenon. Chris and Matt team is worth mentioning in particular for their special ways of implementing the entrepreneurial ideas.

We are particularly indebted to Malik Ismail, Jay Kansara, Shehzad Kurlawala, Faisal Amirali and Nazish Momin for their help in editing and organizing contents of the book.

Section One

Basic Facts;

Entrepreneurs and Bankers

Chapter 1

Be a Successful Entrepreneur

There are many ingredients required to become a successful entrepreneur. In business and entrepreneurship, there are many qualities, traits, attributes and virtues needed from the person aspiring to become an entrepreneur. Almost all of us have most of such qualifications. Some may need to be developed by working with some experienced colleague or a mentor. With investment of time these can all be developed. We shall define and elaborate them here.

Ambition: This is by far the most important ingredient in becoming a successful entrepreneur. Without ambition to grow and be successful, many important and much-needed jobs will remain undone or less attended, leading to very slow progress or even failure. Hence, every beginner has to try and understand his own ambition and follow his or her sixth sense in starting or pursuing any career. Today’s world is very competitive, and although ambition is an inborn thing, it would be safe to say that the competitive spirit, which is promoted in today’s schools and colleges, sharpens the inborn ambition to a major extent.

Personal interest: You need to be interested from the bottom of your heart and spirit to be able to succeed in any line of work. One sure way to lose and fail is to start a job and lose interest in the middle. Hence, all entrepreneurs are well advised to have a long enough exposure in the line that they are wanting to pursue as career. Such exposure will make you understand how much interest you actually have in the career, which, on first look, seems to be enticing. You may have to work in that business or career for some time to understand its requirements. You then need to analyze from the experience obtained to understand the limitations and difficulties in that career and then conclude whether that business or career is suitable for you or not.

Commitment: To find success in any work, only getting involved is not enough. One has to be committed to the work. As an entrepreneur, you need to learn this early in life, so that you are trained to be absolutely devoted to the kind of work that you chose to pursue for your entire life. A new business venture is like raising a child. It is a challenge to learn many new things and be dedicated to do all that it takes. Again, if the commitment and interest is any less than the best, it may lead to mediocrity and/or failure. Many businesses do not do well only because the entrepreneur is not fully committed right from the beginning.

Experience: This is also one of the most important ingredients to bring success to any work. Experience is an invaluable asset that anyone can invest in one’s work. We strongly advise every entrepreneur to work and gain experience in the line of work that you think will be interesting and gather a lot of experience before starting your own business. The time spent in obtaining such experience will reveal to you the limitations and rewards attached to it. It will expose you to many possible problematical situations and teach you how to resolve or rectify them. The firsthand experience will allow you to measure your own interest in that line of business and will also be a test if the interest is sustained after a while. Firsthand experience and an understanding of the business will also reveal whether or not this is the kind of work