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Implementing Innovations

Entrepreneurship
The path less traveled
Sreeraj S
Co-Founder & Chief Technology Officer, Ordyn Technologies Pvt. Ltd.

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Agenda
Definitions and Scope The Need Challenges The Entrepreneur Startup Operation and Growth

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Entrepreneurship
Definitions & Scope

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Entrepreneurship
Wikipedia: the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities

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Entrepreneur
Wikipedia: Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome

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Scope/Focus
The need Entrepreneurs life
Challenges, Qualities, Rewards

Growth companies
Enterprises with potential to grow BIG How to start and build them Will discuss operational aspects
What to do and mistakes to avoid Will not discuss administrative, management and legal issues

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Scope/Focus
Help in a deep understanding of what entrepreneurship means
Take a decision whether entrepreneurship is for you Work towards building the required attitude and skill set

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Entrepreneurship
The Need

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Importance
Ventures lead to economic prosperity
Create jobs Improve quality of life
Ideas/Products/Services
Telecommunication, Internet Transport Computers Entertainment EVERYTHING similar that we take for granted!!!

Creates wealth

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Government Owned Enterprises


Quality Price Choice

The Other Option

Works best in protected markets/ monopolies May not provide the best for the customer

Less motivation for innovation and competitiveness May not self-sustain and will then drain wealth May be essential in some sectors

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Entrepreneurship
Challenges

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Challenges
Very risky
A majority of new ventures fail in spite of the entrepreneurs competence and perseverance
Need to have a detached view point Must plan for contingencies

Statutory non-compliances can land you in court or even in jail


Understand the law and operate within it

Financial and operational risk taking can lead to extreme stress

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Not a favored or respectable career in society and most families in India/ other countries
Support from family and friends is probably important Considers entrepreneurship as an option pursued by the maverick (eccentric?)
And probably true how many would choose this path?

Challenges

Venture or adventure?
While there is venture in adventure, a venture aims at generating profit. Adventure is just an exciting undertaking.

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Challenges
Sweat equity
Somehow, the creation and building up of a successful enterprise inevitably requires an enormous amount of sacrifice and hard work from the entrepreneur
May have to perform a lot of roles in the initial phase till the business shows profit and grows.

Lesser time to spend with family and reduced social life


Conflicts in personal life

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Entrepreneurship
The Entrepreneur

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Why
Personal expression
Pursuing a vision Contribute to improving the world

Money Fame

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Risk taking ability

Qualities

Able to confront and go through adverse situations Assume responsibility and accountability for the outcome Calculated risks not recklessness

Perseverance
A die hard attitude Rome was not built in a day

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Qualities
Must be a good learner
Voracious reader Learning=study + understanding + application

Problem solver
Must have the attitude to meet problems head on and solve them The attitude Where there is a will, there is a way

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Qualities
Work with others
One-person ventures do not have the potential to grow big Various skill sets required in an enterprise
Management, Finance, Sales and Marketing, R&D, Purchase, Manufacturing etc.

You are good at developing technology, but lack management skills


Find a partner who can complement your skills

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Qualities

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Qualities
Self-Confidence
Whether you think you can or you cant do it, chances are high that you will be proved right Not over-confidence

Leadership abilities
Ability to communicate ideas and plans

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Entrepreneurship
Startup

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Define the Business


What will be bought? Who will buy it? Why would they buy it? Scaling up
How will the business grow?

NOT What will I sell?

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The primary team

Building the Primary Team

Shares initial ownership Takes management decisions

Choose people
Who shares the vision on what the enterprise must achieve Who can contribute directly to the vision in complementary roles Avoid just choosing friends and relatives

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Building the Primary Team


Get experienced, maybe retired people on the board of directors as advisors
Will provide better direction

Requires the right number of people


Lesser people will increase risk of failure More people will create confusion The needs of all involved must be compatible

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Building the Primary Team


Creative conflict
Yes-people rarely contribute well to the decision making process

Limit equity to primary team and angel investors


Support employees should be given stock options only when they have proven themselves and have long term value

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Importance of Focus
Limited resources Concentrate on accomplishing two or three defined goals within a specific timeframe
All actions performed must take the organization closer to the defined goals Do not focus just on day to day activities Revise goals only if market demands it

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Importance of Focus
If you dont know where you are going, any road will take you there Alice in Wonderland Avoid distractions (the fun stuff)
Pick out offices Design letterheads, logos Whatever is not priority at the moment

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Written Business Plan


Prepare a written business plan
Who will do what and by when Cash flow Revise when changes are required Until committed to paper, intentions are seeds without soil Would you construct your house without seeing a blue print?

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Written Business Plan


Contents
Overview (Executive Summary) Concept Objectives Market Analysis Production Marketing Organization and People Cash Flow and Financial Projections Ownership

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Written Business Plan


Executive Summary
Probably written last although the plan begins with it. Will provide a brief on the concept, market and strategy, economic viability and the team Must be good enough to get people interested in the venture

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Written Business Plan


Concept
The long term concept for the business
Intel : Automated computing engines (Not microprocessors) Sony: High Quality Consumer Electronic Goods Nokia : Mobile Telecommunication (Not Wireless Telecom!)

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Objectives

Written Business Plan

These are the end results that will be made to happen Sales, profits, market share, margins Big capital gains or moderate steady income Entrepreneurs personal objectives
Build personal net worth Gain personal control over others/ events Gain independence/ freedom of action Achieve professional/ technical satisfaction Reduce frustration with current activities Secure/ increase annual income Contribute to society

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Market Analysis

Written Business Plan

Need for the product does not mean that there is a market Which market segments will be the target
Teenagers, kids, mothers, travelers etc North India, Asia pacific etc.

Size of market estimated or known to be available Growth projections Types of funding possible (banks etc) Competition Sales channels (Dealers, distributors etc) Government regulations

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Production

Written Business Plan

Outsource/ in-house Make vs Buy Equipment required Processes involved Sources for raw materials, labor Schedules Personnel Budget

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Marketing

Written Business Plan

How will customers be created How will their loyalty be maintained

Organization and People


Board of directors, general management, functional specialists The right people make the right things happen

Cash Flow and Financial Projections


Cash in, cash out and timing

Ownership
What percent of the company will be owned by whom

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Entrepreneurship
Operation and Growth

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Hiring Employees
Hire people with proven records of success at doing what needs to be done
Must have the attitude to pitch in and do what is required for building the enterprise Do reference checks Multiple interviewers

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Reward Performance
Set performance standards Reward individual and team performance that exceeds the set standards

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You cannot accomplish everything you want simultaneously

Expansion

Plan for incremental growth Seek logical extensions of existing activities Bigger is not automatically better Walk before you run
Focus on making the venture profitable before expanding

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Cultivate financial sources while you are doing well


Cash is the blood of a growth business Get credit from suppliers Get advances from customers Credit from banks Private and Institutional investors Joint ventures

Cash Flow

Ability to continue operations depend on cash available Monitor the cash flow carefully and plan ahead Collect receivables as soon as possible

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Maintain Detached Point of View


Managing a growing enterprise
Requires unyielding dedication Can take your mind and body to extremes
Health is at stake

Growth implies and entails risk

Ventures can succeed or fail


You fail only when you quit

The entrepreneur is not the company


The company has a life and soul of its own They are different legally too.

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Detached Point of View


Build layers of management
Hire competent people Delegate work and decision making Plan for making the enterprise independent of you

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References
The Internet Entrepreneuring: The Ten Commandments for Building a Growth Company Steven C. Brandt Further Reading
Books on entrepreneurship, business administration and management, accounting, company law, contract law Books in your chosen domain area

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Look Out
Do not blindly believe or apply what you find in books
Use your discretion and common sense What works in one scenario may not work for you Believe in yourself When everything seems to be going wrong (which they will), please see point above.

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Indian IT Industry
Predominantly service oriented
IT Coolies? Labor arbitrage turnover directly proportional to number of people employed Very little Intellectual Property

No visible technology product company from India


Few companies are trying to move up the value chain

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Questions

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Thank You