Life -Before and After Entrepreneurship

"Always Give a chance for others to Work. If they are working, make them to work for you".

Some powerful quotes require ages to get to know about their true flavour. The above written quote is one of those. Just imagine, you are given a chance to lead a group of people and perform a task. Success or failure, You are responsible.So, you are representing both the sides of a coin.(just an example dude!).Be proud man! both success and failure are depending on you right!.

             

                              Basically,Entrepreneurship is same as this, nothing but taking some responsibilities, handling a bit of tough situations, managing people to get your work done and lead a peaceful life(hopefully). Introducing something new to the industry is also one of the important features of entrepreneurship. Just innovate, work on your innovation, showcase the product wisely to the market and see the success.

Entrepreneurs play a key role in any economy. These are the people who have the skills and initiative necessary to anticipate current and future needs and bring good new ideas to market. Entrepreneurs who prove to be successful in taking on the risks of a startup are rewarded with profits, fame and continued growth opportunities. Those who fail suffer losses and become less prevalent in the markets.

But this is not that easy as what we think. Brains are stormed sometimes to get the perfect idea. Perfect idea is something which gets popularity without usage of too many resources(luck factor matters a lot for this). So everything should go in favour of you to get an easy success!.But depending totally on luck is also a kind of risk taken by some brave entrepreneurs(success rate is not too high dude!). So its better to plan things earlier, work for them( not for ages) and make things simpler when there is a requirement.

Lets visualise a life Before and After Entrepreneurship(Hold on! there's still time to have fantasies. Just visualise man. Don't go deeper.)

BEFORE-

1. Strive for life.
2. Adjustments
3. No status
4. No recognition
5. Did nothing for your Motherland.

AFTER-

1. Luxury
2. Respect
3. You will have potential to do some good things to the society.
4. Special Status.(its inevitable.)
5. A meaningful life.

LIST OF SUCCESSFUL INDIAN ENTREPRENEURS -

1.DHIRUBHAI AMBANI-RELIANCE

2.RATAN TATA-TATA GROUPS

3.NARAYANA MURTHY-INFOSYS

4.AZIM H. PREMJI-WIPRO

5.Lakshmi Mittal-ARCELOR

6.DR. VERGHESE KURIEN-AMUL

7.ANAND MAHINDRA-MAHINDRA GROUP

8.SHIVA NADAR-HCL

9.JAMNALAL BAJAJ AND RAHUL BAJAJ-BAJAJ AUTO

10.SUNIL MITTAL-BHARATHI ENTERPRISES

                 

There is research that shows high levels of self-employment can stall economic development: Entrepreneurship, if not properly regulated, can lead to unfair market practices and corruption, and too many entrepreneurs can create income inequalities in society. Overall, though, entrepreneurship is a critical driver of innovation and economic growth. Therefore, fostering entrepreneurship is an important part of the economic growth strategies of many local and national governments around the world. To this end, governments commonly assist in the development of entrepreneurial ecosystems, which may include entrepreneurs themselves, government-sponsored assistance programs and venture capitalists; they may also include non-government organizations, such as entrepreneurs' associations, business incubators and education programs.

Entrepreneurship is essential for the development of any economy. Countries which have flourished attribute their rise to the growth of entrepreneurship. Therefore, governments and people all over the world want to encourage this concept. This article lists down the factors which contribute to the growth of entrepreneurship and therefore to the growth of the economy of any given area.

Political Factors

Political factors play a huge role in the development of entrepreneurship in a given geographical area. This is because politicians decide the type of market that is in place. The market could be capitalistic, communist or some countries have adopted a mixed economy. Each of these three markets has very different implications for the way in which entrepreneurs are required to function. Capitalism requires breakthrough innovation whereas communism requires entrepreneurs to be well connected with the political class. Therefore, it has been observed that the more capitalistic any country is, the more entrepreneurship flourishes in the region.

Legal Factors

Entrepreneurs are dependent upon law for a wide variety of factors. The strength and fairness of the legal system of a nation affect the quality of entrepreneurship to a large extent. This is because entrepreneurs require a wide variety of legal services to function. For instance, entrepreneurs would require the courts to enforce the contracts that were entered to between parties. In many countries such contracts are not enforceable and therefore the resultant risk prohibits the development of entrepreneurship. Then again, the entrepreneurs are dependent on the courts for the protection of their property rights. Also, many advanced countries have noticed that the provision of declaring bankruptcy has been positively associated with the development of entrepreneurship. Entrepreneurs do fail a few times before they find the right innovation that leads to their success. The United States is amongst the countries with the highest rate of entrepreneurial development and it is also known to have one of the most advanced bankruptcy laws! Even business legends like Henry Ford had declared bankruptcy in their early days.

Taxation

The government can also influence a high degree of control on the market through provisions of taxation. Some amount of taxation is necessary for the government to maintain the legal and administrative systems in place for the entire economy. However, a lot of times governments resort to excessive taxation. They usually adopt the policy of beggaring the rich and giving it off to the poor. This goes against the basic tenets of entrepreneurship which believes in survival of the fittest. Therefore, countries where tax regimes are restrictive find an outflow of entrepreneurs. In short, entrepreneurs want to set up shop in places where there is minimal interference from the government.

Availability of Capital

The degree to which the capital markets of a nation are developed also play a huge role in the development of entrepreneurship in a given region. Entrepreneurs require capital to start risky ventures and also require instant capital to scale up the business quickly if the idea is found to be successful. Therefore, countries which have a well developed system of providing capital at every stage i.e. seed capital, venture capital, private equity and well developed stock and bond markets experience a higher degree of economic growth led by entrepreneurship.

Labour Markets

Labour is an important factor of production for almost any kind of product or service. The fortunes of the entrepreneurs are therefore dependent on the availability of skilled labour at reasonable prices. However, in many countries labor has become un-ionized. They demand higher wages from the entrepreneurs and prohibit other workers from working at a lower price. This creates an upward surge in the costs required to produce and as such has a negative effect on entrepreneurship.

With the advent of globalization, entrepreneurs have witnessed the freedom to move their operations to countries where labour markets are more favorable to them. This is the reason why countries like China, India and Bangladesh have witnessed a huge rise in entrepreneurial activity in their countries.

Raw Materials

Just like labour, raw material consisting of natural resources is also an essential product required for any industry. In some countries this raw material is available through the market by paying a fair price. However, in some countries seller cartels gain complete control over these natural resources. They sell the raw materials at inflated prices and therefore usurp most of the profit that the entrepreneur can obtain. Therefore, countries where the supply of raw material faces such issues witness depletion in the number of entrepreneurial ventures over time.

Infrastructure

Lastly, there are some services which are required by almost every industry to flourish. These services would include transport, electricity etc. Since these services are so basic, they can be referred to as the infrastructure which is required to develop any business. Therefore, if any country focuses on increasing the efficiency of these services, they are likely to impact the businesses of almost all entrepreneurs in the region. Therefore, countries which have a well developed infrastructure system witness high growth of entrepreneurship and the opposite is also true.

Of course, the above list of factors is not exhaustive. Entrepreneurship is far too complex a subject to capture in a few bullet points. However, the above list does provide an indication towards the type of factors that can play an important role.

                                 Entrepreneurs need funding and venture capitalists and financiers need emerging businesses with great potential for investments. Therefore, there is a symbiotic relationship with entrepreneurs and the financiers wherein each need the other for mutual gain. While the entrepreneurs would use the capital invested by the financiers to grow and expand their businesses as well as the more important aspect of returning profits on the investment, the financiers would benefit from the profits since their investments are generating returns.

Having said that, it is certainly not the case that financiers invest in just about every new business without doing their due diligence. Indeed, one of the key aspects about entrepreneurship and entrepreneurs is that they need to have compelling business idea and a robust business model that would convince the financiers to invest in their companies. This is one of the reasons why entrepreneurs find it hard to raise funds especially during economic downturns since the financiers would insist on robust and profit making business models which not all entrepreneurs can come up with.

What is “Spicy Money” and How it Impacts Entrepreneurs

Turning to how financiers fund during economic booms, when money is plenty and capital is abundant, the financiers would be more than willing in pump in large amounts of money in what they deem to be solid ventures. Now, when does capital become abundant and when does it become scarce? As mentioned earlier the former is when there is a boom wherein “hot money” is in search of good investments and the latter is when during economic recessions when capital is hard to come by.

In recent years, the Western world has seen the rise of many financiers who have benefited from the ultra loose monetary policies and the fact that interest rates in the West are close to zero. This is an incentive for them to look for avenues to channel their capital. Indeed, this is what is referred to as “hot money” wherein there is so much liquidity in the system that the financiers would be willing to invest even in mediocre startups that promise modest returns. As can be seen from the points made so far, whenever there is hot money in search of investments, there tends to be a boom in the rise of the startups wherein even those entrepreneurs who have earlier not fancied their chances become hopeful of investments into their ventures.

Creation of Bubbles

Having said that, there needs to be a note of caution here especially when such hot money flows result in “bubbles” being created. A bubble in economic terms is when there is an artificial inflation or increase in the value of an asset or an entity which is not supported by fundamentals. In other words, say you have a house which is worth a Million Dollars. When there is easy money flowing in the system, the same house can be sold for more than a Million Dollars since there are more buyers willing to shell out more money. This is because the buyers are flush with funds due to easy financing, increased salaries, or even the growing economy because of which they feel that they can invest more since the prices would go up in the future.

Such bubbles can be seen in many of the recent crop of startups especially in the Indian eCommerce sector. This is because there are many Western financiers who find themselves with abundant capital and hence, need to invest such capital somewhere. Considering that most asset classes in the West are not generating the kind of returns that the investors want, they are looking for greener pastures in Asia which they feel would justify their investments. Further, with the future projections for the Indian economy being forecast as very bright, these investors feel that they would be more than getting their anticipated returns.

The Indian eCommerce Sector and Spicy Money

This has led to a situation in the Indian eCommerce sector wherein even companies that have not generated any returns or profits are the subject of Billion Dollar investments and valuations so high that one wonders whether there is another bubble in the making here. Indeed, the situation in this sector is reminiscent of the Dotcom bubble in the 2000s wherein investors were willing to invest just about in any venture with a .com suffix since capital was so abundant that it needed avenues for investments.

Of course, the investors are not fools now or even then since at the first sign of the bubble bursting, they would withdraw their funding and “exit” from the ventures just as they did when the dotcom bubble burst. Therefore, entrepreneurs have to be conscious of this fact and not promise the Moon when all they can deliver are modest reruns from their businesses. In addition, the individual investors in the stocks of these companies must proceed with caution especially when they invest in IPOs (Initial Public Offerings) of these companies.

What Goes up has to Come Down

Finally, it is always better to remember that “what goes up has to come down eventually” which means that despite all the hype and marketing as well as “spin” over the prospects of the startups, unless the business fundamentals are strong, there is a tendency for “correction” sooner or later and hence, all stakeholders must be cognizant of the basics of economics.

In conclusion, when the flows of “hot money” subside eventually as the interest rates in the West are poised to be hiked in the coming months, the companies and businesses of entrepreneurs that have the business models based on sound economic and management principles would be the ones that would remain in contention.

Failures of Startups- 

1.Lack of concentration-

The number one reason behind the failure of mom and pop stores is the lack of focus. Businesses tend to thrive when they are specialists. Customers have a clear-cut perception about them. Also, they can build expertise that will allow them to build a solid reputation. Reputation is the number one asset on which mom and pop stores survive. Hence, a loss of focus means suicide when it comes to these micro-organizations.

2.Single Handed Work-

Startups tend to owned, managed and run by a single person. This, just like the lack of focus, is a major detriment to their well-being. Although, mom and pop stores cannot afford to hire an army of managers and specialists, they must still follow the fundamental principle of division of labor. The entrepreneur must use his intelligence to perform strategic tasks. 

3.Ignoring Suggestions-

The heart of the mom and pop stores is customer relationship management. They must live by the maxim that the customer is king and cannot possibly do any wrong! What actually happens is that mom and pop stores are managed by people that do not have a service mindset. Instead, they try to fleece customers. Since the customers are face to face with the owner, they often express their displeasure. The owners often overlook this displeasure. This is a huge mistake. Flexibility is at the core of the small business. They must pay attention to the opinions of their customers and adapt quickly.

A startup can be made successful if the following points are followed perfectly-

1. Know your purpose

2. Do something you love

3. Believe in yourself

4. Surround yourself with supportive people

5. Learn from criticism

6. Challenge conventional wisdom

7. Pick a good name

8. Serve your customer, not yourself

9. Raise the right amount of capital

10. Be dedicated to work

                   I'm not saying that being an employee is not a good thing, but always think to be a BOSS. Because in life, whatever be the field, Bossism is something which rules everything. THINKING BIG is not thinking big in certain limits, it's thinking big without having any limits.

To conclude, My dream is the same. That's the reason why i wrote this blog. I'm not expecting any kind of helps or favours from the readers. I just want the people to understand the need for Entrepreneurship for the country as well as the world.

         cheers!

             ALL THE BEST.