In my earliest posting I have cited several contributing factors to become a successful entrepreneur.
While starting a business is one side of a coin the other side is running it successfully duly strengthening the confidence of all stakeholders. The top three problems faced by start-up entrepreneurs are mostly (a) marketing, (b) management and (c) working capital. However, majority of entrepreneurs point their failure towards deficient financial resources or short working capital. The creeping fact indeed would be mostly the failure in marketing. Poor marketing and sales would create a vicious circle where poor sales results in piling stock in the warehouse, which in turn would make a dent on working capital leading to management confusion.
A good percentage of start-ups are initiated by first generation entrepreneurs who lack the knowledge or experience in the business processes or functional priorities in business. Many don’t follow the business setup processes like:
- Opportunity/Idea research: If not done it would result in inappropriate, unviable or bad business selection. This would lead to obvious failure at the end.
- Feasibility Study: If not done it could result in incorrect product / service selection for the target market, improper sales projections, wrong or deficient strategies to face competition and more. The end result would obviously be either product failure or market failure.
- Detailed Project Report / Business Plan: If not done it will not let you know the sequence of processes, actions required in the end-to-end implementation of project and the planning & strategy required to conduct business operations. Besides, these documents would be highly essential in securing business loans, availing government support with respect to loans, and subsidies. DPR and Business Plan are the mirror to the business / project and an entrepreneur should invariably get the same done and imbibe the contents for right implementation. The documents should never be considered as a record alone if a true and transparent success in the project / business is to be achieved.
- Project Management: This is related to the setting up of business or executing the project in a structured, disciplined, transparent and an accountable manner. Project Management is important because if you don’t manage project effectively, you will find yourself at the negative end of the road. The saying goes very clearly that when you don’t plan, you plan to fail.
- Marketing Strategy: The sin in business is allowing the produce to remain in the warehouse than pushing it into the market. How is it possible to market a product without right strategy that could tell you the means, resources, methods, and schedules to market your produce? Hence, marketing strategy is highly essential for the very viability of business.
- Financial Management: Financial resources i.e. money is every thing in the business. Inadequate money or improper financial management will result in several failures. This is especially difficult where the business procures secured or unsecured business loans which will need servicing of loan on time for peaceful running of business. Many businesses will again misjudge the spending on CAPEX and Working Capital. Going beyond the budgetary allocation for procurement of capital goods or high spending with poor negotiation power will result in drain of budgetary resources. The effect would be a strain on working capital.
- Induction of human resources and expertise: Team is everything. Induction of quality team depends on right job description and right recruitment processes. This plays a pivot role especially in the matter of senior management personnel. This would always need professional consulting services and business should not go for just known resources or cheap resources to save money.
- Communication management: This could be resolved through professional management processes and should not be ignored. Right communication and interactions would create brand identity and corporate identity in the organization pervading transparency across the enterprise.
- Collaborations & Partnership: Identification of partners who can complement the business abilities and requirements, proper negotiation of terms, clean exit plan and assessment of ROI on partnership are most important aspects which could be done only through right understanding of market.
- Stakeholder Management, CRM: If the aspirations and expectations of stakeholders are not properly analyzed and right customer support system and Customer Relationship Management is not in place, it would result in customer dis-satisfaction and business erosion.
- Return on Investment: Business should be directly related to the Return On Investment. Having cash flow for some reasons may at times make you believe that business is doing well. Professional assessment of return on investment is an important process and business must know the short-term and long-term returns to be received and investment recovery time lines in order to drive the business in right direction.
Several SSI and SME firms have a bad notion that businesses would not need such a strict rules to follow documentation or detailed processes as above. That is the very cause of business failure. Process and process quality is inevitable for business success. There is no thing called ‘small’ or ‘big’ in the matter of ‘success’ or ‘failure’. Both would have same bearing and would have same background in all likelihood.
The situation calls for professional education for entrepreneurs before they start their business. Interested individuals can contact us for Start-up education or start-up services at any stage of their business progress.