Being an entrepreneur - 2

Hi folks! It's been a while I've posted here on account of few personal commitments that I was engaged in. I'm back now and let's keep the ball rolling.

The key point that was reiterated in the previous blog post was that the success of business these days is directly proportional to the amount of 'cash burning'.

Cash burning has been the reason for the bout of start-ups that have been started with superior and extraordinary ideas to shut shop within a little time of their existence.

As we have seen in our earlier post that the concept of funding took it's birth to make able the budding entrepreneurs smell finances to run the business who have minimum access to capital to put in the business.

We see umpteen programs each day popping up everywhere in the media that are aimed at boosting the startup culture. Though this support system is much appreciated, the truth at the grass-root level is that they are of no avail to the budding startups. All such programs actually keep so many conditions to avail the benefit, that would mostly be given to the startups which are governed by an influential person or may be backed by political support or should either be run by filthy rich persons. Such instances of providing benefits to genuine startups is meagre and limited. 

For instance, lets consider the government initiative to support startups. It has been noticed that the government funding will be sanctioned to the startups only if 25% capital investment is shown. And that 25% of capital investment should be shown exclusively in the setup of machinery or the core part of the startup. This scenario is like if the startup builds the foundation, then the government will give some sort of support for the construction of the building. But doesn't the government realize that the building would not stand still if the foundation is not sturdy?

That way the government support for 99% of the startups can be ruled out. The situation to get funding from banks is even worse as they expect the startup to operate for three years and then register profits post which the banks would be able to evaluate and decide if they can fund the business. The  thriving of the business for the initial three years is actual the crucial time for funding, rather than getting the funding after three years post registering profits because the business in itself can reinvest in the business and grow steadily albeit a slow pace. Once the startup is profitable in three years, then availing finances by way of funding by investors is not a herculean task. However availing finances in the initial stages from the investors is something where the entrepreneur has to take many risks and chances.

The story changes with the advent of the  mentors and investors. In the name of mentoring, the idea of the startup with which it has been born and is ideally the core DNA of the startup is tweaked, changed, twisted, crushed, convoluted, blended, braided and swivelled into a totally different setup. This happens in the name of moulding and guiding the startup in the right direction as the startup has no experience in the business. With the investment brought in by the investor, the control of the entrepreneur goes in the hands of the investor with the majority of the stake-holding in the business. For the sustainability and continuity of the business of startup and in the need of the finances, the entrepreneur gets influenced having no other option after multiple attempts by the mentors and investor and compromises the core DNA of the startup for the mashed up idea of the mentors and investors. Now the entrepreneur is left to swim and survive in the ocean of reality and meeting the obligations to the mentors and investors. There have been many instances where the startups have ceased to operate because they have got choked by the mentors and the investors leaving the entrepreneurs with no other option than to shut shop or sell off the business stake inspite of being able enough to manage the business. 

In the name of accelerator programs, the mentors or investors influence the entrepreneurs that funding is compulsory. Under compulsion and influence, the entrepreneurs get fooled around that success can only be attained with the exposure and participation in such kind of programs. The influence in most cases is to that extent that the entrepreneur ends up concentrating more on the programs than the startup's idea itself. Eventually commercialization has taken place in the startup culture too, because most of the programs do good to themselves (in terms of getting a stake or earning money), than to the startups.

It is to be noted that there exists few mentors who genuinely help in the growth of the business with their experience. However, the entrepreneur has to be wary about the extent to which he take his mentor's advice. The prime issue of having a mentor is that, one's vision and thought process would be limited and guided between two lines. Considering even the day to day operations of a business setup like marketing where in printing pamphlets, it's distribution, online advertising, TV commercials,  etc.,  have to be done using the existing contacts of the mentors at a pre-determined price. This leads to limited scope to creativity, innovation and lessens your bargaining power. When you are not able to decide on the vendors and suggest ideas for differentiating your startups among your peers, then how will you deal with the customers of your startup? You are ultimately creating more dependency on mentors and making your choices limited. The nuances of the business will be understood once you actually get into the market, interact with number of people, vendors and shortlist yourself the best bet for your budget and service requirements rather than limiting yourself with the pre-defined set of parameters. Thinking out-of-box and not limiting your opportunities is one of the essential characteristics of an entrepreneur.

So ultimately the entrepreneur is left with the option of raising funds from family and friends with no interest rates or many times at high interest rates. Many a times, parents do not support the idea of setting up a startup which leaves the entrepreneur taking digs at many instances in the way forward and affecting his confidence levels. However a little support from the parents would go a long way in boosting up the confidence of the entrepreneur if not essentially a financial support.

My advice to all the budding entrepreneurs out there is to stop running after money and do not get blind folded by the mentors and investors. Do not let your passion die out and get swayed away by external forces. The core idea of the startup should be the crux of all the decisions taken ahead. Do not let your passion die out and stay determined on your idea of the startup. Do not mind to say a 'NO' if you are required to compromise on the core DNA of your startup. Be aware of all the programs and people you are associated with.You have taken on this journey of setting up a startup because you do not want to bow down to somebody, isn't it? Then do not let that happen even during your journey into a startup. Success will definitely be yours!

Being an Entrepreneur - 1

BEING AN ENTREPRENEUR - 1

Who is an Entrepreneur?

Well, the dictionary says that an entrepreneur is a person who organizes and manages any Enterprise, usually a business with considerable initiative and risk. As simple as the meaning might get, the life of an entrepreneur is next to a roller-coaster ride. I'll hereby take you on a ride on the life of an entrepreneur in general which will be presented as a series of posts.

So let's get going and start with how an entrepreneur is born?

When life gets mundane, and when there is an element of excitement missing in life each day, one loses the purpose of living and would not find a meaning to his life. At this juncture, people who fight back with the circumstances, family and the society with zeal and passion to add some excitement to his life, the road that is less travelled upon is chosen to explore and is set on an adventure giving birth to an entrepreneur who would strive to provide some meaning to his existence and value addition to the society at large.

Being an entrepreneur gives constant adrenaline rush each moment. An entrepreneur develops two sets of the audience for himself. One that supports and gives appreciation for the establishment of the idea and for the brevity, the guts that are required to break the shackles of commonplace thought - leaving a regularly paying job and entering into a risky business. The other portion of the audience, that staunchly provides criticism and stern opposition, trying desperately to bring you down. A healthy combination of both the sets of the audience will put you on your toes each day and keeps you motivated to sail through the storms.

How did the business of 'The Business' start?

It all started with the origin of human beings on Earth. According to climatic conditions, the fertility of the soil and the availability of water, the crops that were harvested in each area were different. For instance, an area richly harvests watermelons and another area harvests mangoes. Individually, these areas cannot cross produce crops. However, there is a demand for the fruit in the other area too where it is not harvested. So, the barter system took its existence for the exchange of the produce between the communities of both areas.

But then, is one unit of watermelon equal to one unit of a mango? This questioning has led to the idea of money. Minting money has started with the erstwhile copper coins to provide a common medium of exchange and to value the goods according to the effort and resources that are required to produce that particular good, size, quantity and the final value that a person who consumes the product derives out of it. More the value more is the price of the good.

The margin that is earned on a product or a service over and above the inherent costs is the profit for the business and is required for the survival and the continual running of the business. This had been the core concept of business since ages.

However, this core concept of business seems to be over-written by the modern day entrepreneurs. Business for them involves constant 'Money-burning'. For instance, let's take an example of Hush Puppies shoes that I had bought recently from a prominent e-commerce site. The MRP of the product is Rs. 5000/- However,  I could buy the same pair of shoes online at a much lower price of Rs. 3000/- Isn't it amazing to get the product at a whopping discount of 40.0%! Well, as enthusing as it may sound, have we ever thought of how are we able to avail such discounts which are next to impossible to avail when bought in a store? It is the business that is bearing the cost of the discounts enjoyed by us. The raw material cost, procurement cost, designing, manufacturing costs all sum up to Rs 5000/- which also includes a margin for Hush Puppies. The e-commerce site pays the brand it's due worth for selling the product through its channel.  However, the point that needs to be noted here is that the e-commerce business is actually not earning any margins on the product, instead, it is incurring additional costs such as fool-proof packaging, online presence, and digital marketing and the logistics of the product till delivery. If the costs of the same are included, the cost to the e-commerce site is much more than the original MRP. In the urge of acquiring customers and to do business in volumes, the business is taking the brunt by burning cash. But as a customer, how are we so assured of the quality of the product? Only time shall tell that. In this whole transaction, one thing is assured for sure, that neither the customer nor the seller understand the true worth of the product. The value of the product is actually diminished in the minds of the customer. Just think about the difference in treatment that you give to a similar pair of shoes bought alongside the road and the ones that are bought in a branded store. The core value of the product and it's worth is at stake.

Thus, burning cash has become a trending sutra by way of mega sales, promotional discounts. Thus, burning cash back and so on for startups to stand out among the rivals and attain growth. Off late, this has become a reason for the shut shop of many budding entrepreneurs as they are unable to get the funding to match up to their cash burn rate (the rate at which the company is losing money) and subsequently failing to meet the expectations of the investors too.

This is also the central reason for the giants of e-commerce sites like Flipkart, Snapdeal and its likes who are still finding it difficult to break-even after being operational for years in spite of availing series of fundings. This concept of 'Money-burning' essentially does not consider the value of the time and resources of the seller. Clearly, the success of the idea of an entrepreneur depends on how sturdily the establishment has been set up on the back-drop of finances. But how would the budding entrepreneurs work towards their ideas, who have left their jobs in the pursuit of becoming a successful entrepreneur if the concept of cash burning persists in the business?

To bridge this gap, the concept of 'Funding' has originated. We shall brainstorm about the challenges of an entrepreneur in availing Funding for the business in the next part of the blog series.

PK

Websites: PKC Laundries

                 Pk enterprises

Dhobi industry - Oh yeah!

During the daily course of my life, as I enjoy a three course nutritious meal each day, wearing branded clothing which is right in fashion and snoring away a good night's sleep under the roof of my own home; my mind at times drifts upon those people who are not able to avail any of the basic needs required to live with dignity in the society. There are countless number of people who are suffering in dire poverty in every walk of life. Poverty is such a disgrace to the nation, to which all of us together need to stand up to alleviate it. Stats yell out that India has the largest population in the world dwelling in poverty. About 21.9% of the total population of India is under the below poverty line who are not able to earn an average income of ₹ 33/day. So here comes the question as to how, we, the common men can contribute in a healthy manner to soft-pedal it each day, if not eradicate it completely overnight which of-course is a next to impossible task. 

As I brood on this disease that our nation had been grieving upon since ages, and the basic needs of human - food, clothing and shelter; it's not hard for all of us to realize that these three industries of food, clothing and shelter contribute a noteworthy portion of revenue to the service industry of the country. Among these sectors, food and shelter sectors are seen brimming with various innovative and competitive services day-in and day-out making the lives of the consumers pleasurable. Much to my surprise, the clothing sector with laundry services seems to be the most untapped area and the full potential is yet to be unleashed. 

Throwing some light on this Dhobi industry, the organised sector in the laundry service market is only ₹ 5,000.0 crores whereas the unorganised market is about ₹ 2,20,000.0 crores. Where unorganised sector thrives, there is no structure to the industry and there is a huge loss of opportunity to generate revenue for the country. That's when it had dawned upon me that there lies a huge untapped market for the laundry business with the majority of the market being highly unstructured, untapped and unorganised. 

Most of the population relied on dhobis and domestic helps to cater to their laundry needs which I now feel is an age old lost custom. In this present era with the busy weekdays and the slothful weekends of all the working and the student strata, doing their laundry is a daunting and an enervating task. This spurted the demand for the laundry services at disposal and has thus enabled the erstwhile smaller and unorganised laundry industry to strive to become organised and is ringing with opportunities to grow beyond conformity with an estimated market size of ₹ 2,20,000 crores.

All said and done, if we actually zoom into the base of the laundry industry, the foundation in itself has always been shaky with lack of proper structure in terms of quality and commitment. In this current generation, consumer focused on-demand service is the ultimate key for a business in any industry where we have seen the likes of Ola, Bigbasket, Hotstar and others tasting success which have adopted the mantra and are serving the customers in completing their job in a hassle-free manner. So here arises a pressing need for the consumer focused on demand service in the laundry industry too where you can avail quality laundry services at the click of a button with on-time delivery. With this driving force, the birth of PKC Laundries took roots.

Scrutinizing the things that are required to be changed in the laundry industry to make it organized, I had stumbled upon the following thoughts -

1. Safe practices of Dhobis - Persons who are into this profession, are exposed to harsh chemicals and intense heat which eventually deprives them of healthy life in the long term. The Dhobis are physically capable of doing laundry of about 30 clothes per day. However, in the need to pacify the burning stomachs of self and the family, they tend to take up the laundry task of 3-4 times of their ability. It is to be noted that all the processes that require chemical treatment to the clothes like bleaching and dry cleaning; have to be carried out in a secluded place wearing all the necessary protective masks and clothing. The chemicals used are very harmful to the skin when exposed to or inhaled, leading to  skin diseases and breathing disorders which may induce cancer in the long-term upon continuous exposure. Such is the impact on Dhobis, of which they are basically not aware. On the whole, Dhobis are compromising on their health and the health of the clothes too. Therefore the prime most thing that has to be done, is to educate Dhobis on the severity of impact cause on their health and their family indirectly and make them aware of the safe practices.

2. Licensed inclusion of Dhobis - Just like the Gold sellers to the meat sellers and to the belt shop owners who need a license to set shop their facility, licensing is required even for Dhobis to run their services. The major step towards making laundry industry into an organized industry, I intend Government to provide each Dhobi a license for setting a Dhobi service stop and bringing them onto same platform. Once such move is initiated, there will be no bounds in moulding an organized laundry industry. Laundry shops can be set up at a centralised location in each city wherein these licensed Dhobis carry out the operations. As a next move, Government could then provide basic equipment like steam iron boxes replacing the heavy and scorching smoky charcoal iron, safety equipment like gloves and safety masks for carrying out the chemical treatment of clothes. Currently, there is a wide demand-supply gap in laundry industry. These steps if implemented, would aid in that gap and also provide the opportunity of creating jobs. Just imagine the quantum of jobs that would be generated if the organized laundry market spins ahead from Rs. 5,000.0 crore mark to Rs. 2,20,000.0 crores. Isn't it mind boggling just to picture the future of laundry market? Yes, it is and I can hear a resounding Yes from each of the reader out there. With the increase in jobs, grows the revenue of the country. All this can happen, if and only if the laundry industry becomes organized.

3. Dignity of Laundry job - Well, this I'm rather surprised that over ages, doing the job of laundry had been a job of little significance and looked down by everyone. It is thought to be job for the lower strata illiterate people. For instance, just question yourself. Do you want to associate yourself in a job related to laundry? I can sense a big, firm NO. And yes, even I had and I am going through this phase, where I'm demeaned as a laundry person and that I could have been one even without any education. This cliched thinking of many has actually deprived the laundry industry of the glory it could have attained. All such like minded people, when actually go to other countries, do not take a back step in taking up jobs like being a receptionist, working in a petrol bunk, supermarket as salesperson, waiters in hotels and restaurants. When inquired about the same, I had always got a plain answer that there is dignity of labour abroad which is missing in India. Doing laundry is our daily need and I feel there is a necessity to give the Laundry job its long due dignity. The industry requires people who are well educated, who can stand up for taking the industry to the next level.

Many might question that such vision is a wild goose chase and is unattainable in India. I retort, as to why it cannot?  It's all in our blocked thinking. As rightly quoted by Sir Abdul Kalam, it's time we give wings to our thoughts and set ablaze to bring a change in the society no matter how small.

I leave you on this note, with a little hope that I have kindled the thoughts of at-least a few.