Success for entrepreneurs

S R Balachandran

Often people have the intention of conducting business of their own. There are several reasons for this:

a) to utilize the talent, money, experience gained

b) to express their views without restrictions

c) to improve their status both financially or otherwise

d) to continue without retirement

It is true several benefits accrue when you commence your own business. However, it does not mean that all entrepreneurs are successful in their operations. It is necessary to follow standard procedures to improve one’s position. Otherwise one could get into unredeemable difficulties.

a) Policy

Your policy must be clearly defined.

Whether your intention is to achieve super profits, average profits, market domination, creation of job opportunities, popularity in the business or even in the political world.

b) Familiar business

It is always better to involve in a business which you are familiar with and have a good knowledge and experience.

It is not advisable to risk your future on, unfamiliar business, depending on others. You should know what is called the ‘trick of the trade’.

c) Risk

It is true that profit is the remuneration for the risk you take. But you must be very careful in selecting your business.

For example if you have Rs 5 million cash and you are earning Rs 100,000 as salary, it is not advisable to resign from your job and commence a business with the Rs 5 million.

In the event of your business being unsuccessful your entire future comes to a standstill.

So it is better to commence your business and after assessing the performance you could resign from your permanent job and concentrate your business full time.

d) Personal interest

You should show personal interest in your business without depending on information furnished by an assistant.

The successful film producer late S S Vasan (Gemini Studio, India) once said that any business where personal attention is not given will collapse.

He used to visit the studio daily and watch all the activities. Because of his presence even actors and actresses started coming early. He himself took over the duty of the director once he realized that his director was wasting. This had resulted in massive cost saving and he was able to produce several successful films.

e) Strengths and weaknesses

It is very important to realize your strength and identify the weaknesses. You must take efforts to overcome you weaknesses and convert them into strengths.

For example if computer literacy is essential for your business you must take efforts to acquire adequate knowledge. When British ruled Sri Lanka every Governor selected was requested to become fluent in the language of the natives, so that they were able to approach the problem direct without going through translators.

f) Positive thinking

Positive thinking is very important for your business. You must always think that you would be successful in your business and watch your steps. If you are depressed when facing early losses you should not enhance your business activities.

For example at the start of Second World War Great Britain faced severe losses. However, Prime Minister Winston Churchil had great will power and enhanced his war operations, received aid from America and used the opportunity when Germany was defeated at the Russian War Front.

g) Early action

It is very important for you to take timely action when faced with difficulties. You must not take hasty decisions but must not delay action as well.

You should be like an army commander who changes his war tactics according to enemy action.

Napoleon once said that he had six ways of thinking to solve a problem.

h) Location

This is very important. If proper location is selected for your business, that itself would give a boost. For example restaurants situated closer to bus halt, tutories, business areas, will always have high patronage.

i) Customers

You should understand customers’ needs and plan your future. A customer who enters your business premises is considered King and proper attention should be given.

The point of sale is the moment of truth for the customer to experience the expectation he/she has of your organisation. This is a vital moment to meet and if possible beat the customer’s expectations.

Hence its important to have adequate stocks, courteous sales personnel and efficient service.

If you don’t provide what is a standard market expectation (something most of your competitors provide) then you are doomed to fail, if you provide something that no one else provides then you may succeed if the customers see that as a reward.

An Indian business magnet known as “Bread King” opened a branch in Dubai and observed that sales were not picking up.

On investigating he realized that people from that area do not wish to come out from their houses in the morning to purchase bread.

Immediately he arranged for home delivery service and was successful in his operation.

j) Timely information (statistics)

There was a time where one had to wait for about three months after completion of the financial year, to ascertain the results.

Due to introduction of computers, daily, weekly, monthly, quarterly and annual figures are available currently at the click of a button.

You should pay special attention to the following.

1. Whether sales are increasing at an acceptable level.

2. Whether a particular product is showing improvement.

3. Whether the number of customers are increasing.

4. High return of goods from the markets.

5. Whether suppliers are reluctant to supply.

6. Why there is shortage of stocks

7. Are banks refusing to give credit on time.

All these investigations should be done and corrective action should be taken.

k) Good labour relationship

To be successful businessman good employer-employee relationship is essential. Employees should feel that it is their business and therefore their future depends on its success.

1. Pay them proper salaries and also on time.

2. Pay all the statutory dues such as EPF, ETF contributions together with Retiring Gratuity on time.

3. If a good performance is observed praise them publicly and give them promotions where appropriate.

4. Encourage and assist them to gain more qualifications and training in the field they are working.

5. Payment of bonus is very important to make them feel they get a share of profit. Instead of paying them a fixed bonus, pay bonus fairly, variable with the profits earned. That would be an encouragement.

6. Give them extra benefits such as free meals, reimbursement of medical expenses, and funeral expenses in respect of their family members etc.

7. When they leave release their terminal benefits on time.

8. Some companies offer preferential job opportunities to the children of employees. This practice is adopted in Japan and proved to be successful.

l) Cash/Bank balances

It is very important to have adequate funds. This could be done by drawing a proper cash flow and adhering to same. There are companies who have earned super profits but faced cash flow difficulties due to high stocks and debtors.

Never allow your cheques be returned by your banker. This would lead to loss of goodwill. Further, in case of statutory payments like income tax cheques returned would attract penalties.

m) Credit policy

A proper credit policy should be drawn up and adhered to.

Some companies follow no credit policy. Though profits are less, bad debts and liquidity problems are avoided.

Utmost care should be exercised pertaining to granting of credit, collection of debts, and timely legal action if debtors do not pay. Some companies grant credit, based on bank guarantee submitted by the customer.

This is a good step where the banker will pay if the debtors default.

n) Proper accounts

Ensure accounts are available on time, audited and tax liability etc properly computed. This ensures timely action taken where necessary.

o) Statutory dues

All statutory dues such as Taxes (Income Tax, VAT, ESC, NBT.BTT etc) EPF and ETF contributions should be paid on time. Failure to do so would result in penalty. Wilful evasion is a criminal offence.

p) Illegal transactions

Never enter into illegal transactions such as purchasing of smuggled goods, stolen goods, duty unpaid goods etc. Tax evasion is illegal and this would affect the goodwill of the company.

q) Advertising

It is very important to advertise the products. They say no advertising is like winking at a girl in the dark.

However, ensure that there is no over advertising which increases the expectations of the public and the failure to meet such expectation results in loss of goodwill.

r) Scandals

Time to time, scandals may be raised about the product, company, etc. Sometimes the reports appear in the media about the product, may be true.

In such event immediate action should be taken by withdrawing all the stocks from the market, advising the foreign suppliers and the local manufacturers on time and proper publicity be given for the action so taken.

If the information is false, objection together with certificates received from experts should be published. Business is like a race horse and even a slip, if not controlled, will result in disaster.

s) Meeting with dealers

It is better to have an annal meeting with your selected customers and dealers. This improves your trade relationship and result in increased customer relationship. At such meetings, the problems faced by the customers should be considered and proper action taken to rectify same.

Often most customers complain about tax difficulties and this should be clearly explained through a tax specialist.

t) Etiquette

It is very important to maintain etiquette when dealing with customers, members of staff and even with competitors.

Healthy competition is important and not cut throat competition. Ensure members of the same trade are united for better benefit from the Government.

u) Market domination

If you wish to have a market domination it is necessary have program set up. If the current market share is 15 percent never aim to capture a market share of 50 percent dominated by another trader.

Watch the person who is next, having 20 percent and ensure to take over his share by proper and efficient dealing.

Now on reaching market share of 35 percent it will be easier to concentrate to capture the material share from the competitor.

The resources should not be wasted at the early stage of competition with the major competitors.

v) Personal weaknesses

Personal weaknesses towards liquor and having drinks with your employees should be kept away from business.

High positions should not be given to friends who are not adequately qualified. This could result in frustration to other employees.

w) Personality development

Please ensure that there is proper personality development, by acquiring adequate qualifications, knowledge, experience, professional approach to your problems, proper dress code etc.

Personality development is essential for high level of success.