Hello Young Entrepreneur A. Senthivel pot

In many individuals’ life, business and personal life become inseparable in the sense the financial needs of the personal side of life do make inroads into the finances of the company..

Hello Young Entrepreneur

A Senthivel (Co-author, “Life is Fundamentally Management”)

Published by A Senthivel at Smashwords

Copyright 2013 A Senthivel

www.alignedliving.in

Table of contents

1 Why this trouble 3

2 Is the universe conspiring

against you! 6

3 Do we exercise choice? 8

4 What is the ideal way? 28

1 Why this trouble?

The news kindled my thoughts As an entrepreneur, I have also committed serious mistakes in managing my business and finances Without mistakes, we cannot learn But it is not always

necessary that we learn only from our own mistakes We can learn

from others’ mistakes, too There is one more way to avoid all mistakes completely – not do anything at all in life I am sure you will agree that this will be the greatest mistake that one can commit

in life – doing nothing!

At small levels, where the company is run by one individual or by

a small group of people, accountability to debts takes a personal colour whereas with huge corporate companies, it becomes a

`formal’ thing when that company files for bankruptcy In the case

of big companies, everything is mutually agreed beforehand – right

at the time of floating a company and asking people to subscribe for shares, it is clearly told that it is subject to risk, to the extent of even filing for bankruptcy when things go too bad!

Here our focus is not on a relatively `few’ big business houses, but the focus is on the relatively large and very large segment of small entrepreneurs – who play in the range of one crore to about 50 crores of turnover a year

Not all of us enter business with an MBA Nor do all MBAs display that practical sense which is needed to run a business successfully, at least for the few initial years, whatever be the business - a restaurant, or a hotel, or a manufacturing unit, or a software firm Rashmi Bansal in her book, Stay Hungry, Stay Foolish, has beautifully described how different IIM graduates have struggled to reach the next higher level of practical wisdom

So, a degree is a help, but not a guarantee certificate against mistakes

One thing is sure – everyone enters the fray of business with a lot

of desire and hope These are the true ingredients with which, I am sure, most of the big-time business people would have also started their small beginnings! The desire to grow, the desire to make things happen, the desire to see the establishment of big office and

factory set-ups, the desire to see a huge pay roll in one’s company, the desire to spread geographically across into other continents, the desire to enjoy those material benefits that become a possibility because of business – luxury homes, swanky cars, sophisticated gadgets – these endless desires remain the magma that erupts out

in the form of motivation to individuals! Yes, for a person who has achieved reasonable amount of success in business life, all these may not be a driving force These things are presumed to be the natural accompaniment in the life style of those people But, for those people who have not tasted business success and the good things such a success can bring about, it remains the source of every day motivation!

At this stage when one is engulfed in the fire of making things happen, one’s mind does not have the time to take a balanced look

at how to run the business process In fact, it is not only good but also desirable to have that fire burning in the belly Otherwise, there is no impetus Too much initial thinking might create a situation like the one Dr.Edward de Bono describes where a centipede lies paralysed because he started analysing which leg followed which other leg! So, to start with, getting catapulted in to the business world with all the fire and enthusiasm is all natural and desirable, too!

What I have realized is that there are certain common sense guidelines which if one sticks to, from the beginning, then one may not enter the red zone of deep debts and irredeemable situations I accept that business cannot always take the predictable route One could be displaying the greatest wisdom, restraint, financial discipline and pre-emptive ways of functioning, but what about those external conditions and influences which are not in one’s control? A day’s strike by the truck owners can throw your calculations completely haywire when that crucial raw material you had been waiting for so anxiously gets delayed by 24 to 48 hours Five of your crucial employees going on leave around the same time can cause a setback much disproportionate to the sum which goes as their salaries for those days But again, beyond a point, you cannot push the employees We need to respect their private situations also

There are `n’ number of small surprises that could slow down the everyday business pace and all this could be factored into your general approach to your business Avoidance of avoidable mistakes takes the first priority If the basic, avoidable mistakes are ignored and if someone takes a route which flies in the face of these basics then it paves way for the resultant, undesirable, and negative situation from which escape becomes impossible

My interest in writing this short book is to help the young and fresh entrepreneurs to take a balanced view of things and proceed

in a manner which will help avoid unnecessary troubles resulting from gross mismanagement of business and finance

Deep troubles in business life can be avoided Troubles, in

my view, can be avoided to a great extent if we are wakeful to the realities on a daily basis In many individuals’ life, business and personal life become inseparable in the sense the financial needs of the personal side of life do make inroads into the finances of the company There is no right or wrong here But the financial indiscipline corrodes into the vitals of the business and one day it leads to unmanageable pressure The trouble in business life is largely self-made With efforts, we can stay clear!

2 Is the universe conspiring against you?

All of us live by beliefs Some of us believe in luck, some in the helping hand of God, some in sheer hard work, some in the well-wishes of parents, some in the auspicious red or blue stone that they are wearing on their ring finger, and some in the positivity of their spouses, and so on A belief in the positive entails a belief in the corresponding negative side also While it is healthy to allow some positive beliefs to serve as encouraging factors, we should be cautious against negative beliefs ruining our life

With all due respect for people’s beliefs, I feel like saying this that God only helps those who help themselves Negative beliefs become more energised especially when someone gets into trouble that is too deep to

be solved immediately A person starts entertaining the feeling that some negative force is definitely working against him simply because of the immensity of the problem But he may not realize the fact that the trouble had been brewing for quite some time about which he had been ignorant Wrong expenditure patterns, or for that matter un-audited expenditure habits, have a way of snow-balling silently And they don’t bother a person until the trouble becomes sizeable enough to put a spoke

in the smooth business operations

The point is that although other factors could affect the way we do our business or the way we go about our spending, an awareness of the happenings inside our business can go a long way in ensuring the business does not derail

So, I would suggest an attitude of realism which does not bring in too much of beliefs in the business process A scientific kind of attitude will make sure we play the game of business within the healthy outer limits

so that we never have to worry about big troubles There are `n’ number

of success stories in the business world where companies have seen centuries of successful operation There is Bosch which has done business successfully for the last 125 years There is Boeing which has spanned a century of progressive growth There is Ford marching through times victoriously ever since mankind opened a page for

automobile history! One of the documented success stories is that of South West Airlines – they boast, deservedly, of more than three decades

of profitable business, in spite of spells of bad times for the aviation industry The first pair of slippers I wore was from Bata It has been and

is ubiquitous even today There is no need to add to the list because everyone knows at least a dozen successful companies, small and big!

So successful business is a norm! Nobody is ever conspiring against any

of us to prevent us from becoming successful in business! An interesting statement which I read long years ago still lingers in my memory – `what man can do, man can do!’ But wisdom lies in giving some time to think about the specific ways that successful businesses have adopted!

My father was a truck cleaner when he started his life Then he worked

as a tourist bus driver After a few years of service, he wanted to become

an entrepreneur by owning a truck Seeing my father’s loyalty and ordinary hard work, the owner of the bus company helped him in many ways to buy a truck He bought a truck and it was running successfully for a few years This motivated him to buy a bigger, 10-wheeler truck that had just been introduced in the market by Ashok Leyland (Till then, 6-wheel truck with a permissible payload of 10 tons was the norm)

extra-He sold the current truck and bought this 10-wheeler This gave him an euphoria that generally changed the way he spent money He became a little lavish in his own style and started monetarily supporting quite a few

of his own kith and kin When money is drained from the business, naturally it will start creating pressure situations – no money to buy tyres, no money for diesel, etc My father could not see the fact that the way he was spending had to do with the pressure situations He used to blame the company that sold this truck They used a picture of a large truck carrying another truck on its back when they released this vehicle

in to the market – what they meant was that earlier a truck used to carry a maximum of 10 tons of permissible load and now one truck can carry the load of two trucks put together Although the truck was sold on this promise that it can carry twice as much the regular 6-wheeler truck, my father faced problems when the truck crossed over to the other states in India In the home state, they allowed 20 tons but in neighbouring states they had a different rule – they allowed only 14 tons This brought the revenue drastically down for my father I accept that if the truck had been allowed to carry 20 tons across states, my father would have made more revenue per trip

Here I have a point to make Yes, there was that discrepancy in the load capacity permitted by different states But, that alone was not directly responsible for the financial pressures my father faced It was one of the factors My father never could possibly think that it was he who was responsible for the financial pressures – the way he took money away from his business, the way he spent money on his friends, kith and kin!

In short, he spent more than what he earned! So, from my own experience of what happened in my family, I am sure that external factors do not conspire against us It is our own ignorance, over-confidence and unthinking ways that cause a lot of trouble to us!

3 DO WE EXERCISE CHOICE?

Here, we will look at why we tend to behave the way we have as applicable in our business lives The basic assumption here is that we are the architect of our own destiny, in terms of success in business life Situations could be conducive or adverse We are not going to talk about them We are going to talk about how we are going to run our brains on a day to day basis

All great men and women of business must have started their life one day

as a baby, and then they became a toddler, and then an adult and so on The basic theory of human behaviour is that we tend to behave the way

we are conditioned to behave! Conditioned way is simply a programmed way Monkey see, monkey do is the basis of our learning! If the mother winks, we will also wink If the father whistles, we will also try to whistle If the father speaks in a raised voice, we also copy the father, and so on This is something known to all of us But what is not known

to us is in what major behavioural ways we each is scripted in! Someone could be scripted in over-spending, someone else could be scripted in impolite behaviour and yet another could be scripted in taking vengeance

When I say scripting, please note it is a strong word If I say you are scripted in over-spending, the tendency on your part to spend compulsively will even push you to the extent of borrowing and spending, unmindful of the consequences! Your scripting could easily become the determining factor of your destiny

So, it is advisable to develop self-awareness right from the beginning of your work life We will look at some of the detrimental scripting and how we can change our ways, in practical everyday situations

Scripting 1: We can rotate money

When I started my travel company and when I first collected a sum of Rs.20,000/- from a client, I felt great I felt instantly successful My business was working on the model of earning 10-15% commission on the sum collected from the customers All the money that I collected from the customer was not mine! I knew this intellectually But I did not know this emotionally This means I ended up spending the entire Rs.20,000/- to fulfil my personal (family)needs And I knew that by the time I had to make payment to the supplier against this collection, I would have collected some money from further customers! I got this scripting from my father But I did not realize at that time that I had this deep-rooted scripting in me! It took several years of financial hardship to open my eyes to this reality The point is that if you are scripted in rotating money, you will be literally blind-folded to other reasonable ways! Your scripting dominates you absolutely!

Some of you might ask if it is not a wise way to rotate money as it is paves way for meeting our financial needs without having to borrow additionally towards working capital or even to fulfil personal needs Yes, it does Rotation of money definitely helps The insidious danger is that it becomes a habit The promise of tomorrow’s business (which is

yet to take place) becomes the basis for today’s spending! And the spending goes on increasing as and when money is lying in the bank account

I am not saying that people spend the money in rotation only to fulfil their personal needs On more than one occasion, people have been seen choosing to invest in real estate and even as a capital for starting a fresh business with the rotation money Again, this is not wrong But the whole thing becomes unmanageable when we lose track of what we are doing

Times are changing The internet has brought about unbelievable quick possibilities in terms of money transfer Those days, we used to depend

on drawing a demand draft if we wanted to send out-station payments A cheque used to take an unusually long time to get cleared Hence, people used to accumulate reasonably big sums and then make lump sum payments Now, those of you who are scripted in rotating money, you can cultivate a new habit of paying the suppliers or vendors immediately after collecting money from the customer

First of all, this habit of paying immediately to the supplier or vendor will help in immense ways in building a credibility track record! Secondly, this practice of paying off immediately will not leave much of others’ money in the bank account and hence the possibility of your withdrawing that money is ruled out! And slowly you will cultivate a habit of living on your profits, and only profits This is very, very important This obviates the need for any kind of sleepless nights due to payment pressures

See, the theory of business is that you offer some service or product for a price, make profit out of the difference between the cost and the selling price, then live out of the profit I don’t think any healthy definition of business would include this that you can make a living or make your investments out of rotating the creditors’ money

If you feel a sort of reluctance to this idea of paying off the vendor immediately, it could be due to your wrong scripting or you could be comparing yourself with others Supposing one of your friends is seen living comfortably by using the creditors’ money, then you will also start thinking, `why not?’ It is at this moment that we need to exercise extra-ordinary caution and courage to practice what we believe is the best way

We do not have to copy others’ model and there is no point in getting carried away by the external appearances A person, who buys luxury cars or houses prematurely, might pull off for some time But it will catch up with him If there is steady flow of ever-growing business and profit, he may get away But any lean periods will expose the true situation!

It might be difficult in the initial stages to practice this paying off immediately But it will create a life-time habit in you! This means for a life-time, the trouble on this score is eliminated!

Another thing is that your business will run in full strength and vigour if financial problems are absent Every day morning if you wake up with a

worry as to how you are going to clear your cheques today, then 90% of your energy is already consumed by this worry! No great energy will be left for you to put in your business activities So, it makes sense to ensure that finance is managed properly For this to happen, you need to delay your gratification! If your impulses push you to the car showroom every time a new model is introduced, then it is time to rethink your ways It is

in your own selfish interest to delay buying things that you value most because premature purchases will catch up with you in the form of every day pressures! Sometimes, what you bought pre-maturely may have to

be sold pre-maturely, too, in order to solve the financial problem Let your neighbour or your cousin buy whatever he wants! Just because he bought a luxury car, you should not also jump into it!

What if you find that you are already into rotating the company’s funds? What if rotating money is already a habit with you? If that is the case, it

is high time you sat by yourself for some time and asked yourself if you would like to continue with the current style or slowly change the way! You can enter into a contract with your supplies and vendors that from now on you will pay them immediately and that the old outstanding would be cleared in a phased manner

Old habits die hard! This is a potent saying So, it is better to start your business with healthy habits!

Scripting 2: We can take a loan!

What is currently impossible may become possible immediately due to the possibility offered by loans! Loan is a boon as well as a bane! It is what we make out of it!

For an aspiring person who does not have funds, one whole lifetime might become stifled if loans were not available to him at all! So, for a person who wants to make things happen, loan is the best friend But, for

a person who is addicted to taking loans against every business or personal need, loan becomes an enemy!

Loans have a definite quid pro quo They facilitate certain things and take a big price out of you Most of us are overwhelmed by the pleasant fact that someone or some institution is ready to offer that huge sum which can fulfil our today’s need We emotionally enjoy the wish becoming a possibility If a car costs 20 lakhs, and if you were to wait to accumulate that money from your profits, it might take a considerable number of years whereas the possibility of loan makes it happen today!

So, loan is God-like, so to say!

See, the human mind is a habit-building mechanism If you take one loan and fulfil one need, the mind will extend the logic and make you think of taking one more loan and fulfil one more need Is it wrong? No But, the mind will push you to the brim, and one day you will wake up to the reality that you have about 16 loans running in parallel!

If the earning capacity also grows with every passing month, then it is absolutely fine But when the growth curve is moving gently up, your loans should also be kept proportionate to the repayment capacity

Otherwise, what will happen is that all the meagre or good profit that you earn will be eaten away by the interest part!

So, in the context of running a business, what is the right perspective on loans? We need to calculate the profits that can be earned over and above the repayment-instalments and only if it is worth it, we should go for the loan Any given time, profitable business should be no.1 priority When business is not profitable loans will become curses

The loans must enable us to set up a new business or expand existing business and thus should pave way for profit making, if not immediately

at least over a period of time If the profit making is spread over too long

a period, then the interest will nullify the advantages of the loan!

Ultimately, you should not consume the loan money, only the business should consume the loan money Loan should not become today’s happiness and tomorrow’s misery

Loan is definitely needed in the initial stages But, somewhere you should draw a line and follow, ideally, the Infosys route of running a debt-free company! I am not talking about any right or wrong here Wouldn’t you love it if you were running a company that is debt-free and

is profitable year after year?

Now check your scripting If you have a tendency to think of loans against every business or personal need, then it is time you sat down to think of healthier ways I am sure you would also love to be loan-free but

at the same time have plenty of surplus money Let us work towards that ideal One day it will become a reality if we steadily work towards it! There might be some tax benefits against loan repayments I am not disputing that My whole intention is to help you look at your own habitual ways from a distance as if you were a third person observing the situation You should not become a victim to pre-scripted programs! Simply because your father had the habit of taking loans, you also need not become a victim to that habit! If you need a loan, and if you are fully convinced of the wisdom of paying interest on that loan and if you are convinced it is worthwhile, then you can go ahead But, my cautions need not make you fear loans, either You know what loans can do to you, and how much you need to pay back and after knowing all this clearly, if you still want, you can go for it!

Scripting 3: I am very lenient with people, you know!

In running a business, the most challenging aspect is managing your people! People are all not the same! They all come with different basic dispositions! Each one is scripted in different ways Some are scripted in working hard, some are scripted in working extended hours, some time

to time, some are scripted in looking only at their own benefits, some are scripted in practicing win-win, some are scripted in not caring for reporting on time, some work for money, some treat their work as enjoyment, some people have no problems reporting to seniors and some don’t like being questioned, and so on! You might find someone extremely talented but very emotional and difficult to deal with Some people will never understand your urgency and will only follow their

own pace at work, come what may Some will be over-enthusiastic and over-reactive to situations Some will be radical in their thinking and behaviour Some will have balanced personalities and some will have low-esteem problems Uniformity is just not possible where there is more than one person at workplace

If you were to devise an approach-plan specific to each of them, then all your time will go in this and still you will not succeed fully, as people don’t display consistent behaviour all the times, in spite of them possessing some basically strong and identifiable behaviour patterns

At the same time, there is no one-size-fits-all formula when it comes to dealing with people How you deal with your people is more likely to be prompted by your own core nature rather than any of the management lessons that you read in books! One manager could be quite lenient, another could be inordinately lenient, another could be tough, yet another could be very tough, and so on No one method is fully right or fully wrong And all styles, whether it is in this extreme or in that extreme, will still work and produce some results An employer who is rude continues to survive as well as the one who is quite considerate and respectful There is no question of anybody not surviving and continuing

to be in their place But, there is something called the best practices!

In addition to adopting a fundamentally respectful and considerate attitude towards employees, it is best to have objective norms and goals that are mutually agreed between you and your employees Of all the business lessons, I personally valued the one given by Dr Stephen Covey – agreed beforehand! See, when we deal with people with varied personality traits, it is best to subscribe to a goal which will work in the interest of all the people involved! And as a business owner, you always deserve the right to stick to what you think are your values and goals, in

so far as they don’t’ take away the dignity of the employees or so long as they don’t mean exploitation of people or cheating them in any implicit manner

As an employer, if you believe in working extended hours, you have every right to practice your ideal But when you cannot impose it on your employees and the legal frame work of any company stipulates the number of hours an employee is expected to work in a day But, as a non-legal ideal, if you still value the importance of working extended hours, then you can choose to inspire your people periodically by sharing your ideas and by explaining how a higher commitment to work can yield a higher reward for both the company and the employees.Coming to the question of leniency, I would suggest that, when it comes

to work-relations, you maintain a set of objective norms to guide your decision- making process If you believe in giving allowances (non-monetary), it is better to jot down and make it a part of the objective guideline

A lot of companies believe in family-friendly approach to employees and they provide even such facilities as a crèche and indoor games inside their own premises Inspite of providing the best facilities, you should

have a system of making sure people fall in line with the basic mandatory things expected out of them that are mutually agreed upon

It is a wonderful quality to respect people and trust people But only extra-ordinarily mature people can profess that high level of commitment even under the absence of supervision And business not being a charity, you cannot afford a huge amount of lenience as you might practice in a school

Human nature is governed, to a large extent, by the second law of thermodynamics Human beings, by virtue of possessing a mass, ie., their body, will tend to move towards disorganization and chaos if not pulled upward constantly by a force! Lethargy and slackness will play a spoilsport with the quality and quantity of work if people are left without supervision for longer periods I am not suggesting that human beings are not reliable I am saying human beings are also subject to the natural forces that are acting upon them!

In a way, too much of lenience will fundamentally contribute towards spoiling a person’s future If you are insisting on a minimum amount of hard work from a person, you are probably doing something good that person! We all know that without that minimum amount of discipline, hard work and commitment to work, things don’t improve

But, at the same time, the desire to produce results should not make you behave like a robot programmed in rigour and callousness If you pull the elastic beyond its current capacity to endure, it will break! The right approach is two-fold – one is to insist on your employees falling in line and honouring the minimum, pre-agreed conditions of fulfilling obligations and the second thing is to work on their inner selves by appealing to their good sense And the latter is done better by periodical motivational and inspirational speeches Although hiring of the external teachers will help, your own communication of your own beliefs through your own mouth will go a much longer way! In your company you are the ultimate leader Things will take the direction of your own thinking!

It cannot be otherwise Your own core beliefs only will form the work culture People down the line, will tend to speak your own language

In a way, you have to inspire people to be tough with themselves As Zig Ziglar says, `if you are tough with yourself, life will be easy on you, if you are easy on yourself, life will be tough with you!’

With force we cannot get things done to the degree to which expect But, when inspired, people can go a very long way

Now check your own scripting Who did you learn your management style from? A movie character could have become your model or your father or mother or your uncle or a friend! You will not know the source

of your management style very consciously But, it will be operating from within you! There is no point in copying somebody else’s model If you mull over all the points that we are discussing here, you might evolve your own unique style which is not copied from anyone and the new style could be reflecting a lot of objectivity!

And if you are genuine with yourself, you will easily identify your scripting If you are able identify your own psychological ways, and then you can start working on change!

So, lenience or toughness? The solution lies in between Sticking to objective norms will correct your undue lenience and the path of inspiring people will obviate the need for undue toughness

Scripting 4: I believe in being shrewd.

Acumen is not shrewdness Smartness is not outwitting people by resorting to immoral and cunning ways Be it an employee or a customer, they will come to know of your intentions within two or three transactions As James Allen says people think they can hide their thoughts, but they really cannot because they will show up in words and deeds An insincere attitude will ruin the prospects of success People don’t like lies and people don’t like to deal with untrustworthy people Although people give allowance for weaknesses like not being very prompt, coming a little late or postponing a little, they will not forgive intentional lapses

Being honest with yourself and with your employees, customers and vendors seems to be the best way And all of them will definitely respect you for this honesty Speaking or practicing lies only erodes credibility There is no other strength which will rank higher than credibility in the business situation I am sure each one of you have a list of people whom you can trust and whom you cannot trust In this light, it should be our endeavour to be in the list of `trustworthy people’ in others’ eyes!

Sometimes, we wrongly pride ourselves in saying that we are `smart’ Being smart (in the negative sense) might help you win the battle today, but not the war ultimately

You are never dealing with machines or buildings in your life All that you can deal with in your life are human beings And human beings love trust Sometimes they may not be themselves trustworthy but if others are not trustworthy, they will not like it!

If you think it is not too much, the very best way in business is to practice the golden rule – do unto others what you will have them do unto you! What you don’t want to receive, you should not give to others What you love to receive from others, you should also give that to others! If you like trust, you should be trustworthy, in the first place If you don’t like delayed responses, then you should not be giving delayed responses to your customers If you don’t like being told lies, then you should avoid speaking lies to customers That’s all Such a practice will make you a respected person! Not that you should be a respected person

in order to run a business, but your business will benefit a lot if you choose to remain a respected person

I know of a film producer who maintains an impeccable track record in terms of clearing his cheques But, occasionally when a situation arises where there is insufficient balance to clear a cheque, his bank just passes the cheque, whatever be the deficit amount, and then informs the