Entrepreneurship for the “Common man”
Whenever we decide to mentor someone for entrepreneurship, the first thing we like to do is ask them to go our and research the options in the market first. The problem is most people we work with are trying to move from the E quadrant (employee quadrant) to the B quadrant (Business quadrant). Their worldview is that of the E world but their eyes are set for the B world. The two worlds are poles apart. We can see the shiny successes of the B world because we have a romanticised idea of business and entrepreneurship which comes from movies like “Guru” and “The Social Network” and most recently “Sui Dhaga”. The portrayals are a 100% accurate but the problem is that the story from nothing to everything gets done in less than 3 hours. And it’s difficult to expand each phase shown to 10 and 15 years which is how it actually pans out in real life. Like they say “overnight success usually takes 10 years”.
The options that the “common man” who is a professional like me is considering are not practically infinite. Common man being defined as the person who does not get a radical, innovative or technically unique idea like Mark Zuckerberg, Bill Gates or Elon Musk and is not exceptionally gifted with a different worldview and the power to shape the world like Steve Jobs or Richard Branson. And that covers most of us out there who will perhaps ever read this article. And if you are one of us, then, before you explore a business option of opening a Restaurant/Cafe or source some product from China and do online sales or open a services based business like in health or beauty or grooming or housekeeping or cleaning or maintenance or open a boutique or buy a ice cream/pizza/bagels franchise or try one of the few legit Network Distribution models like through Amway, ask the following questions:
How much is the startup investment that it will take - for example for a food stall it could be anywhere from 3-5lacs or a restaurant could be 15-20lacs or franchise could be 40-50lacs or a services based business could take 2-5lacs or a network distribution model could be 10-15k and so on
How much will be the running cost monthly for the business - this the money you need every single month on the 1st of the month to pay for the salaries, rent, utilities, EMIs, royalties, taxes etc. This money is a fixed cost every month irrespective of how much revenue you do or don’t generate that month from your business. If your business doesn’t perform…well..you pay from your pocket for it.
What is the break even time for the business idea you are considering - for most businesses that means can you just cover the monthly expenses of your business? Most of the time it doesn’t mean recovering the initial investment. That is considered “cost” of business which might never be recovered most of the time.
How much time commitment will be needed to set it up and then to run it on a day to day basis? Can it be run part time with your full time profession or will you have to move full time into it?
Can you identify a mentor in the domain who has successfully walked the path before - such guidance is invaluable because you can save yourself the pain of learning everything by yourself and stand on the shoulders of giants so to say.
It’s easy to start something but are you aware of the effort it will take to sustain and run the business in the long run? What are the risks and how do you close it down if you have to?
Is the business scalable? Most businesses can hardly make any profit from a single unit because most of the profit goes in creating the systems itself. Profit can only be made if the model can be duplicated and scaled up. Scaling up almost always means multiplied investment and risk but if a business is not scalable it can become really frustrating in the future.