MODERN ENTREPRENEUR
the funds at his disposal and figure out how much capital will be needed and when it will be needed .
When a company scales , it needs funds . Choosing the best funding option is important to the growth of a company . It is important to be aware of the various ways for raising funds - friends and family , self funding , VCs , banks , angel investors , incubators and IPOs going public .
Create or cater a need
11When dealing with products and services , there is no place for mediocrity . Excellence is the need of the hour . It is hard to sustain something that is not world class .
Entrepreneurship needs conviction to try something new , something that does not exist . There are two ways to sustain a business -- either you cater to the needs of the client or you create the need yourself .
The iPod is a classic example of a product that created its need in the market , whereas e-commerce is an example of finding a new solution to an old problem .
Recruit the right people
12A start-up is built around the initial people it recruits . Recruit people who are self-driven and are willing to go the extra mile . Hire the best talent to do each job . Never compromise on the quality of people .
Find experts and let them take control . Let them have the centre stage and make decisions . Let the best people handle the work and drive things . Build a team -- people tend to bring out their best when they are collaborating rather than competing with each other .
Work on the exit plan
13Most entrepreneurs neglect the exit option . They find it difficult to comprehend selling their business or other exit options .
It is important to consider your exit strategy when starting-up . The most common selling option is to be acquired by another business , a private investor or management . Some businesses also go for mergers and IPO ( Initial Public Offering of shares ) as an exit option .
Working capital and
14finances
How much working capital is required ? How are the finances going to be managed ?
It is very important to streamline the accounts and finances from the beginning . Most entrepreneurs , especially those with a technical background , do not understand finances . However , businesses cannot be run without an understanding of money .
Equity of company
15Decide beforehand the stakes involved in the business . The start-up is a very early stage , but one needs to have a fair idea of how the equity will be distributed . Many start-ups fail when there is contention in distribution of the equity .
The founders and the board must lay everything out clearly before the team . A rough guideline that most successful start-ups follow for equity is as follows : Founder / Board / Mgmt : 33 % Venture fund : 33 % Employees : 34 %
16 Uncertainty
The route of a start-up is unpredictable , to say the least . The people on board should be prepared mentally to go through this tough journey and deal with any sort of challenges . Whether it is a complete change in technology , financial crunch , product failure , internal conflicts , damage by nature , or dealing with loss of people , one cannot afford to let the situation dictate terms .
10 ModernBusiness October 2016