Emergic: Rajesh Jain's Blog

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I Wish I Knew Then

April 6th, 2010 · 14 Comments

Inc Magazine India asked me to write a short column entitled “I Wish I Knew Then.” This is what I wrote. (Some of the points have been mentioned on the blog in the past.)

I have been an entrepreneur for nearly 18 years. My first company was acquired five years after I started it. It was a small company – there were just about 20 employees, and we had about Rs 3 crore in revenue. So, I never got to learn how to build a business which is, to borrow a phrase from a Jim Collins book, Built to Last. This time around, the business I am building is much bigger – we are already 180 people and many times in revenue of the previous company that I had built. I have learnt that the way I was used to doing business then is not going to help me this time to scale. I want to share some of those learnings which will be especially useful for early-stage companies. If I knew a few years ago what I know now, I would have done a much better job in building my present business.

Watching the Cashflow: It has been rightly said that the one of biggest reason for failure small businesses is (deteriorating) Cashflow. If billings take time to convert into cash, then it can lead to a difficult predicament – expenses continue to happen on schedule, and incoming cash slows down (even though sales numbers may hit their targets). So, keep a watch out for collections in the business, and monitor aging reports of debtors (especially those over 60 days) closely.

Thinking Multi-Monetisation: A friend once asked me a seemingly innocuous question: What is the one thing that can cause us to fail? I thought for a minute and replied: Reliance on a single revenue stream. He argued that a business must have focus. My counter-point: At the early stage of a new industry, it is not obvious where the value creation will happen and what will be the dominant business model or revenue stream. In that scenario, one needs to be able to try out multiple different options and get quick learnings as to what will work and what will not. At that stage, it would be suicidal for a business to just bet on a single revenue stream assuming that is the only one which will work.

Continued tomorrow.

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14 responses so far ↓

  • 1 harsha // Apr 6, 2010 at 7:49 am

    >> Reliance on a single revenue stream
    You nailed it down Rajesh, it is the sole reason many SME would go down after initial success, however it may not so relevant for B2C model.

  • 2 Rama Vadakattu // Apr 6, 2010 at 9:48 am

    Rajesh you should also share how you went from zero to 3 crores 🙂 this will be much more interesting to people who are just started and struggling …………

    Few questions like :
    ————————-
    1) What initial preparation did you made before starting up?
    2) What was ringing in you mind before building a business?
    3) did your initial idea worked?
    4) What are the key things a (especially techy) entrepreneur should know before starting up a business?
    5)What mistakes did you made?
    6)How did you sustain in the initially years where getting money from other people is tough.
    7) What should a ( especially techy enterpreneur ) should know about running a
    business?

    etc…

    thanks
    rama

  • 3 Santosh // Apr 6, 2010 at 1:58 pm

    there is nothing which 1 can be sure of in the early stage of the a technology start-ups except about “implicit/expressed consumer problem”. all other things – the solution, the product, the revenue model, the customer (in many cases users & customers are different), the pricing, et al – are more of trial & error.
    there are times when an entrepreneur cracks the market in 1st attempt, but these would be more of exception than rule.

    The only truth is “lack of clarity in entirety”. One may be clear on certain aspect of the market need, product, customer segment, pricing, etc. But getting clarity at once on all aspects of business is rare.

  • 4 kasi // Apr 6, 2010 at 6:55 pm

    Rajesh,
    People may accept your counter argument… because you have proven your thought.

    If I say the same thing not many people agree 🙂 .

  • 5 Sameer // Apr 7, 2010 at 7:17 am

    Rajesh,

    That revenue streams are not v clear at the early stages of a business is a v candid thought. I wish more startups were less sure of themselves, and willing to experiment with multiple models, packaging etc. Keeps design open, and nimbleness happens as a good side effect 🙂

    Rgds,
    Sameer

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