I Wish I Knew Then

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.

Short URL: http://emergic.org/?p=11090

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