Business

Entrepreneurship- The key to success?

/ Business

This article is based on a talk that I recently delivered at IBS, Mumbai at the request of the Entrepreneurship Cell of IBS. This was an online session of 60 minutes attended by the students of the college and several other guests.

The following is a short excerpt from the session I conducted.

Entrepreneurship is always a great career move.

If you are here this evening, it is probably because you want to be an entrepreneur, or because you want to take your entrepreneurial skills to the next level. Either way, you have made the right choice. 

Entrepreneurship will always be a massive field of unexplored opportunities. You can build a viable business around any one idea you believe has potential! 

As the session unfolds, we shall explore how do we enjoy the exciting journey of entrepreneurship together and witness the marriage of creativity with opportunity.

An entrepreneurial journey is full of excitement! You get to do what you love since you enjoy the business that you chose. You have passion and an obsession with the project. It is the thrill of converting an idea into a business model. This task requires your commitment and determination. If you approach it in this manner, you will experience this journey as a rollercoaster that provides an adventure every day. There is no stagnancy since every day brings new experiences. As an entrepreneur, you get to learn new things and apply your creativity to innovate in a dynamic industry. You are the boss and you make the rules for yourself and for others. You get to choose your team members as well as your clients/projects. 

So you might be wondering—How do I start? 

Start with creating or finding an idea. Then, develop your idea into a business model. The next step is to perfect this business model to the extent possible, and ensure that it is technically feasible, financially viable and economically desirable. Finally, ask yourself if your business is sustainable?

You can accomplish this

• As a full-time grassroots entrepreneur / an intrapreneur

• As a part-timer along with your existing job

• As a franchiser or franchisee

• As a Business Support Organization (BSO)

You may ask now: Sir, you tell me a great business idea so I will build from there!

My answer to this question is — “No business idea in the world will fit every aspiring entrepreneur’s dream. Your desire of starting a venture as an ambitious young entrepreneur depends on your individual circumstances and several external factors!”

You must exploit your own unique situations — your educational background, your unique skill sets, your years of experience, combined with clever financial management — to create an opportunity that best suits what you bring to the table.

In other words, make the best use of what you have, to achieve what you want to have!

Remember that your attitude, cultural background, value systems, and mindset are most important. 

Some entrepreneurs select their projects after a structured process of project identification. Still, others select their businesses on a random basis. Either of the approaches works if you truly believe in the idea. 

At this point, many people would wonder: “Alright, I have an idea but how do I get the money to execute it?”

In other words, 

How to fund your project?

You can fund your project from your own equity as well as equity contributions from your family, friends, relatives, and associates. You can also bring in quasi-equity. Apart from equity, you can also raise term loans from various banks and DFIs. 

Other sources to fund your business/project include angel investors, venture capitalists, ICDs, Crowdfunding and others. 

I particularly emphasize three sources from where entrepreneurs can raise funds during the start-up phase. These are bootstrapping, getting equity support from your college batchmates, and approaching a few important stakeholders like the suppliers of machinery and raw materials to lend you equity support. In fact, I got to know about these pearls of wisdom when I attended an international seminar a few years back in Mumbai. The seminar was graced by many famous serial entrepreneurs who were sharing their personal experiences with the attendees.

Here are a few important tips for the entrepreneurs for their start-up success.

During the project execution stage, there are three important aspects that you as an entrepreneur must keep in mind. The first aspect is that you must keep your timeline in control and no activity howsoever important should be allowed to exceed the completion time allotted to it. Remember that any slippage on the timeline will lead to additional costs. The second aspect relates to your project cost. Ensure that there is no escalation in the project cost come what may. The project cost must be contained within the budgeted figure and the entire project team must be sensitized on this aspect. The third aspect relates to the scope of the project. Under no circumstances, you should agree to any change/s in the scope of the project as this may over-capitalize your project. We all know that over-capitalization is a bad thing and creates a lot of trouble for you later.

During the operations phase of the project (what we also refer to as normal business operations), we must try to achieve the well-known five performance objectives. These are cost, quality, speed, dependability and flexibility. Let me explain. You must keep your cost of production in check so that you remain competitive in the market. You must also offer high-quality goods and services to your customers. Apart from these two objectives, try to improve upon the speed of delivery; meaning, you must cut on the lead time of your customers. The last two objectives relate to dependability and flexibility. By this, I mean that you must try to satisfy your customers on all possible dimensions, and ensure that you remain a dependable supplier to them.

Many entrepreneurs out of their sheer enthusiasm tend to borrow huge sums of money from banks and DFIs right during the start-up phase. I generally advise entrepreneurs who come to me to not follow this practice. In my opinion, an entrepreneur should build their business module by module and enhance their borrowings only in that proportion. Once you, as an entrepreneur, have mastered the art and science of handling money, and making money from money, you can always step up your borrowings.

My next tip is about choosing your co-promoters and business partners. Here, you must remember that anyone who is a good friend may not necessarily be a good business partner. Many such friends join your start-up with an investor mindset, meaning that they remain sitting at the fence all the time. If the venture succeeds, they’re more than happy or else, they console themselves that it was a bad investment for them. An ideal co-promoter/partner will share your vision for the business and will remain with you through thick and thin.

Apart from the above suggestions, I would like to point out that entrepreneurs during their start-up journey should also pay special heed to certain critical aspects like effective management of the working capital, ensuring adequate liquidity by maintaining the current ratio always above 1, striving their best to create, communicate and deliver value to all their stakeholders, and finally using their network to advantage.

Last but not the least, I urge that you must find a mentor. Entrepreneurship can be a lonely and confusing journey, especially at the start. A mentor can be a friend, philosopher, and guide to you at every stage in your professional as well as your personal life. A mentor, who has professional experience in the field, insulates you from failure. A good mentor is one who has already traversed the path that you are now embarking on! 

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Do you find the entrepreneurial journey exciting?

/ Business

It is always more exciting and lucrative to be an entrepreneur, intrapreneur, or freelancer than being in a secure corporate job. Entrepreneurship is a career opportunity if you want to go up the social hierarchy or economic hierarchy. Let us understand that future growth will come from new ideas and therefore we must be ready to make all-out efforts for the creation of new ideas and then to invest our time, money, and resources in those ideas – to convert those ideas into technically feasible, financially viable, economically desirable, and above all sustainable businesses.

As great entrepreneurs, we must create great enterprises. This can be done by adhering to certain basic ideas:

#1

The first and the foremost factor is the choice of people we are going to work with. Hire the best people with excellent domain knowledge, skills, and experience. They should be good team players and possess above-average interpersonal skills. They must be go-getters and know how to survive in cross-cultural and multi-disciplinary work settings. Let us not forget that only excellent people will be able to build excellent organizations. 

#2

The second element to focus on is building great internal business processes for your organization. This can be done with professional help and support from consultants, and experts. This is again teamwork where your own executives work with outside consultants to develop and institute various processes and flowcharts. The presence of such established processes lays the groundwork for the smooth conduction of day-to-day working.

#3

After ensuring that you have competent people and world-class business processes – the third idea deals with developing conducive management and operational culture within the enterprise. Once you have done this – you are all set to make those wonderful decisions that take your organization ahead towards success and profitability. Remember that it is the quality of your decisions and actions that eventually drives you towards success. 

#4

The fourth aspect is about instituting a system of planning, monitoring, and control. Here, you can depend upon concepts like Budgetary Controls, Gantt Charts, and other computerized software to monitor and control activities, budgets, timelines (schedules), and costs. You also must institute a robust MIS (Management Information System) to ensure that you provide all necessary information to your top management without any delay. 

#5

Last but not the least – do identify a mentor who can be a friend, philosopher, and guide to you at every stage in your professional as well as your personal life. Work in close association with your mentor to prepare a grand action blueprint for your future. Carefully analyze scenarios and fine-tune your decisions and/or action plans depending upon the situation. Entrepreneurship can be a lonely and confusing journey, especially at the start. A mentor plays the role of the constant support that guides you towards your goals, towards success. The primary purpose of a mentor is to help drive your personal/professional growth. Your mentor can also help you to enhance your knowledge, and build the required skills. Mentors can also be useful to you in building your network by making introductions for you to their own contacts.

There’s more…

Apart from the above, there are many social issues involved when you’re starting a business. It’s important to structure your time and set boundaries so you have balance in your life. This makes you more productive, more present when you’re working in your business and gives your family much-needed time and attention. Network wisely and benefit from the social environment of networking by listening to others. Make a difference in your community and in the world by partnering with charities and NGOs and building a loyal clientele in the process. By addressing the social issues with starting a new business and developing useful strategies for dealing with them, you’ll feel less drained by the start-up stress and have more time with your family. And, with your full attention and smart strategies, your start-up will stand a chance of being more successful and profitable in the long run.

Get in touch with me if you are excited by the idea of entrepreneurship. You can write to me on kktandon@gmail.com

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Importance of Financial Statements #GreatMinds

/ Business, Great Minds

All business organisations prepare Profit and Loss Account. It gives a summary of the income and expenses for a specified period. They also prepare a Balance Sheet, which shows the financial position of the organisation at the end of the specified period. Financial statements are used to control the organisation. The figures for the current year can be compared with the previous year’s figures. They can also be compared with the figures of other similar organisations. Ratio analysis can be used to find out and analyse the financial statements. Ratio analysis helps to understand the profitability, liquidity, and solvency position of the business.

Here’s what Jim Blasingame, an American small business expert and radio talk-show host, has to say:

WHAT DO YOU THINK?

Let me know in the comments section.

In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.

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Product Line Pricing #GreatMinds

/ Business, Great Minds

When a primary product is offered with different features or benefits, essentially creating multiple “different” products or services, it’s called Product Line Pricing. The goal of product line pricing is to maximize profits. Think of a car, for example, which could be the primary product. It could come standard, with a sunroof and navigation system or fully stocked with all the features and add-ons. Each product after would then be priced accordingly. The more features offered, the more consumers will pay. The aim is to draw enough interest in the primary product that the upgraded product will be sold (at a greater price) based on the interest in the “basic” primary product. By using Product Line Pricing, some individual products may not make profits, but the intent is for the product line as a whole to turn a profit.

Here’s what Warren Buffet, an American business magnate, investor, and philanthropist, has to say:

WHAT DO YOU THINK?

Let me know in the comments section.

In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.

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Entrepreneurship – An Exciting Opportunity! #GreatMinds

/ Business, Great Minds

It is more exciting and lucrative to be an entrepreneur, an intrapreneur, or a freelancer than being in a secure job. Entrepreneurship is a career opportunity if you want to go up the social hierarchy or economic hierarchy. Let us understand that future growth will come from new ideas. Therefore, we must be ready to invest in the creation of new ideas! We should all become entrepreneurs. Becoming an entrepreneur is not a business model – it is entirely your mindset that pushes you to do so. Identify your dream business and then put your 100 per cent into it. Employ competent people (build a great team), deploy world-class processes, and have a good mentor who can be your friend, philosopher, and guide through various stages of your business. 

Here’s what Robert Toru Kiyosaki, an American businessman and author of ‘Rich Dad Poor Dad’, has to say:

WHAT DO YOU THINK?

Let me know in the comments section.

In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.

Entrepreneurship – An Exciting Opportunity! #GreatMinds Read More »

Insulating SMEs Against Financial Risks

/ Business
Read on for specific suggestions to insulate your small business against financial risks.

Planning a start-up in the SME space? That is indeed a great idea! If you work smart for an initial period of, say 18 to 30 months, there are fair chances that you will make a reasonable success of your venture. 

When I say – work smart – I mean that you strictly adhere to the roadmap provided in your business plan document. Avoid the time and cost over-runs, and most importantly – let there be no changes in the project scope. Adhere to the project scope outlined in the business plan and do not make any changes – unless there are exceptionally important reasons to do so. 

Apart from exercising time, cost, and scope control – you should also mobilize the best possible human, financial, informational, and physical resources for your business/project – the human resources being the most important. Identify and position competent people in your business/project team, take good care of them, and you are done – your people will now take care of your business.

There are certain other aspects too that will warrant your specific attention – these are creating an atmosphere of learning and growth within the organization, establishing world-class business processes, instituting proper customer care and support systems, creating suitable checks and balances, and MIS. Along with all this – adhering to well-known management and organizational practices (like unity of command, delegation principle, authority/responsibility relationships, teamwork, effective de-centralization, and others) will be the icing on the cake. 

I am now making a few specific suggestions to insulate your small and medium business/project from financial risks. The suggestions given below are not to be looked at in isolation – these can be suitably blended with general business guidance given above – and the resultant knowledge can be deployed to insulate your business/project against all kinds of financial risks. 

Avoid over-capitalization

The project must be adequately funded, and the entrepreneur should keep their external borrowings as low as possible till they can reasonably insulate their business against initial start-up risks. The risk of over-capitalization shows up even when we change the project scope unnecessarily as explained earlier. 

Avoid the temptation to borrow more

There is a danger in borrowing more. This increases the interest burden on the enterprise. And the unnecessary interest burden may kill the project and/or jeopardize future profitability. 

Have a balanced capital structure

The proper choice of the debt:equity ratio will help the entrepreneur understand that to what extent he/she can leverage financial resources for the growth of the enterprise. For a first-generation entrepreneur who is embarking upon a small business with his limited means (equity), it will be a good measure not to create a big asset base unless there are valid reasons to do so. Going slow and developing the business in small modules should be a good strategy for eventual success. 

Cost-Benefit Analysis is vital

Once the project has been implemented and commercial operations have commenced – it will be of utmost necessity for the entrepreneur to undertake regular cost-benefit analyses before implementing any of the major operating decisions. The entrepreneur can resort to renting or lease options to start with and make a permanent investment in assets later. All decisions on advertising and interest costs must be questioned twice – these and similar other costs, wherever and whenever possible, must be contained/avoided. 

Poor WC management can cripple operations

Many new projects fail during the operations phase for want of effective working capital and cash flow management. Regular internal monitoring of the Cash-Credit account must therefore be done in active consultation and collaboration with the lending bank. Levels of stocks/inventories, debtors and creditors should be effectively monitored to ensure good liquidity. 

Cut unnecessary costs and expenditure

We must keep an eye on all avoidable expense items including promotion, advertising and interest costs. Salaries and wages once started cannot be discontinued. It will be, therefore, necessary to build the organizational team in stages. Unless and until the enterprise can afford a full-fledged salary and wages bill, one should try to manage with retainers, part-timers, and outsourcing options. 

Working towards Profits

This will call for creating adequate value addition in operations to enhance financial surplus, profits, and wealth creation. Your products and services must conform to the needs and wants of customers and should be regularly modified based on customers’ feedback. Cost of creation/production of goods and services must be reduced through good shop floor management, effective supply chain, expenditure control, better efficiencies, and value engineering. We must build necessary distinctive competencies and consequently the competitive advantage to have an edge over competitors. Each activity in the value chain must be improved to create better “value add” and consequently the higher profit.

Leaving you with an insightful quote on risk management by Peter L. Bernstein who was American financial historian, economist and educator:

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Do You have an Entrepreneurial Mindset?

/ Business, Motivation
https://cdn.pixabay.com/photo/2021/08/21/12/08/impossible-6562613_960_720.jpg

Your performance depends, to a large extent, upon your mindset – if you think you can do it, you will be able to do it. All aspiring young entrepreneurs require a mindset that is different from the mindset of a typical employee working in a corporate job. It is all related to one’s thinking and attitude!

If an employee is happy with his/her job content, able to earn an above-average salary every month and still able to save some money for the future – they will generally be considered satisfied with their career prospects. That is an employee’s comfort zone. However, this is not the case with an entrepreneur! An entrepreneur will love to operate with more and more degrees of freedom rather than looking for any kind of security or zone of comfort. An entrepreneur should find their comfort zone in being uncomfortable – chasing opportunities, doing innovations, and striving to create value for their customers and other stakeholders.

The concept of entrepreneurship caught momentum during the mid-1990s with the success of Microsoft and Apple — both companies were started on a small scale and grew into the largest enterprises in the world. 

The mention of an entrepreneur usually makes one think of a “technopreneur“. Whereas the most prominent and successful entrepreneurs have emerged from the IT sector, it is not that entrepreneurial opportunities do not exist in other domains. So many successful entrepreneurs have originated from manufacturing, pharmaceuticals, electronics, and other industries too!

There are certain universal traits in all the entrepreneurs. These have been listed below:

Entrepreneurs are strong-willed individuals who have high resilience, meaning — they are not easily discouraged from what they want to accomplish. They exhibit a never-say-die attitude.

Good entrepreneurs are effective and quick decision-makers. They very well understand that there is no result unless you make a fast decision. Once the decision is taken, they follow it up with a prompt action to implement that decision.

Good entrepreneurs always take responsibility for their decisions, actions, and outcomes. They do not blame other persons (or circumstances) for their failures and/or wrong actions. They seldom react – instead, they give a proactive response.

Entrepreneurs believe in intelligent risk-taking. They take calculated risks that will pan out in the long run.

Entrepreneurs are not afraid of failures – they hold the attitude, “I did not fail, my project failed.” Failures are their learning opportunities and stepping stones to success.

Entrepreneurs often operate outside their comfort zone.

Entrepreneurs possess a visionary mindset that allows an individual to see the value of a business idea before and ahead of other individuals.

Entrepreneurs demonstrate mental ability, agility, quick thinking, flexibility, tenacity, and a sense of productivity. 

Entrepreneurs possess excellent problem-solving skills, and this provides them with a feeling of personal enhancement.

Entrepreneurs have an adaptive attitude and are open to learning new things – they have an enthusiastic attitude towards learning. Entrepreneurs will not mind learning even from their competitors.

Entrepreneurs are open to embracing new technologies, love research and experimentation to create new and innovative offerings for their markets.

Let me end the blog-post with the motivational words of Jack Ma Yun, who is a Chinese business magnate, investor and the co-founder and former executive chairman of Alibaba Group:

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Why do we need Corporate Governance? #GreatMinds

/ Business, Great Minds, Management

Corporate Governance is the system of rules, procedures, processes, and systems by which a company is directed and controlled. Adhering to good governance practices brings about an excellent balance in the interests of a company’s many stakeholders – customers, employees, shareholders, management, suppliers, financiers, government, and the community. Since corporate governance also provides the structure for attaining a company’s objectives, it incorporates practically every aspect of management – planning, strategizing, instituting effective control systems, performance measurement and corporate disclosure.

Here’s what Dominic Cadbury, a British businessman and member of the Cadbury chocolate manufacturing dynasty, has to say:

WHAT DO YOU THINK?

Let me know in the comments section.

In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.

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Ensuring Success of Mergers & Acquisitions (M&As) #GreatMinds

/ Business, Great Minds, Management

Post-merger Integration Issues (PMIs) – this is the single main reason for the failure of M&As in quite many cases. Senior executives and other key managers generally remain occupied with negotiations and deal details of M&As rather than focusing on the vital aspect of post-merger integration. The merged firm needs a leader who can guide the combined entity and provide a sense of purpose and direction to the entire organization. This, among other things, will require visionary leadership, the magic of effective communication, aiming for high synergy and the ability to address cultural differences.

Let us take a closer look at the following image with this in mind:

WHAT DO YOU THINK?

Let me know in the comments section.

In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.

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The Common Problems Start-ups Face

/ Business

Last week, I wrote a post about start-ups. I discussed the difference between start-ups and small businesses and what traits make start-ups unique. You can read it here. This article is a sequel to the introductory post.

Today, in this blog post, I want to discuss the various problems that start-ups face and elaborate on the possible solutions. The most common problems that start-ups face are raising capital, or failure of business model, poor human resource management and many other unforeseen challenges. But let me take you through these challenges in a sequential manner.

Developing the Vision and the Business Idea – The success of any start-up rests on, to a large extent, the right selection of the product and/or service to be offered by the entrepreneur to his/her customers and the market(s), the entrepreneur is proposing to serve. We call this activity – Opportunity Sensing & Project Selection (OSPS). To effectively carry out the OSPS exercise, an entrepreneur must scan his/her external business environment thoroughly to spot and exploit suitable opportunities. An entrepreneur must possess the ability to see what others cannot see. While others see problems, an entrepreneur should see opportunities. An entrepreneur can also connect with various consultants and advisors, dealers, state level and central financial institutions, various government departments (which work for promoting industrial development in the country), various trade fairs and exhibitions for obtaining new business ideas. 

Raising Funds for the Start-up – After deciding upon the business idea, the next challenge an entrepreneur faces when starting a business from scratch, is that of raising funds. Trying to convince investors about something that does not exist is certainly a challenge – but then there is an advantage with the entrepreneur – he/she knows everything about his/her project from the idea stage to detailed planning. And therefore – the entrepreneur can use all his/her knowledge about various aspects of the venture to convince prospective investors, venture capitalists, angel investors, banks, and others to raise required capital (both debt and equity) for the business. 

Marketing and Sales related Problems – This is a major problem area for so many start-ups. Entrepreneurs should conduct desk research (from various secondary sources) as also structured market surveys during their business planning stage to have adequate knowledge about demand-supply gaps. All-out efforts must be directed to capture projected market demand for the product in various market segments. Suitable studies on customer needs and wants, buying behaviours and preferences should also be conducted. Only after such studies – entrepreneurs should decide about their product and market offerings. Entrepreneurs should also work on their marketing plan and strategies suitably to decide on their marketing mix – particularly about pricing, promotional, and advertising strategies.  

Business Model Failure – This is one of the most common causes of failure in the start-up world. Entrepreneurs are generally quite confident about their strategy to acquire customers. They assume that because they will build an interesting website, product, or service, that customers will rush to their door. That may happen with the first few customers, but after that, it rapidly becomes an expensive task to attract, win, and retain customers. To take care of such complications – an entrepreneur should stay in regular touch with competent advisors/consultants – who can offer necessary professional help in striking the much-needed balance in three crucial functional areas – operations, marketing, and strategy. An insider and/or a mentor can also effectively do this role. 

Poor Management Team – Another common problem that causes start-ups to fail is a weak management team. Weak management teams make mistakes in multiple areas – like building a product that no one wants to buy, poor marketing management, ineffective customer relationship management, and others. Such poor management teams also do not perform well in undertaking planning functions, exercising controls, and strategy formulation and execution. To avoid such problems – the main entrepreneur should focus upon building effective teams at strategic, tactical, and operational levels. Besides, they should also provide for proper learning, growth, and training opportunities for employees.

Liquidity or Cash Crunch – Another major reason that start-ups fail is that they run out of cash. A key job of the CEO is to understand how much cash is left and whether that will carry the company to a milestone that can lead to successful financing, or cash flow positive. The only way to manage liquidity is effective working capital management in consultation with your bankers and the Chartered Accountant.

Product Development Problems – Another reason that companies fail is that they fail to develop a product that meets the market need. Most of the time the first product that a start-up brings to the market does not meet the market requirement. The root cause of this problem lies in the business planning stage when the product was developed for the first time. Ideally, a product should be developed by a multi-disciplinary team comprising marketing, market research, operations, finance, purchase, and R&D members – with full support from the top management.

Finding Good Employees – Business owners know how difficult it is to find a hardworking, trustworthy employee. Most employees want to work less and get paid more. Finding a good employee who will be passionate about delivering his or her services is quite difficult. Finding good employees is a minor task compared to the business challenge of forging your hired employees into a team. 

“The competition to hire the best will increase in the years ahead. Companies that give extra flexibility to their employees will have the edge in this area.”

Bill Gates

Dealing with Competition – Competition is yet another crucial challenge that start-up entrepreneurs face when they are starting a business. Most individuals see competition as bad, but competition is a good challenge. It is a benchmark for creativity, the main engine that stimulates innovation and production of quality products at the right prices. Without competition, there will be no innovation and without innovation, the world will be stagnant. Competition keeps us on our toes and drives us to constantly improve our products and services. Competition can make our business lose its relevance in the eye of our customers and therefore – we must always be on guard.

Lack of Research & Development Facility – We all know that it is a time for innovation and creativity. Any business can fail if no efforts are being made to constantly innovate. The start-ups lack financial viability and face cash crunch always, therefore, they find it difficult to take up R&D activities.

Unforeseen Business Challenges

The following grid lists some of the unpredictable challenges that can crop up for startups:

Unexpected Legal SuitsInconsistent Government PoliciesUnexpected Employee Turnover
Bad Debts from CustomersUNFORESEEN BUSINESS CHALLENGESForce Majeure
Loss of Market Share (to competitors)Working Capital and Inventory ProblemsUnforeseen Increase in Business Expenses

Mitigation Strategies

Here are some things that an entrepreneur can deploy to mitigate difficult situations in business:

Defining and understanding the problem correctly. State all the facts and major issues involved. If need be – carry out the SWOT Analysis to understand the situation completely.

There are a few things that you can do nothing about. They are not problems; they are merely facts of life. Often, what appears to be a problem is an oppor­tunity in disguise. 

Do root cause analysis. Find out the root cause of the problem – rather than treating a symptom. If the root cause is not understood, the problem will occur again, perhaps with different symptoms.

Develop Options. The more possible solutions you develop, the more likely you will come up with the right one. The quality of the solution seems to be directly proportional to the number of options (possible solutions) considered in problem-solving.

Decide on a solution. Do not delay your decision. Postponing any decision-making will never ensure that you have made a good decision. Once you have made your decision – decide on a course of action. Be firm in your action and go ahead.

Instead of getting offended or embarrassed when your product does not do well or someone badmouths your brand in an attempt to elevate their own, look at the problem as a direct route to connect with your customers or competition. If your customers are unhappy, correct the problem.

Involve all members of your organization in process simplification, adherence to lean manufacturing, and quality assurance programs. They should also be trained to practice effective cost and expenditure control. 

I hope you found this article informative and insightful. Let me know what you think in the comments below!

References

  • H, Mayuri. “Mobilising Resources for Startups: Types, Problems and Solution | Entrepreneurship | Business.” Essays, Research Papers and Articles on Business Management, 4 Sept. 2018, www.businessmanagementideas.com/startups/mobilising-resources-for-startups-types-problems-and-solution-entrepreneurship-business/18188.
  • Kanchana, R. S., J. V. Divya, and A. Ansalna Beegom. “Challenges faced by new entrepreneurs.” International journal of current research and academic review 1.3 (2013): 71-78.

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