Enterprising Entrepreneurship 1

Charms of an Entrepreneur 2
Credentials of an Entrepreneur 4
The Changes & Challenges 7
Risk Taking - the Way 10
Entrepreneurship Skills 12
Skills Enhancement 15
Communication 18
Express to Impress 21
Presentation Skills 23
Time Management 30
Men Management 32
Leadership Skills 35
Team Building 38
Resource Management 41
Crisis Management 44
Problem Solving 46
Creativity 49
Business Idea Generation 53
Business Ideal Identification 55
Business plan - a Case Study 58
Business Market 61
Marketing Strategy 63
Selling Techniques 64
Customer Relationship Management 66
Financial Management 70
Pricing, Costing, Profit 77
Accounting & Legal Aspects 79
Business Mistakes 83
Towards Excellence 87
Catalog
Be an Entrepreneur
Entrepreneurship is a social phenomenon and it is not inherent
within a person, rather it exists in the interaction between people.
To be a successful Entrepreneur it requires an out of way thinking
by acquiring various skills and efforts in learning to understand a
business. Entrepreneurship is the future of our modern India. It
reflects a ray of hope for the unemployed to earn a living and
maintain a dignified life and also for the economic development of
our country.
Entrepreneurs are the driving forces behind any economy. They
create large corporations out of backyard enterprises. Henry ford,
Bill Gates, N R Narayanamurthy, Dhirubhai Ambani and many
other were people who envisioned a dream and took risk to achieve
their dream. They marched to a different beat. They were
innovators, inventors, and adventurers.
Entrepreneurs are people who do things, which are not generally
done in the ordinary course of a business. It is not surprising that
every fortune 500 Enterprise in existence is the result of an
entrepreneur's enterprise and perseverance. Entrepreneurs are
pillars of industrial strength - the movers and shakers who
constructively disrupt status quo.
Enterprising Entrepreneurship 1
1
Innovation is the specific tool of
entrepreneurs, the means by
which they exploit change as an
opportunity for a different
business or a different service. it
is capable of being presented as
a discipline, capable of being
learned, capable of being
practiced. Entrepreneurs need
to search purposefully for the
sources of innovation, the
changes and their symptoms
that indicate opportunities for
successful innovation. And they
need to know and to apply the
principles of successful
innovation.
-Peter F. Drucker,
The Father of Modern Management
Be an Entrepreneur
Every day, new businesses open. More and more people want to
become entrepreneurs because of the many benefits and
privileges that are available as venture into business. The business
world is not exactly easy. As a matter of fact, it is complicated and
could be quite stressful, but despite the negativities and pressures
attached to it, many people still want to become entrepreneurs-
why?
They aspire to conquer a level of business ownership, and they do
all that they can to surpass the challenges and finally get there. But
what is "there" exactly? What is there to aspire for that business
owners feel it necessary to do all possible? What makes one
person willing to go through all the obstacles? What invigorates him
and helps him grasp reality more firmly?
If you ask any successful entrepreneur they will say that their
triumphs have been a result of combined motivations; that without
it, they would not be where they are now. So, what motivates an
entrepreneur to move forward? What motivates an entrepreneur to
meet success?
FULFILLMENT OF A DREAM
Most things begin with dreams and a lot of entrepreneurs began
their journeys with the building of dreams. These dreams became
the fuel that projected their paths towards success. When you have
a goal in mind and you keep your mind hard at it, you will not lose
your way. You will be focused on attaining this one goal and you
will do all you can to get to it.
Charms of an Entrepreneur 2
2
Theres lots of stuff none of us
have ever seen before. Thats
good in some ways, but limiting
in other ways.
-Mark Zuckerberg,
Co-founder-Facebook.
Be an Entrepreneur
SEEING AN IDEA FLOURISH INTO SPECTACULAR
Entrepreneurs are idea builders. Unlike most people who only go
with the flow, they have innovative minds that are able to
conceptualize winning ideas. When an idea is born, it takes one
risky movement that sets its pace. Entrepreneurs are motivated by
thought of seeing these ideas becoming ideals
FEEDING ONE'S PASSION
Not all people are the same. Not all people want the same things
and this is what sets everyone apart from one another. Who you
are as a person and as a worker will be dictated by your passions
in life. If you are working to feed your passion, if you are doing
something that you love, then you will never go weary. Many
people remain in stagnant situations because they are doing things
that do not mean anything to them. Successful entrepreneurs take
magnificent leaps forward because they are invigorated by their
passion for success and their commitment to their goals.
BUILDING BETTER LIVES
If there were one thing that truly sets an entrepreneur apart from
normal people, it would be the dream to build better lives for
people. They do not get into business only for their personal gain,
instead they work hard because they know that their efforts will
ultimately provide comfort to those whom they could reach and it
could, even a little, bring something good for many people around.
Entrepreneurs are a different breed of businessmen and they are
different not just in the leaps of success that they were able to
achieve but this difference is mostly signified by the very attitude to
be significant. Their motivations brought them to where they are
now and these motivations could be yours as well.
3
Nobody talks of entrepreneur-
ship as survival, but thats
exactly what it is and what
nurtures creative thinking.
-Richard Branson,
Founder Virgin mobile.
Be an Entrepreneur
Whenever we talk about a business term it is essential to analyse
its meaning, ENTREPRENEURSHIP i.e. trying to identify market
opportunities, arranging resources to bring an imaginative idea to a
practical situation and investing these resources in order to attain
long term gains for everyone involved in it.
A. BE GOAL-ORIENTED, ACCOUNTABLE AND
DISCIPLINED
Knowing where we're going is the first step to achieving your
dreams, and a clear vision and plan will help you reach them. Even
as conditions change in and around business, always have a target
that directs daily actions and take consistent and regular steps
toward actually reaching it. Have people and tools in place to keep
on track, whether that's regular check-ins with an accountability
partner or weekly reviews. Remember that, at the end of the day,
the buck stops with the head. No matter what schedule or approach
is, it must be disciplined and steadily move in the direction of goal.
B. BE ADAPTABLE, RESILIENT AND DETERMINED
Change is inevitable, and there will be plenty of times one will need
correct course and modify plans so that his/her business isn't left
behind.
Be ready and willing to accommodate changes in the marketplace
and be careful not so rigid that we miss opportunities for growth
and improvement. In addition to being adaptable, it's important to
be OK with failure. "Fall seven times, get up eight," as the proverb
goes.
Credentials of an Entrepreneur 3
4
Seek first to understand, then to
be understood
-Stephen R. Covey
Be an Entrepreneur
Mistakes and failure come with the territory of being a successful
entrepreneur, and if we're not making mistakes, we're not putting
ourselves out there enough.
Being in business for ourselves will push to the breaking point
sometimes, so we'll have to be determined and remind ourselves
how far we've come. Find assistance through other entrepreneurs
and small business owners who can help, through difficult times
and challenges. It takes a great deal of commitment and dedication
to see a business to success, but if we stick with it, we will
eventually get there.
C. BE CREATIVE AND OPEN-MINDED
Solving problems, promoting businesses and expanding into new
markets will require a good dose of creativity and imagination.
Without it, every setback and obstacle will seem insurmountable.
Look for possibility everywhere. Think of how other industries deal
with issues we are facing and find ways to adapt those solutions to
work for our business. Stay flexible, make room for a variety of
possibilities and believe that there's always a way.
D. BE CONFIDENT AND OPTIMISTIC
One will come across plenty of resisters along through the way to
success, so it's important to become very selective with hearing
and about whose advice to seek. Find mentors and other big
thinkers who can call on for inspiration and advice, and most
importantly, believe in self and abilities.
E. BE PERSISTENT
There will be plenty of times when one just has to stick with an idea
long enough for it to take hold. It takes persistent and a whole lot
of the same thing over and over to finally make progress.
F. BE AN AVID LEARNER
So much can be learned from the experience of others, and
fortunately, there are thousands of books out there from
entrepreneurs who have achieved success. Many such books are
available for free at local libraries or inexpensive through book-
trading sites. One new book every two weeks is over two dozen by
the end of a year!
5
Keep your feet on the ground
and your thoughts at lofty
heights.
-Kiran Mazumdar-Shaw,
Founder BIOCON India
Be an Entrepreneur
G. BE AMBITIOUS AND DRIVEN
Without motivation, it will take a lot to justify the hard work and time
required to get a business off the ground. No one should care more
about your success than you, and if you're not driven to achieve
your goals, every obstacle will provide the perfect opportunity to
quit.
H. BE A SELF-STARTER
Neither your mom or your teacher nor your boss will be there to
make sure you show up and do the work for business. So you have
to be self-starting, making sure that you have regular, dedicated
time to move the big rocks each day.
I. BE PASSIONATE
Above all, one should be passionate about the work. It's a choice
to go into business, so why not choose something we love to do?
There's no reason to dread starting a new day, so find something
passionate about that build business and life around it.
6
There is no failure except in no
longer trying.
-Suhas Gopinath
Be an Entrepreneur
When someone asks you if it is going to rain, you make your best-
estimation by saying that it might, but you cannot guarantee that it
will. The charm glitters there. It is all about hope and facing the
challenges passionately.
A. MEGA BUSINESSES:
The advent of much bigger competition, especially regional and
national chains, into the same geographical area poses an
immediate threat to the startup business. With deeper pockets of
money, they can outspend the start up businesses in every aspect
of their business and still charge lesser for their products.
Big businesses control the entire supply chain and they can
manipulate it to meet the customer needs dynamically. They also
leverage high-end technology to keep costs under control in a way
that cannot be emulated by the startup businesses. They also have
several partnerships which allow them to bundle a wide variety of
products and services for their customers.
B. FINDING AND RETAINING QUALIFIED WORKERS:
Initially small businesses cannot pay the level of wages or benefits
that can be offered by large businesses. Another key factor is the
visibility of the organization. A start-up business may be unable to
provide the depth of knowledge or experience that will enable an
employee to make a major transition into another company or
business entity easily.
Hence, most start-up businesses find it much more difficult to hire
and retain skilled workers. They have to look for employees within
a reduced pool of candidates, some of whom may be transient.
The Changes & Challenges 4
7
Never leave that till tomorrow
which you can do today.
-Benjamin Franklin
Be an Entrepreneur
Many start-ups, mostly small businesses rely on family members to
fill some of the roles.
Lack of skilled employees or the inability to hire them can result in
a lot of additional costs in terms of time and money spent in
recruitment and retraining. When an employee leaves, the new
employee must spend a non-trivial amount of time being trained to
replace the old employee.
C. GOVERNMENT REGULATIONS:
Every business owner has to comply with a variety of regulations,
including obtaining permits, licenses and health and safety
inspections. While necessary for the overall well-being of the
community, this poses a burden on the new business owner in
terms of time and money that could have been spent growing the
business.
Environmental regulations, workplace rules and the paperwork
associated with tax compliance contribute to most of the burden.
Although all businesses have to bear the burden of regulations,
start-up businesses are more affected. A disproportionate amount
of regulatory work has to be done by the employer and other
owners which leave less time for management that would yield
better results for the company.
D. ECONOMIC UNCERTAINTY:
Many start-up business owners are at the mercy of economic
conditions that they have no control on. This is particularly true in
cities and towns dependent on large employers. When such
employers decide to lay off hundreds of workers, it adversely
affects several start-up businesses that were built around those
employers.
Globalization has affected small business owners drastically,
particularly those manufacturing products that can now be
imported at very low cost. Events such as multi-national treaties,
foreign currency rate fluctuations and new trade blocks happening
elsewhere in the world have impact on start-up businesses.
E. BEING UP-TO-DATE WITH TECHNOLOGY:
Generally, small start-up business, owners are foot-draggers in
technology adoption. The primary reason is the high cost of
keeping up with the latest technological innovations in the
8
A business has to be involving, it
has to be fun, and it has to
exercise your creative instincts.
-Sanjeev Bikchandani,
Founder, Naukri.com
Be an Entrepreneur
particular industry. The major risk with a start-up business initiating
and living with outdated technology is that of competition
leapfrogging over it and quickly reducing it to oblivion. Also new
technology usually brings the promise of reduced costs and/or
increased revenue.
One cannot talk about new technology without mentioning the
Internet. Most start-up businesses are not technically savvy
enough to use the Web effectively. They also cannot afford to hire
expert site designers to map out a good online strategy. While
blogs are becoming more popular, even people in IT industries and
big companies do not realize their importance yet, until.
F. ACCESS TO ADEQUATE CAPITAL:
Many start-up businesses find it very difficult to obtain finance,
especially if they are with new strange ideas or if they are relatively
unknown. Lenders require security for loans and many start-up
businesses may not have adequate security to be accepted.
Changes in banking organizations, particularly large mergers, have
affected lending to start-up entrepreneurs. During downturns in the
economy, the capital crisis grows more severe as banks reduce
lending to riskier borrowers, to which category entrepreneurs
belong.
9
In order to be a success in business, there is one thing you must
do. You cannot be successful without it. That is WORK. I have not
told you anything new. Everyone knows that you cannot be
successful in anything without work.
Why does not everyone work? Because some lack the one thing
that makes men want to work-ENTHUSIASM. That is something
no one can give you. You must acquire it yourself, and the only
way that you can become enthusiastic about anything is to have
a thorough KNOWLEDGE of it. You have never seen an
enthusiastic man who was lazy.
-Thomas J. Watson
Be an Entrepreneur
Think beyond the unthinkable."
Product cycles are too short; markets are deregulating too rapidly.
Risk entrepreneurialism is as much an idea as a business tactic.
Product cycles are too short; markets are deregulating too rapidly.
Innovative products and services relentlessly flood the
marketplace. No one can predict the future, but that does not stop
people from wanting to find ways where they can get an idea of
what is to come.
Prior to the early 1990s, the conspiracies were limited. It was then
started the intuition through drastic changes in every field. It is all
about determining, to the greatest degree of development, just
what is going to happen down the road following the plenary
scenario.
Through diagnosing the scenario one can make statements about
events, but at the same time the outcome is going to be unknown,
may be. It is often called making a best-estimation of what is going
to happen. Without it, before the world scenario on track, giving
plenty of opportunities to upcoming entrepreneurs. There are
ample number of sectors and applications which really give a
chance to emote, to each individual entrepreneur daily, their tricks.
Risk is the potential having a chosen action or activity (including the
choice of inaction) will lead to a loss (an undesirable outcome).
Possible losses themselves may also be called "risks".
Almost any human attempt carries some risk, but some are much
more risky than others. Risk is as old as man and has been an old
time friend of businesses. There is no approach that will make risk
to go extinct in business environment however; it can be controlled
Risk Taking - The Way 5
10
Business, social responsibility
should not be coerced; it is a
voluntary decision that the
entrepreneurial leadership of
every company must make on
its own.
-N.R. Narayana Murthy,
Infosys
Be an Entrepreneur
to an appreciable level. As an entrepreneur, everyone is duty
bound to reduce risk level to a minimum and may continue to make
profit. To this end, better risk management strategies are good
inhibitors of business failures.
No matter what the sizes are, to protect a business against risk, an
entrepreneur needs to do the following:
1. DISASSOCIATE PERSONAL FROM BUSINESS:
Activities that bring about risks to an organization need to be
stopped. For instance, if a business fund is not separated from a
personal fund, the temptation of using the company's fund for
personal expenses will always is there. Quick and unilateral
decisions of top members of the management most times pose
great risks to the company.
2. SPREAD THE RISK:
There is no need for the risk to be concentrated on your desk
alone. Spread the risks in the form of contracting out some
projects/services with a performance bond signed by the
contracted firm can help. Sometimes, selling out products on credit
to trusted customers can help to minimize the risk of obsolesce and
high inventory cost.
3. REDUCING RISK THROUGH BETTER MANAGEMENT
CONTROL:
If the pros and cons of running an organization is properly spelt out
for management, staff, employee and customers etc, certain risks
will be averted in the business. Proper management of the
company's data also helps to prevent risk. Hardcopy data can be
digitalized and stored by reputable data managers for safety.
4. INSURING AGAINST RISK IF POSSIBLE:
A company need to insure against damage brought about by fire
and natural disasters.
5. APPLY IMPROVED TECHNOLOGY:
If risks will be averted, modern techniques need to be applied in the
operation and service provision of any company. This will enhance
the business supply chain management hence making service
provision to be excellent.
11
The three things that are most
essential to achievement are
common sense, hard work and
stick-to-it-iv-ness....
-Thomas Alva Edison
Be an Entrepreneur
Some of the most common questions on the theme of
entrepreneurship are, "What characteristics determine who will be
a successful business owner?" And "Why does one person take
successful advantage of an opportunity while another person,
who's equally knowledgeable, does not?"
For all this sort of questions, there might be no real definitive
answers. What we do know is that successful business owners
seem to have certain traits in common. These traits fall into four
categories:
A. PERSONAL SKILLS:
The first things to look at are once personal characteristics, values,
and beliefs. Does he/she have the inner spirit characteristic of
successful entrepreneurs?
I. Drive and persistence
II. Commitment
III. Risk tolerance
IV. Self determination
V. Vision
VI. Initiative
VII. Control
VIII. Resilience
While one is born with a certain temperament or personality, the
traits listed here can certainly be fine-tuned. However, trying to
change a personality completely is much more difficult - some
might say impossible. When assessing entrepreneurial personality,
Entrepreneurship Skills 6
12
Great things are done by a
series of small things brought
together.
-Dhirubhai Ambani
Be an Entrepreneur
be aware of areas where one is completely at odds with the
"average entrepreneur," as they need to compensate for possible
weaknesses in these areas.
B. INTERPERSONAL SKILLS:
Running own business is all about working with people. One has to
be cordial and communicate with and satisfy employees,
customers, suppliers, shareholders, investors and more.
One's ability to communicate with them is critical to entrepreneurial
success. The types of interpersonal skills that need to be good at
are:

Communication Skills

Listening

Team player

Leadership and motivation

Conflict Resolution

Personal Relation

Negotiation
Interpersonal skills are developed over time and some people are
more gifted in this area than others. The more we work with people,
the better we become at deciphering the complexity of human
relationships.
C. CRITICAL AND CREATIVE THINKING SKILLS:
Entrepreneurs need a well-developed set of critical thinking skills to
organize and administer a successful venture. As an entrepreneur,
we must be able to find the necessary information to support wise
decisions about a venture.

Creative thinking

Problem solving

Opportunity identification

Decision Making
Creativity and innovation require discipline and are based on a
discrete set of skills. This means that we can learn to improve our
creative thinking skills and break out of traditional thinking patterns.
13
The more you are willing to
accept responsibility for your
actions, the more credibility you
will have.
-JRD Tata
Be an Entrepreneur
D. PRACTICAL SKILLS:
The final components of entrepreneurial skills are the practical
skills and knowledge to produce goods or services effectively and
run a company

Goal Setting

Planning and organizing

Controlling

Knowledge Building

Monitoring
The Knowledge base has three dimensions

Business Knowledge

Entrepreneurial Knowledge

Opportunity-specific Knowledge
14
Your time is limited, so dont
waste it living someone elses
life. Dont be trapped by dogma -
which is living with the results of
other peoples thinking. Dont let
the noise of others opinions
drown out your own inner voice.
And most important; have the
courage to follow your heart and
intuition. They somehow already
know what you truly want to
become. Everything else is
secondary.
-Steve Jobs
Be an Entrepreneur
Skills management is the practice of understanding, developing
and deploying self skills. Skills enhancement management
provides a structured approach to developing individual and
collective skills and gives a common vocabulary for discussing
skills...
CREATIVITY & INNOVATION:
Creativity is an act of turning new and imaginative ideas into reality.
Creativity involves two processes: thinking, then producing.
Innovation is the production or implementation of an idea. If you
have ideas, but don't act on them, you are imaginative but not
creative.
"Creativity is the process of bringing something new into
being...creativity requires passion and commitment. Out of the
creative act is born symbols and myths. It brings to our awareness
what was previously hidden and points to new life.
CREATIVITY AND WORK:
Creativity is a core competency trait for leaders and managers and
one of the best ways to set a company apart from the competition.
Corporate Creativity is characterized by the ability to perceive the
world in new ways, to find hidden patterns, to make connections
between seemingly unrelated phenomena and to generate
solutions.
Generating fresh solutions to problems and the ability to create
new products, processes or services for a changing market are part
of the intellectual capital that give a company its competitive edge.
Creativity is a crucial part of the innovation equation.
Creativity requires whole-brain thinking; right-brain imagination,
Skills Enhancement 7
15
Watch, Listen and learn. You
cant know it all yourself. Anyone
who thinks they do is destined for
mediocrity.
-Donald Trump.
Be an Entrepreneur
artistry and intuition, plus left-brain logic and planning.
Creativity is fostered in organizational cultures that value
independent thinking, risk taking, and learning. They are tolerant of
failure and they value diversity.
INNOVATION:
The central meaning of innovation thus relates to renewal.
Innovation can therefore be seen as the process that renews
something that exists and not, as is commonly assumed, the
introduction of something new.
The other way, Innovation can be seen as a change in the thought
process for doing something, or the useful application of new
inventions or discoveries. Innovation could be either way.
1. The introduction of a new good - that is one with which
consumers are not yet familiar - or of a new quality of a good.
2. The introduction of a new method of production, which need by
no means be founded upon a discovery scientifically new, and
can also exist in a new way of handling a commodity
commercially.
3. The opening of a new market that is a market into which the
particular branch of manufacture of the region in question has
not previously entered, whether or not this market has existed
before.
4. The conquest of a new source of supply of raw materials or
half-manufactured goods, again irrespective of whether this
source already exists or whether it has first to be created.
5. The carrying out of the new organization of any industry.
"QUALITIES OF AN INNOVATOR"
These days, the "innovation thing" is something of a no-brainer.
Indeed, it seems that any company worth its low-salt lunch has
identified innovation as a core competency worth developing.
It follows as
Curious . . . . . . . . . . . . . . . Actively explores the environment,
investigates new possibilities, and honors
the sense of awe and wonder.
Self-motivated . . . . . . . Responds to deep inner needs, proactively
initiates new projects, intrinsically rewarded
for efforts.
16
There is nothing too difficult to be
accomplished when done
carefully with unflinching
endeavour.
-Thiruvalluvar
Be an Entrepreneur
Visionary . . . . . . . Highly imaginative, maintains a future
orientation, thinks in mental pictures.
Takes risks . . . . . . . It goes beyond the comfort zone,
experimental and non- conforming,
courageously willing to "fail."
Playful/humorous . . . . Appreciates incongruities and surprise,
able to appear foolish and child-like, laughs
easily and often.
Self-accepting . . . . . . . Withholds compulsive criticism of their own
ideas, understands "perfection is the
enemy of the good," unattached to "looking
good" in the eyes of others.
Flexible/adaptive . . . . Open to serendipity and change, able to
adjust "game plan" as needed, entertains
multiple ideas and solutions.
Committed to learning. . Continually seeks knowledge, synthesizes
new input quickly, and balances information
gathering and action.
Persevering . . . . . . . Its hardworking and persistent, champions'
new ideas with tenacity, committed to
follow-through and bottom-line results.
17
Be the Change you wish to see
in this world
-Mahatma Gandhiji.
Be an Entrepreneur
"All happy families resemble one another, each unhappy family is
unhappy in its own way." What it meant, perhaps, is that
communication is complete when the mind is happy and
uninhibited and distortion creeps in when the mood is sullen and
sad. Most problems in an organization, family or group are the
result of people failing to communicate.
Haven't you often said "You don't understand what I say" or words
to that effect? Communication is the exchange or flow of
information and ideas between one person and another.
Communication is a process where meaning is defined and
shared between living organisms.
Communication requires a sender, a message and an intended
recipient, although the receiver need not be present or aware of the
sender's intent to communicate at the time of communication;
Thus communication can occur across vast distances in time and
space. Communication requires that the communicating parties
share an area of communicative commonality. The communication
process is complete once the receiver has understood the sender.
What does a communication process involve? One may have an
idea that there is a need to communicate and a message is sent to
the receiver, either verbally or non-verbally. The receiver then
translates the words or nonverbal gestures into a concept or
information. Let's take, for example, this message: "You are very
intelligent." Would this message carry the same meaning to the
receiver every time you voice these words?
Communication 8
18
Where theres a will theres a
way...
-Anonymous
Be an Entrepreneur
The success of the transmission depends on two factors-content
and context. Content is the actual words or symbols that
constitutes a part of the message, known as language. It could be
either spoken or written. We all interpret words in our own ways, so
much so that even simple messages could be understood
differently.
Context is the way the message is delivered, the tone, expression
in the sender's eyes, body language, hand gestures and state of
emotion (anger, fear, uncertainty, confidence and so on). As we
believe what we see more than what we hear. We trust the
accuracy of nonverbal behavior more than verbal behavior. So
when we communicate, the other person notices two things: What
we say and how we say it.
Normally we think communication is complete, once we have
conveyed the message: "I don't know why it was not done. I had
asked him to do it." Chances are that the message was not
perceived properly. A message hasn't been communicated
successfully unless the receiver understands it completely. How do
you know it has been properly received? Is it by two-way
communication or feedback?
COMMUNICATION BARRIERS
No matter how good and effective a communicator maybe, yet the
fact is that one does face certain barriers, from time to time, which
forces them to work on becoming even more effective in their skills
to communicate. Many people think that communicating is easy.
It is after all something truth in this simplistic view. Communicating
is straight forward. What makes it complex, difficult and frustrating
are the barriers we put in the way. Here are some of the barriers.
OURSELVES:
Focusing on ourselves rather than the other person can lead to
confusion and conflict. Often, we are thinking about our response
rather than focusing on what the other person is saying. Some
other factors that cause this are defensiveness (we feel someone
is attacking us), superiority (we feel we know more than the other),
and ego (we feel we are the center of the activity).
19
The only tyrant I accept in this
world is the still voice within.
-Mahatma Gandhi
Be an Entrepreneur
PERCEPTION:
If we feel the person is talking too fast not fluently or does not
articulate clearly, we may dismiss the person. Our preconceived
attitudes affect our ability to listen. We listen uncritically to persons
of high status and dismiss those of low status.
MENTAL STATE:
People don't see things the same way when under stress. What we
see and believe at a given moment is influenced by our
psychological frames of references-beliefs, values, knowledge,
experiences and goals.
These barriers are filters that we use to decide what is useful for
us. No one can completely avoid these filters. If you start taking
every information and message you get seriously, you would be
overloaded with information. But if you are not consciously aware
of this filtering process, you may lose a lot of valuable information.
A way to overcome these filters when you want is through active
listening and feedback.
20
Theres a way to do better....
find it.
-Thomas Edison
Be an Entrepreneur
Speaking is an important method for communicating knowledge
and expressing ideas. Being able to verbally communicate
effectively to other individuals or to groups is essential in school,
business, as well as in personal life.
SOME TIPS FOR GOOD PUBLIC SPEAKING:
Feeling some nervousness before giving a speech is natural and
healthy. It shows we care about doing well. But, too much
nervousness can be harmful. Here's how we can control our
nervousness and make effective, memorable presentations:
Know the room.
Be familiar with the place in which you will speak. Arrive early, walk
around the speaking area and practice using the microphone and
any visual aids.
Know the audience.
Greet some of the audience as they arrive. It's easier to speak to a
group of friends than to a group of strangers.
Know your material.
If you're not familiar with your material or are uncomfortable with it,
your nervousness will increase. Practice your speech and revise it
if necessary.
Relax.
Ease tension by doing exercises.
Visualize yourself giving your speech.
Imagine yourself speaking, your voice loud, clear, and assured.
When you visualize yourself as successful, you will be successful.
Express to Impress 9
21
What you have to do and the
way you have to do it is
incredibly simple. Whether you
are willing to do it, thats
another matter
-Peter F. Drucker
Be an Entrepreneur
Realize that people want you to succeed.
Audiences want you to be interesting, stimulating, informative, and
entertaining. They don't want you to fail.
Don't apologize.
If you mention your nervousness or apologize for any problems you
think you have with your speech, you may be calling the audience's
attention to something they hadn't noticed. Keep silent.
Concentrate on message -- not medium.
Focus your attention away from your own anxieties, and outwardly
toward your message and your audience. Your nervousness will
dissipate.
Turn nervousness into positive energy.
Harness your nervous energy and transform it into vitality and
enthusiasm.
Gain experience.
Experience builds confidence, which is the key to effective
speaking. A Toastmasters club can provide the experience you
need.
More Guidelines for an Effective Public Speaking

Your audience is there to hear your message. Relax and

deliver that message, instead of focusing on yourself.

Make sure that your speech is right for your audience.

Take your time. Don't read your speech word-for-word and

don't rush through it. Be conversational, as if you were talking
with a group of friends.

Don't stand up there like a stick, clenching the podium at both

sides. Be natural and animated. Use hand gestures, drink
water, move around a little. But don't rock back and forth - that
conveys nervousness.

Keep the speech short and simple.

Make eye contact with the audience. Connect with them.

Get them to nod their heads to acknowledge what you're

saying.

Make them pay attention to you.

Practice your speech ahead of time. Take time to pause in the

right places to make eye contact and catch your breath.

Don't get into a debate if someone disagrees. Talk with him/her

after your speech.
22
Motivation is what gets you
started. Habit is what keeps you
going.
-Jim Rohn
Be an Entrepreneur
To really succeed at presenting and build up effective presentation
skills, there are several key areas to focus on. And once mastered
these skills, everyone will be able to create a presentation with a
clear message and deliver it with confidence.
These key skills areas are:-

Planning and writing the presentation

Using visual aids effectively

Overcoming presentation nerves

Delivering the presentation confidently

Answering questions competently

SKILLS FOR PLANNING & WRITING THE PRESENTATION
Planning the presentation involves much of the work that one is
going to do before the actual delivery of presentation. This is a very
important area and it's also one that many people should consider
improving their skills in.
A key part of this planning is to research the presentation audience,
if the audiences are known, there are chances to get understand
them and mean what their preconceptions might be.
One also needs to get to grips with the purpose of the presentation
- so that it is very clear about what they are trying to achieve from
it.
Then it's down brainstorming what are actually going to say and
then structuring this into "digestible" portions within the beginning,
middle and end.
Presentation Skills 10
23
Just as a cautious businessman
avoids investing all his capital in
one concern, so wisdom would
probably caution us also not to
anticipate all our happiness
from one quarter alone.
-Sigmund Freud
Be an Entrepreneur
USING VISUAL AIDS EFFECTIVELY:
Once done with planning, one should decide upon the visual aids
needed. Think about what you want to do here - why you actually
need the visual aids in your presentation and what are they going
to be used for. It is for many people, the presentation content is
seen as the Powerpoint Slides.
But slide after slide of bullet points with lots of different transition
effects, is an absolute turn off for most audiences. And this is only
made worse when the presenter is just reading the bullet points on
the slides or has their back to the audience much of the time!
What's the purpose of visual aids?
Visual aids can be a great way of enhancing a presentation
VISUALLY - when they are used sensibly and with a clear purpose.
You need to relate your visual aids to your audience and to the type
of presentation you are designing. It needs to be suited to that
audience.
Obviously if it's a bigger more formal presentation then it's probably
expected that you'll be using a software tool such as Power Point.
But remember it's there to enhance your message - not just your
prompts!
DESIGNING VISUAL AIDS:
If you are designing slides using Power Point then you need to
make sure that they are not just going to turn your audience off.
They should be there to enhance the message. Not to take over
from you - the presenter - or the message.
Keep them as visual as possible. Wherever possible use images,
graphs, diagrams etc that will help your audience understand what
you are talking about. Connect with it emotionally - if that's what
you are trying to achieve. Images can be a great way of doing that.
Use the KISS rule (Keep It Simple and Short), as far as your use of
visual aids is concerned. Keep bullet points to a minimum - for
example - key facts - but where possible add some visual metaphor
on the same slide. But if you have to does it in-house keep things
simple and don't end up spending up 80% of your time on the slides
and 20% on the actual presentation content!
24
There are many ways of going
forward, but only one way of
standing still.
-Franklin D. Roosevelt
Be an Entrepreneur
MANAGING VISUAL AIDS:
It's also important to think about how to manage your visual aids.

Where to place them in the room.

How to work around them physically.

How visible will they be to the audience?

All these sorts of practical things are best thought through ahead of
when you are actually standing there ready to present.
VISUAL AIDS V/S HANDOUTS:
When do you use handouts or just stick to your visual aids. Again
it's thinking about your presentation, the type of audience and what
do you want to achieve and what's going to be most suitable.
If you need to give the audience more information to support your
message, then you may want to produce some handouts for the
audience to take away.
BACKUPS - WHEN IT ALL GOES WRONG:
Finally to think about what happens if something goes wrong with
the visual aids. What's the backup plan? How do cope with that?
One simple way is to make sure that you at least have some hard
copies of your slides. If you're not sure if the presentation PC has
the latest version of Powerpoint - try saving your file in the format
used by an older version. Alternatively, it might be worth taking
your own laptop along just in case.
Visual aids - can be a great tool - but we need to use them
appropriately so that they help to enhance the presentation.
OVERCOMING PRESENTATION NERVOUSNESS:
When most people hear the word presentation - previously built
"presentation skills" are often forgotten about and nerves kick in.
There are lots of techniques and things one can do to control
nerves and build confidence even before actually starting
presentation as well as while speaking and delivering it.
HOW TO OVERCOME PRESENTATION NERVOUS?
It's important to think about why people get nervous to present
them before the very audience. There are all sorts of symptoms
25
Anger is an acid that can do
more harm to the vessel in
which it stands than to anything
on which it is poured.
-Mahatma Gandhiji
Be an Entrepreneur
that can be created through nerves. And sometimes they can be
obvious, as quite a lot they can manage the audience very
effectively.
So the more you are aware of them and aware of the fact that it's
quite normal to feel nervous then the more that you can actually
start to overcome them.
PREPARING TO PRESENT:
The first thing is to think about is preparing for the presentation- .
The planning, structuring, the visual aids etc but there's also you -
the presenter and how best to prepare yourself.
Obviously the benefits of proper planning are very important - and
will certainly help to reduce nerves. However there are other things
that you can do to fully take control of the nerves before you
present.
PHYSICAL TECHNIQUES:
The benefits of breathing are often overlooked but this one simple
technique can really help to calm you and slow you down. When
you are nervous you probably also speed up your speech. So
controlling the speed that you speak at is a good way to help
control your nerves.
There are lots of other physical strategies that people employ to
help reduce nerves and focus their minds and they are discussed
hence forward.
PSYCHOLOGICAL TECHNIQUES:
There are also some key psychological techniques that you can
apply to help you to kick out those negative thoughts that can creep
into your mind and reduce your confidence.
These techniques can help you to maintain a positive mental
attitude towards your presentation and help you remain in control if
any negative thoughts start to creep into your mind.
One technique is to imagine that the presentation has just taken
place and that it was successful.
Spend time imagining that success and how you feel at that time.
Imagine the voices and other sounds that you hear at the end of the
26
The surest way to reveal once
character is not through
adversity but by giving them
power.
-Abraham Lincoln
Be an Entrepreneur
presentation and what the audiences' faces look like and what else
you can see in the room. Take time to imagine all of the positives
about the presentation that made it a success.
A lot of the time our imagination focuses on the negatives - so
forcing it to focus on the positive can help to turn things around and
will help build your confidence.
REHEARSING THE PRESENTATION:
As we all know practice makes perfection! It is obvious to
experience it, as well. And it could be one of the best ways to get
rid of your nerves. The more presentation experience you have the
more confident you will feel.
Finally we'll look at how to control that nervous energy just before
you present - what you can do that 3 minutes before you present,
what you can do 20 seconds before you start and also what you
can do during your presentation if the nerves start to kick in again
and how to try and control things.
DELIVERING THE PRESENTATION CONFIDENTLY:
After all, it's important to think about how you're actually going to
deliver your presentation.
We will look at some of the key techniques and skills one can call
on to help while to speak confidently, keep the audience's interest,
really engage with them and create the presence that want to have
in front of your audience.
So your personal resources are very important when you come to
deliver your presentation. A good delivery of presentation can give
you a certain uniqueness and extra edge.
The audience will make judgments about you even before you start
to speak. They will do this by way you come across and how you
look. They will continue to form opinions about you by the way you
speak.
FIRST IMPRESSIONS:
You need to look confident and look like you know what you are
talking about right at the start of the presentation in order for your
audience to take you seriously.
27
The best way to predict your
future is to create it.
-Peter F. Drucker
Be an Entrepreneur
If you take time to 'warm up' into it you may well 'lose' your
audience even before you've got to your key message.
Building rapport with the audience is an essential ingredient in
making a good impact. The more confident you feel, the easier it is
to connect with your audience.
There are many ways you can generate this confidence by
developing your delivery skills - the way you use your voice, body
language and space so that you fully engage with your audience
from the beginning right until the end of the presentation.
SPEAKING CONFIDENTLY:
Speaking confidently is one of key areas that you need to look at in
order that you get your message across clearly. It's important to
speak at the correct pace and not to rush, so you have to think
about speaking a little more slowly than usual.
It's also important to speak clearly - so that you don't insult your
words together - as this will make you sound hesitant.
So, by speaking at the correct pace and pronouncing your words
clearly - especially the ends of words, you will sound more
confident and convincing to your audience.
SOUNDING INTERESTING:
The ability to sound interesting is also really important because,
although you might be passionate about what you are saying, if this
doesn't come across well to your audience, then they won't be
convinced.
To sound interesting and enthusiastic you need to use more
expression in your tone of voice so that you avoid a monotone
style. You may also emphasize key words which will help to
influence the overall meaning of your messages.
Injecting pauses into your speaking also helps to create an impact
as well as helping you to control your speed so that you don't race
ahead too quickly making it hard for the audience to follow.
You can use all these techniques to help change the tone and
dynamics of your presentation and this will help keep the interest of
your audience throughout your presentation.
28
There is no telling how many
miles you will have to run while
chasing a dream.
-Anonymous
Be an Entrepreneur
LOOKING CONFIDENT:
The ability to look confident is important especially as you might be
feeling nervous which can unfortunately have a rather negative
impact on your overall presence.
The ways in which you use your posture, gesture and eye contact
can help you to control any bad habits created by nerves and
create a much stronger presence. Make sure that you are standing
evenly on two feet with a strong but relaxed posture.
Take a few seconds before you start to speak to take in your
audience. This will help you feel more in control and more confident
and you will be less likely to be uneasy or look uncomfortable.
Make sure that you also feel comfortable in the space that you are
presenting, so that you look like you have ownership of the space
and that you can move around appropriately. It really helps if you
can walk around the space before your presentation - before the
audiences arrive to help you get used to it.
ENGAGING WITH THE AUDIENCE:
Eye contact is also very important to help you engage with your
audience. If you just stare at them blankly, you won't get the right
connection with them. So you need to use confident eye contact so
that you really connect with individual members of the audience
while you are speaking with them. And although it might sound a
bit daunting to look directly at audience members, it actually has
the opposite effect and helps to feel more confident.
PRESENTATION STAMINA:
It takes a lot of energy to speak in front of an audience, even if it's
just for 5 minutes. So it's important to use the voice and body
language techniques we have discussed here and to practice them
so that you build up your vocal stamina. You don't have to wait until
your next presentation; you can practice the vocal and body
language techniques on the telephone or in a meeting.
Finally it's important to have the confidence to interact with your
audience and deal with any questions that your audience might
throw at you.
29
The most important thing in
communication is hearing what
isnt said
-Peter F. Drucker
Be an Entrepreneur
One of the most frequent concerns and complaints of people today
is that they don't have enough time to do what they or especially
their bosses want them to do.
TIME IS PRECIOUS:
The importance of time management has never been greater than
it is today. Most people today find they run out of time, can't find
enough time or time just gets away from them. Time is most
precious resource today, because it is limited. We can't create
more - there is only 24 hours in a day. But still our lives seem to get
busier and busier.
Effective people know that mastering time management is an
ongoing process that requires regular reviews and updates. We
like to think of this in terms of time management fitness.
It is said that the most effective people are constantly seeking to
grow in their knowledge and their skill-set. Those who don't
continue to sharpen and grow their arsenal of time management
tools and resources, soon find themselves falling behind others,
becoming ineffective, stressed and not able to achieve their goals.
Business time management and personal time management at
work are critical if you want any life balance. It is believed that
success and enjoyment of work is dependent on effective time
management.
PERSONAL TIME MANAGEMENT:
Personal Time Management is about controlling the use of most
valuable but undervalued resource, the TIME. The absence of
Personal Time Management is characterized by last minute rushes
to meet dead-lines, meetings which are either double booked or
achieve nothing, days which seem somehow to slip unproductively
Time Management 11
30
When an idea exclusively
occupies the mind, it is
transformed into an actual
physical or mental state.
-Swamy Vivekananda
Be an Entrepreneur
by, crises which loom unexpected from nowhere. This sort of
environment leads to inordinate stress and degradation of
performance: it must be stopped.
Poor time management is often a symptom of over confidence:
techniques which used to work with small and big workloads are
simply reused with large ones. But inefficiencies which were
insignificant in the small role are ludicrous in the large.
One cannot drive a motor bike like a bicycle, nor can manage a
supermarket-chain like a market stall. The demands, the problems
and the payoffs for increased efficiency are all larger as
responsibility grows; one must learn to apply proper techniques or
be bettered by those who do.
Possibly, the reason why Time Management is poorly practiced is
that it so seldom forms a measured part of appraisal and
performance review; what many fail to foresee, however, is how
intimately it is connected to aspects which they do.
Personal Time Management has many facets. Most people
recognize a few, but few recognize them all. There is the simple
concept of keeping a well ordered diary and the related idea of
planned activity. But beyond these, it is a tool for the systematic
ordering of once influence on events; it underpins many other
managerial skills such as Effective Delegation and Planning.
Personal Time Management is a set of tools which allow you to:

Eliminate wastage

Be prepared for meetings

Refuse excessive workloads

Monitor project progress

Allocate time appropriate to a task's importance

Ensure that long term projects are not neglected

Plan each day efficiently

Plan each week effectively

And to do so, we simply need a little amount of self-discipline.
Since Personal Time Management is a management process just
like any other, it must be planned, monitored and regularly
reviewed.
31
Blessed is he who expects
nothing, for he shall never be
disappointed.
-Benjamin Franklin
Be an Entrepreneur
Every man has an aim in life. To achieve that aim one has to make
an effort. To achieve a collective aim the supreme commander has
to mobilize a mass of men and motivate them to follow the leader
through thick and thin. It may even mean laying down lives of many
men and women for the national cause. Ultimately the collective
aim is achieved, that is establishing superiority over the enemy -
achieving total victory.
LEADERSHIP:
A country raises an army and trains it for war. In fighting a war, the
quality of gun is important. However, the Man behind the gun is
more important. It is he who fires the gun and scores a hit on the
enemy target. Of course, the gun is upgraded and modernized from
time to time.
Man who operates the gun, needs better up gradation and
modernization of mind, body and spirit to be battle worthy to win the
war always and every time. The commander who leads his men
into battle is the leader of men who motivates the men; he
commands to do the most difficult things under the most adverse
circumstances and even risking life and limb. However, the leader
ensures that the body of soldiers he commands must achieve the
predetermined aim.
MIND IS THE MEN:
A man whose mind is liberated and motivated gives proper signals
to the body for the right action. It is the mind which has to signal the
body to follow the path of righteousness.
One may be tempted to give an example of getting a difficult job
achieved through the man management of the old school where
punishment - just punishment - was the policy of those days. It was
Men Management 12
32
The miracle is not that we do
this work, but that we are happy
to do it.
-Mother Teresa
Be an Entrepreneur
all stick and no carrot. It is recorded that the Great Wall of China
was built by the first emperor Ch`in Shih Huang Di and other
despotic rulers and satraps by mobilizing men through brute force.
Indeed, the brute force achieved the aim but the dynasty perished
because the men rose in revolt. Man management, as we
understand today, was lacking. Mass mobilization of manpower, a
quality of the Chinese nation did achieve results but the cost in
terms of life, limb and emotional health was tremendous.
SENSE OF FULFILMENT:
Bread is important but man does not live by bread alone. He has to
have a sense of fulfillment after he has done his day`s work. Above
all, it is the will go a long way in raising his enthusiasm and
equipping him to face the change.
In today's comprehensive world the most important and most
difficult job is to manage people. One who is the leader, manager
or mentor must lead, motivate, inspire and encourage them.
Sometimes one will have to hire, fire and discipline or evaluate
them.
"People are our most valuable asset" is a clich which no member
of any senior management team would disagree with. Yet, the
reality for many entrepreneurs is that their people remain

under valued

under trained

under utilized

poorly motivated
Consequently perform well below their true capability
The rate of change facing entrepreneurs businesses has never
been greater and they must absorb and manage change at a much
faster rate than in the past. In order to implement a successful
business strategy to face this challenge, entrepreneurs must
ensure that they have the right people capable of delivering the
strategy.
The market place for talented and skilled people is competitive and
expensive. Taking on new staff can be disruptive to existing
employees. Also, it takes time to develop 'cultural awareness' of
33
Time is the scarcest resource;
and unless it is managed,
nothing else can be managed.
-Peter F. Drucker
The Great wall of China
Be an Entrepreneur
product/ process/ organization knowledge and experience for new
staff members.
The human nature can be very simple, yet very complex too. An
understanding and appreciation of this is a prerequisite to effective
man management and motivation in the workplace and therefore
effective management and leadership.
There is an old saying: you can take a horse to the water but you
cannot force it to drink; it will drink only if it is thirsty, so do the
people. They will do what they wanted to do. Whether it is to excel
on the workshop floor or in the ivory tower they must be motivated
are driven to it either by themselves or by external stimulus.
34
The clock represents our
commitments, appointments,
schedules, goals and activities -
what we do with and how we
manage our time. The compass
represents our vision, values,
principles, mission, conscience,
direction.
-Stephen Covey
Be an Entrepreneur
A LEADER:
There are leaders and there are followers', as the saying goes, and
developing good leadership skills can create the distinction
between the two. Many people believe a strong leader is born and
not made. This is not necessarily the case.
As with anything, educating to encourage make a great leader or a
person with superb leadership skills takes time, energy and
commitment. A leader is a person who has strong principles,
courage and dedication to a clear vision.
People follow a great leader because he is representative of the
beliefs of a group. This person is often a well-principled individual
who is focused on a common goal and eliminates excess fear and
doubt. The followers of the leader often provide the necessary
support for the team to advance and succeed in achieving their
goals. An individual with good leadership skills will recognize and
reward the team for the greater cause.
WHAT ARE LEADERSHIP SKILLS?
These skills are different than those required to be a manager.
Leadership and management are not the same. To be a leader,
one needs an exclusive set of human relations and interpersonal
skills.
To influence one needs a number of component skills. Some are
fairly easy to develop others take a long time to protect. To get from
A to B one can choose many different ways. For example:
One can ride a bicycle or ride a plane. One is easy to learn but not
so fast. The other is fast but not easy to learn.
Leadership Skills 13
35
When you realize how perfect
everything, you will tilt your
head back and laugh at the sky.
-Buddha
Be an Entrepreneur
We can use our authority, it's quick. But leaning charisma takes
more time but is more powerful.
THESE SKILLS INCLUDE:
Understanding the key concepts, the telling ideas require great
interpersonal communication skills,
Better listening methods so you don't answer the question
wrong,
Creating the right first impression,
Face reading will make sure you are not confusing the
interviewer,
Asking the right type of questions to impress and gather
information
Interviewing techniques and cognitive biases can tilt things to a
favor.
If it's not clear already, leadership is without doubt mostly about
attitude, especially towards others. People who strive for these
things generally come to be regarded and respected as a leader by
their people:
Integrity - the most important requirement; without it
everything else is for nothing.
Having an effective appreciation and approach - towards
corporate responsibility, so that the need to make profit is
balanced with wider social and environmental responsibilities.
Being very grown-up - never getting emotionally negative
with people - no shouting or ranting, even if you feel very upset
or angry.
Leading by example - always be seen to be working harder
and more determinedly than anyone else.
Helping alongside - your people when they need it.
Fairness - treating everyone equally and on merit.
Being firm and clear - in dealing with bad or unethical
behavior.
Listening - to and really understanding people and show them
that to understand (understanding is different to agreeing).
Always taking the responsibility and blame for your people's
mistakes.
Always giving your people the credit for your successes.
Never self-promoting.
36
Passion is a true spark that
helps to ignite the methods upon
which all thing move forward
and where passion is rekindled
to keep the fires of discovery
and success alive.
-Anonymous
Be an Entrepreneur
Backing-up and supporting your people.
Being decisive - even if the decision is to delegate or do
nothing.
Asking for people's views, but remain neutral and objective.
Being honest but sensitive in a way that gives bad news or
criticism.
Always doing what you say you will do - keeping your
promises.
Working hard to become expert at what you do technically and
at understanding your people's technical abilities and
challenges.
Encouraging your people to grow, to learn and to take on as
much as they want to, at a pace they can handle.
Always accentuating the positive way saying 'do it like this', not
'don't do it like that'
Smiling and encouraging others to be happy and enjoy
themselves.
Relaxing - breaking down the barriers and giving people and
self time to get to know and respect each other.
Taking notes and keeping good records.
Planning and prioritizing.
Managing your time well and helping others to do so too.
Involving your people in your thinking and especially in
managing change.
37
The key is not spending time,
but in investing it.
-Anonymous
Be an Entrepreneur
A team comprises a group of people linked in a common purpose.
Teams are especially appropriate for conducting tasks that are high
in complexity and have many interdependent subtasks.
Team building is pursued via a variety of practices and can range
from simple bonding exercises to complex simulations and multi-
day team building retreats designed to develop a team (including
group assessment and group-dynamic games) usually falling
somewhere in between.
It generally sits within the theory and practice of organizational
development, but can also be applied to sports teams, school
groups, and other contexts.
Team building is not to be confused with "team recreation" that
consists of activities for teams that are strictly recreational.
Team building is an important factor in any environment, its focus
is to specialize in bringing out the best in a team to ensure self
development, positive communication, leadership skills and the
ability to work closely together as a team to problem solve.
REASONS FOR TEAM BUILDING:
Improving communication
Making the workplace more enjoyable
Motivating a team
Getting to know each other
Getting everyone "onto the same page", including goal setting
Teaching the team self-regulation strategies
Team Building 14
38
One of the secrets of success:
do not be discouraged by
failure.
-Anonymous
Be an Entrepreneur
Helping participants to learn more about themselves
Identifying and utilizing the strengths of team members
Improving team productivity
Practicing effective collaboration with team members
To constitute an effective team, its members must share a common
goal, have respect for each other and be motivated to use the
strengths of each member to achieve their objectives. Current
corporate philosophy stresses that each member of a team plays
an integral part in the success of the company.
In addition, many businesses form teams or committees for varying
purposes; therefore individuals can be members of several teams.
For an effective team, time should be established for getting
acquainted and the exchange of ideas. From the employee's point
of view, being part of a team usually provides a sense of loyalty and
ownership.
Through activities known as team building exercises, individuals
can practice brainstorming, collaboration, creativity, trust, and
feedback. Most team building activities focus on areas such as
problem solving, organizational development, and conflict
resolution. Participants can also develop leadership, interpersonal
presentation and negotiation skills.
Great corporate team building ideas should try to establish trust
among the employees. A great activity that you can do requires the
group to be teamed up in pairs and have one partner blindfolded
while the other one stands behind them.
TEAM LEADERSHIP:
Team leadership is the management of a group of people brought
together to work to achieve a common goal. In order to get
everyone to work as one functioning team, the leader must
motivate and inspire his or her followers. Leadership of a team
involves assigning followers to tasks, supporting members and
overseeing projects.
A good leader never hands off a project or task to team members
without following through and offering support and guidance. Team
leadership is about accomplishing a goal through many people
working together but this cannot occur efficiently unless everyone
39
Just because you have two
ears and a mouth doesnt mean
you know how to communicate.
-A mothers advise to her son
Be an Entrepreneur
knows his or her role. Leaders give team members specific
responsibilities that suit their experience and job description.
The leader is not only responsible for the outcome of a project but
also for building a strong, effective team. Effective leaders
understand how much as well as the type of support each team
member needs in order to fulfill the role in a project.
TEAM PERFORMANCE MANAGEMENT:
A team should work in harmony in any organization. Two or more
people working together harmoniously are a major factor towards
achieving success.
It is the duty of a leader to monitor the performance of the team;
bring out the best among the subordinates; and determine the
weaknesses, strengths, and potential development of each team
member. Team performance management is the major key in
increasing productivity within a group.
Team performance management is important to the success of a
company. Without it, it is difficult to determine whether a team is
headed in the right direction. A project's success is largely based
on a team's efficiency. Getting people to focus on the right things
to accomplish drives good business results.
40
Ideas are like rabbits. You get
a couple, learn how to look after
them, and pretty soon you have
a dozen.
-John Steinbeck
Be an Entrepreneur
Resource management is the efficient and effective deployment for
an organization's resources when they are needed. Such
resources may include financial resources, inventory, human skills,
production resources, or information technology (IT). In the realm
of project management, processes, techniques and philosophies
are the best approach for allocating resources appropriately
The process of using resources in the most effective and efficient
way is very significant task. These resources can include tangible
resources such as goods and equipment, financial resources and
manpower resources such as employees and officials. Resource
management can include ideas such as making sure one has
enough physical resources for one's business, but not an
overabundance so that products won't get used or making sure that
people are assigned to tasks that will keep them busy and not have
too much downtime.
RESOURCING AND RESOURCE MOBILISATION:
Resourcing means assigning actual resources (a rather cold
expression which normally means people) to the project.
There are two very different aspects to this:
Deciding which resources to apply to which work items in the
project plan and
Actually getting the resources to work for the project.
RESOURCE PLANNING AND SCHEDULING:
The allocation of resources to the project plan is part of the overall
process of planning, estimating and resourcing the project. Each
time the plan is reviewed and revised, resourcing will be
addressed.
Resource Management 15
41
It takes 20 years to build a
reputation and five minutes to
ruin it. If you think about that,
youll do things differently.
-Warren Buffett
Be an Entrepreneur
The initial planning will have identified the work to be done.
Estimates will have been formed, not just for the overall effort but
normally showing effort per resource type.
Initially, one will have to identify the resource requirements
theoretically.
For instance, you may have decided that project tracking requires:
10 days effort from a Project Office Manager,
20 days from a Project Administrator, and
5 days from the Project Manager.
Now you need to consider the real world.
Do you have people like that?
If not, would you be able to get them?
What is their availability / when can you get them?
What else will the Project Administrator and Project Office
Manager be doing? Is there enough work altogether to justify
two people? Or could one person handle both roles?
Is it practical to use a resource part time on the project?
Who is able to agree and authorize the use of the resources?
How do we get them to concur particularly if it is a loss for their
own area?
Very often these "real world" conclusions will have an impact on the
original plans and estimates. Maybe you could not get the number
of people you wanted. May be a key resource will not be available
until later. May be you need to re-sequence tasks to avoid
overloading a unique resource.
As the plan is refined, one has to incorporate practical
considerations and repeat the scheduling process until an optimum
achievable plan has been generated.
42
Do not wait for leaders. Do it
alone, person to person
-Mother Theresa
Be an Entrepreneur
MOBILISING RESOURCES:
Getting the resources requires very different Project Management
skills. Just because one put something in the plan and get it agreed
does not mean that it will happen.
It usually takes strong support from the Project Sponsor and
constant
attention from the Project Manager to make sure the participants
are released to work on the project as agreed. These resources
usually have enough work to keep them busy full time in their
normal line departments.
One has to convince them and their managers that it really is
essential to make them available - even though it causes pain in
their own departments. Getting the right level of input is particularly
difficult where resources are only planned to be working part time
on the project. Try to get them physically away from their line job
and working from the project team's own accommodation
otherwise they will constantly be diverted back to their regular job.
43
Here is a summary of the overall process...
What do we
need to do?
Which skills or
Capabilities will that require
How can we rationalize the skills
requirements into defined roles
How much of each type of
capability is required?
How do we assign actual resources to fill
those roles in an optimum way?
How impact has the actual allocation had
on the plan and estimates?
Which people might we obtain to
meet those goals?
RESOURCING
ESTIMATING
PLANNING
Be an Entrepreneur
Crisis management is a relatively new field of management.
Typically, proactive crisis management activities include
forecasting potential crises and planning how to deal with them, for
example, how to recover if your computer system completely fails.
Hopefully, organizations have time and resources to complete a
crisis management plan before they experience a crisis.
Crisis Management is the process of preparing for and responding
to an unpredictable negative event to prevent it from escalating into
an even bigger problem, or worse, exploding into a full-blown,
widespread, life-threatening disaster. Crisis management involves
the execution of well-coordinated actions to control the damage
and preserve or restore public confidence in the system under
crisis.
Crisis management in the face of a current, real crisis includes
identifying the real nature of a current crisis, intervening to
minimize damage and recovering from the crisis. Crisis
management often includes strong focus on public relations to
recover any damage to public image and assure stakeholders that
recovery is underway.
Crisis management doesn't start only when a crisis arises and ends
when 'the last fire has been put out'. Crisis management requires
actions before a crisis happens, while the crisis is unfolding and
after the crisis has ended. In fact, crisis management is divided into
these three stages:
1. PRE-INCIDENT STAGE:
It involves identification of potential crisis situations and developing
contingency plans for responding to each of them;
Crisis Management 16
44
One must be truthful with
oneself about ones own
motives, especially if one is to
survive in the world. It takes
rigor, and it takes courage.
-Anonymous
Be an Entrepreneur
2. INCIDENT STAGE:
It involves management of an ongoing actual crisis situation itself;
3. POST-INCIDENT STAGE:
It includes corrective and preventive actions to preclude the
recurrence of same crisis situation and business recovery actions
to restore public confidence in the brand or the company.
There are many different ideas on how to best manage a crisis
situation. These differing ideas, nonetheless, have some common
elements:
1) The need to anticipate potential crisis situations and prepare
for them;
2) The need to provide accurate information during a crisis;
3) The need to react as quickly as possible to the situation;
4) The need for a response that comes from the top;
5) The need for long-term solutions.
It is all about identifying vulnerable threats to an organization and
its stakeholders. And the methods used by the organization to deal
with these threats. Due to the unpredictability of global events,
organizations must be able to cope with the potential for drastic
changes to the way they conduct business.
Crisis management often requires decisions to be made within a
short time frame, and often after an event has already taken place.
In order to reduce uncertainty in the event of a crisis, organizations
often create a crisis management plan.
45
Be an Entrepreneur
Problem solving and decision-making are important skills for
business and life. Problem-solving often involves decision-making,
and decision-making is especially important for management and
leadership. There are processes and techniques to improve
decision-making and the quality of decisions. Decision-making is
more natural to certain personalities, so these people should focus
more on improving the quality of their decisions.
People that are less natural decision-makers are often able to
make quality assessments, but then need to be more decisive in
acting upon the assessments made. Problem-solving and decision-
making are closely linked and each requires creativity in identifying
and developing options, for which the brainstorming is particularly
useful.
For group problem solving and decision-making or when a
consensus is required normally workshops help. One can possibly
incorporate appropriate decision making tools and process as
appropriate for every problem. Here are some useful methods for
effective decision-making and problem-solving: Here is a simple
step-by-step process for effective decision making and problem
solving.
DECISION-MAKING PROCESS:
1. Define and clarify the issue - does it warrant action? If so, now?
Is the matter urgent, important or both.
2. Gather all the facts and understand their causes.
3. Think about or brainstorm possible options and solutions.
4. Consider and compare the pros and cons of each option -
consult if necessary - it probably will be.
Problem Solving & Decision Making 17
46
A man should look for what is,
and not for what he thinks
should be.
-Albert Einstein
Be an Entrepreneur
5. Select the best option - avoid vagueness or 'foot in both camps'
compromise.
6. Explain your decision to those involved and affected, and
follow up to ensure proper and effective implementation.
After all this, it is obvious that this process will pave its way to
change and innovation. As going through the decision making
process, one would discover the hidden opportunities which sound
quite good enough to the previous one or find some alterations and
arrangements to the existing one. This will make the decision
maker more active and provoke the tendency of being the trend
holder. Good decision-making requires a mixture of skills:
Creative Development
Identification of Options
Clarity of Judgment
Firmness of Decision
Effective Implementation
BRAINSTORMING
Brainstorming - is a method - is very useful for the start of any new
project, especially if we can be prone to put things off until
tomorrow. Planning a new venture, a presentation or any new
initiative, is generally much easier if we begin simply by thinking of
ideas - in no particular order or structure - and jotting them down
on a sheet of paper or in a notebook. Basically, it will dwell once
unsown, unknown Ideas and arenas etc
Sometimes it's very difficult to begin planning something new -
because we may don't know where and how to start. Brainstorming
is a great way to begin. The method also generates lots of
possibilities which one might otherwise miss by getting into detailed
structured planning too early.
PROS & CONS OF DECISION MAKING:
Pro means 'for', and con means 'against'. Otherwise called as,
advantages and disadvantages.
This method also applies to all sorts of problem-solving where
issues and implications need to be understood and a decision has
to be made.
47
Of all thing Ive done, the most
vital is coordinating the talents
of those who work for us and
pointing them toward a certain
goal.
-Walt Disney
Be an Entrepreneur
Some decisions are a simple matter of whether to make a change
or not, such as moving, taking a new job, or buying something,
selling something, replacing something, etc. Other decisions
involve number of options and are concerned more with how to do
something, involving a number of choices.
First you will need a separate sheet for each identified option.
1. On each sheet write clearly the option concerned and then
beneath it the headings 'pros' and 'cons' (or 'advantages' and
disadvantages', or simply 'for' and 'against'). Many decisions
simply involve the choice of whether to go ahead or not, to
change or not; in these cases you need only one sheet.
2. Then write down as many effects and implications of the
particular option that you and others can think of, placing each
in the relevant column
3. If helpful 'weight' each factor, by giving it a score out of three or
five points (5 being extremely significant, 1 being of minor
significance).
4. When you have listed all the points you can think of for the
option concerned compare the number or total score of the
items/effects/factors between the two columns.
5. This will provide a reflection and indication as to the overall
attractiveness and benefit of the option concerned. If you have
scored each item you will actually be able to arrive at a total
score, being the difference between the pros and cons column
totals. The bigger the difference between the total pros and
total cons then the more attractive the option is.
6. If you have a number of options and have complete a pros and
cons sheet for each option, compare the attractiveness - points
difference between pros and cons - for each option. The
biggest positive difference between pros and cons is the most
attractive option.
7. If you don't like the answer that the decision-making sheet(s)
reflect back to you, it means you haven't included all the cons
- especially the emotional ones or you haven't scored the
factors consistently, so re-visit the sheet(s) concerned.
Writing things down in this way will help to see things more clearly,
become more objective and detached, which will help to make
clearer decisions.
48
Education is the most powerful
weapon which you can use to
change the world.
-Nelson Mandela
Be an Entrepreneur
Creativity isn't just associated with art. It does not equal wild and
crazy. It doesn't equal foolishness. When you hear "out of the box
thinking"; that's the call to creativity. It's coming up with a new
approach. It's daring to think differently.
More and more, today's competitive climate requires organizations
to institutionalize the process of innovation - to plant the seeds of
creativity that could utterly transform a business. Creativity
necessarily involves the destruction of old - and sometimes
comfortable and perfectly good - ways of doing business. But for
companies willing to take the risk - and for leaders committed to
building innovative cultures - the first requirement is to understand
the creative process and the second is to commit to policies that
support the creative process.
The Four Stages of the Creative Process:
1. PREPARATION:
It is the stage where the creative person or team becomes
immersed in the problem. It's an information gathering stage and
when the effort is a collective one, it involves the forming of roles,
areas of special individual interest and the (sometimes loose!)
coordination of tasks. The creative process can sometimes stall -
or temporarily appear to stall - at this stage, especially when lots of
possibilities yield no immediate, transformative insights.
2. INCUBATION:
In this stage, the original problem may appear to be on the priority,
even forgotten or neglected, but the mind is still at work. Not the
logical, linear mind - the part we use most when awake but the part
that dreams, synthesizes and makes new, weird, original
connections. For a team effort, this can mean that the group may
Creativity in Business 18
49
If everyone is moving forward
together, then success taken
care of itself.
-Anonymous
Be an Entrepreneur
not meet for a while, appearing to let the project fall by the wayside.
But people will still be thinking or have ideas occurred to them in
the shower or write down thoughts on cocktail napkins, etc.
3. ILLUMINATION:
Without warning, ideas or innovations can come any time - the
"aha!" or "eureka!" experience. More commonly, there is no
immediate "killer insight," but some new angle that may occur, or
some sudden, burning, unexplainable need to return to work on the
problem - often a sign of creative "labor pains." When the creative
project has been a team effort, sometimes the only thing needed is
to get the original group members together again after a period of
time, and then "pet!" - The spontaneous exchange among them
can bring forth an idea that no one member could articulate alone.
4. EXECUTION:
This is the stage that separates mere creativity from successful
innovation. New ideas require action, stubborn determination, and
ability to build change coalitions while marketing the idea to critical
skeptics. Perhaps more than anything else, it takes courage and
persistence. Since the execution stage is more about social skill
than it is about the technical skill that produces the innovative idea,
this is the stage where organizational management can be most
actively helpful in promoting business creativity.
FIVE BUSINESS PRACTICES THAT CREATE INNOVATIVE
CULTURES:
Entrepreneurs who want to create an innovative business must
understand the steps of the creative process, but that alone is not
enough. To promote business innovation entrepreneurs should
commit to the following business practices and institutionalize them
in the domain.
50
Anyone who stops learning is
old, whether at twenty or eighty.
Anyone who keeps learning
stays young. The greatest thing
in life is to keep your mind
young.
-Henry Ford
Be an Entrepreneur
1. SELECT THE MOST PROMISING INNOVATORS BUT
ENCOURAGE UNEXPECTED SURPRISES:
To build innovative "conservatory" in an organization, executives
may want to gather out the most promising ideas and provide them
with extra resources. Those are the people who can benefit most
from the "buffer zones" in step two. But the other practices listed in
this section should be generalized throughout the organization, if
possible, so that innovators in unexpected places will have the
room to produce ideas and results.
2. CREATE "BUFFER ZONES" FOR THE MOST INNOVATIVE
PEOPLE:
Here, creating "buffer zones" means building a kind of protective
cushion around creative people or around the innovative teams,
within an organization. That means eliminating the ways that
policies or other work pressures get in the way or discourage the
information gathering involved in the preparation stage. It also
means being sure that the tools and resources are available when
creative people go looking around for data or answers to questions.
3. GIVE INNOVATORS ROOM TO "PLAY:"
For innovators, anything they can do to mess around with the kinds
of data or projects that they see as helpful - will be helpful.
But during the incubation stage, activities that may look like useless
diversions - that may not even look like work - are all necessary to
allow the deeper parts of the brain to solve a problem and make
new connection. The key to letting people have room to "play" is to
refrain from judgment of their activities or methods.
4. RESIST THE TEMPTATION TO LOOK FOR IMMEDIATE
RESULTS:
Any team can develop incremental solutions or recommendations.
There is no business or technological process that cannot be
improved through study and modification. But to build a culture that
truly encourages innovation, the pressure to get immediate results
will yield only incremental improvements and the need to meet
deadlines can sometimes kill the creative process before the
illumination stage.
While it is true that deadlines can focus creative teams and
encourage timely ultimate illumination, setting deadlines should not
51
Never tell people what to do,
and they will surprise you with
their ingenuity.
-General George S. Patton
Be an Entrepreneur
be overused because they often will interfere with the creative
process. Close communication with creative people working on a
project can help leaders develop a feel for when setting a deadline
will help, rather than hinder the process.
5. COMMIT TO DRIVING THE BEST IDEAS THROUGH
IMPLEMENTATION:
Innovators are seldom the best salespeople for their ideas. They
are, by nature, more likely to work in isolation, play with their ideas,
or generally rub others who are less creative the wrong way.
The business leaders who want to encourage innovation must act
as the first-line filter to test the best ideas and solutions, choosing
which ones are the right ones to see through to fruition. Then we
must commit to the internal sales and marketing project to build
coalitions that will bring the new idea into a reality. This takes
courage and persistence, and an ability to work the political and
social process involved in getting others to adapt to innovation.
52
To see what is right and not to
do it is want of courage.
-Anonymous
Be an Entrepreneur
Business ideas are all around you. They are being in your garage,
in your basement, in your kitchen and in your children's room. You'll
find them in magazine ads, at your neighbor's house and at work.
They are right there in the vegetables you brought in from the yard
. . . in the stack of papers next to your laser printer . . . in the back
of your truck . . . and at the back of your mind.
A business idea is a concept which can be used for commercial
purposes.
It typically centers on a commodity or service that can be sold for
money, according to a unique model.
There are several methods for developing and testing a business
idea. The ability to come up with a business idea can be
transformed into a viable business, where ideas supported by
feasibility and a business plan can then be sold to interested
investors, firms, and interested parties for a lump sum or a
management contract, or as agreed.
Business ideas, if introduced at the right time, when demand for
such service or a product introduced by the idea is expected to
surge, can lead to a very profitable business. Business ideas are
always available through different sources; however, it is the
application applied on these ideas and timing makes all the
difference in failure or success.
A New product idea can come from several sources. They may
come from internal sources, researchers, sales personnel,
engineers, or other organizational personnel. Brainstorming and
incentives or rewards for good ideas are typical intra-firm device for
stimulating the development of products ideas. New product ideas
may also arise from sources outside the firm-customers,
Business Idea Generation 19
53
Once you replace negative
thoughts with positive ones,
youll start having positive
results.
-Anonymous
Be an Entrepreneur
competitors, advertising agencies, management consultants and
private research organizations. Asking customers that they want
from producers and organizations have helped many firms to
become successful and to remain competitive.
Direct observation of competitors' products, customers' evaluations
of their product features and the grapevine of suppliers and other
who serve competitors often contributes ideas. Ethical and legal
issues can arise from clandestine activities, yet such activities
sometimes occur. Disassembly and intensive analysis of
competitors' product is common.
Another approach is to use brainstorming in which small groups of
customers toss out new product ideas. Such sessions may last one
or two hours and are largely unstructured and freewheeling.
Leadership keeps the interchange moving and the discussion on
the desired track. Focus group interviewing is a technique similar
to brainstorming. The session is freewheeling, but they often go
beyond ideas generation to include evaluation and discussion of
related issues.
54
Be not afraid of greatness;
some are born great, some
achieve greatness, and others
have greatness thrust upon
them.
-William Shakespeare
Be an Entrepreneur
One way to test a business idea is to do a SWOT analysis. A
SWOT analysis is a technique to identify Strengths, Weaknesses,
Opportunities and Threats of enterprises or projects whereby
internal and external factors are considered.
Rate the strengths, weaknesses, opportunities and threats as very
important or less important; Evaluate your business idea; Decide if
you are going to continue with your business idea.
A SWOT technique can be applied to the functional areas of an
enterprise as well as projects, products and services. For the
purpose of starting a new business, the Strength, Weakness,
Business Idea Identification 20
55
Obstacles are those frightful
things you see when you take
your eyes off your goal.
-Henry Ford
Opportunities
How do you ensure your
weaknesses will not stop
you from opportunities?
How will you fix
weaknesses that can
make threats have a real
impact?
How will you leverage
your strengths to benefit
from opportunities?
How do you use your
strengths to minimize the
impact of threats?
External
Threats
S
t
r
e
n
g
t
h
s
W
e
a
k
n
e
s
s
e
s
I
n
t
e
r
n
a
l
Be an Entrepreneur
Opportunity and Threat (SWOT analysis) deserve greater attention
as it helps you evaluate or decide whether to start the business or
not.
COVERAGE OF A SWOT ANALYSIS
56
Financial aspects Physical aspects
Management and operator
capabilities
Market
Information Supply of raw materials
Social environment Production process
Capital of owner
Projected cash flow
Access to additional
resources
Investment requirement
Profitability Risk
Building
Workshop and machinery
Technology/incubator parks
Location
Transport facilities
Infrastructure and utilities
Management competency
Age/experience
Skills availability
Technical know-how
Management contacts/
network
Salesmanship of owner/staff
Personnel management
Profile of target market
Competitor's marketing
strategy
Market share
Product features/quality
Expanding/stagnant market
Demand/supply situations
(past, present, future)
Is the necessary
information available?
Is it available in time for
decision making and for
taking corrective actions?
Are the sources adequate
in terms of quality, quantity
and price?
Are new materials
becoming available which
would be useful to the
enterprise?
Will they continue to be
adequate?
Are people accepting the
product?
Is there any particular
prejudice, likes or dislikes
for the product?
Is the product going to be
produced in mass?
Is it labour intensive?
Is it a job order or
continuous operation?
Be an Entrepreneur
After the above-mentioned parameters are evaluated and rated,
new business start-ups can go into a finer crosschecking of the key
variables affecting the success or failure of the idea.
CRITICAL SUCCESS FACTOR
(CSF) is the term for an element that is necessary for an
organization or project to achieve its mission. It is a critical factor or
activity required for ensuring the success of a company or an
organization. The term was initially used in the world of data
analysis, and business analysis.
Attention!
CSF implies a critical success factor particular to the identified
business, which is very important for the success of that specific
business. If that certain factor is missing, is inadequate or is not
properly taken into account, it can result in the total failure of the
envisaged business idea.
57
Strength does not come from
physical capacity, it comes from
an indomitable will.
-Mahatma Gandhi
Be an Entrepreneur
An intact plan for business is useful and very necessary to focus
and get an overall picture of what to do in order to build plenary
enterprise. On top of that, a good business plan is an absolute
must if one wants to convince institutions or individuals to loan
money or invest in their business.
The real value of creating a business plan is not in having the
finished product in hand; rather, the value lies in the process of
researching and thinking about business in a systematic way. The
act of planning facilitates to think things thoroughly, study and
research about the facts and look in to ideas critically. It takes time
now, but avoids costly, perhaps disastrous, mistakes later.
One way to organize business plan is to compose it like an
informative news article, explaining the "who," "what," "when,"
"why, and "how" of the business.
Who are you?
Write about your background and previous experience in your field.
Tell about your notable accomplishments and about your partners
and staff. If your company has been in business for some time now,
then write about your "track record." Explain what your company
has already accomplished and give an idea of how it stands in
relation to competitors in your particular field of business.
What are Your Products or Services?
What are you producing or what are you going to produce? What
are your products or services? What kind of revenue will these
activities be bringing in or what is the expected range of revenue
once the products are launched? Answer these questions giving a
Business Plan - A Case Study 21
58
I think that only daring
speculation can lead us further
and not accumulation of facts.
-Albert Einstein
Be an Entrepreneur
complete picture of the principal activity that you are engaged in or
will be engaged in during the timeline of this business plan.
When will things happen?
If you have a new start-up business, this section of the plan will
allow you to explain the steps that are needed to set-up your
business and make it fully operational. How much time do you
need? When will the business be up and running? If you have an
already existing business, it is useful to place somewhere in the
plan a list of targets that you want to achieve and give approximate
dates as to when these targets can be reached.
Where is Your Business?
Where are you located? Do you work at home or do you have
business premises? If you have a business location such as a store
or factory, then explain about the size and capacity of this
establishment. What is the business climate like in your area? Are
there significant competitors and what are your prospects of
competing in this market? Answer these questions as best you can
and give yourself, would-be investors a clear picture of where your
business is situated geographically in relation to your overall
market.
Why are you in Business?
Explain why your particular enterprise, product or service is
needed. What can you add to the already existing area of business
that you are entering? What need are you going to fill? The
answers to these questions are particularly important for investors
looking for opportunities in emerging businesses and emerging
markets.
How will it all Happen?
Your sales and marketing plan should be outlined in this section.
Explain how you intend to establish your product or service and
what steps you will take to create or expand your customer base.
How will you finance the start-up and/or expansion of your
business? Explain the source of your funds and whether you have
existing loans or liabilities. How much money do you need to raise
in order to get realize your overall plan for the launching or
expansion of your business? Explain how you are going to
translate your business idea into a living reality.
59
One must be truthful with
oneself about ones own
motives, especially if one is to
survive in the world. It takes
rigor, and it takes courage.
-Anonymous
Be an Entrepreneur
BUSINESS CASE STUDY
A case study is a research methodology common in social science.
It is based on an in-depth investigation of a single individual, group,
or event. Case studies may be descriptive or explanatory. The
latter type is used to explore causation in order to find underlying
principles.
A case study - review:
1. General, theoretical knowledge is more valuable than
concrete, practical knowledge.
2. One cannot generalize on the basis of an individual case and,
therefore, the case study cannot contribute to scientific
development.
3. The case study is most useful for generating hypotheses,
whereas other methods are more suitable for hypotheses
testing and theory building.
4. The case study contains a bias toward verification, i.e., a
tendency to confirm the researcher's preconceived notions.
5. It is often difficult to summarize and develop general
propositions and theories on the basis of specific case studies.
60
Great dreams of great dreamers
are always transcended.
-APJ Abdul Kalam
Be an Entrepreneur
Market is the group of consumers or organizations that is interested
in the product, has the resource to purchase the product and is
permitted to acquire the product. It includes
Total Population.
Potential Market -
Those in the total population who have interest in acquiring the
product.
Available Market -
Those in the potential market have enough money to buy the
product.
Qualified available market
Those in the available market who legally are permitted to buy the
product
Target Market
The segment of the qualified available market the firm has decided
to serve.
Penetrated Market
Those in the target market who have purchased the product.
Business Market 22
61
Hope sees the invisible, feels
the intangible and achieves the
impossible.
-Anonymous
Be an Entrepreneur
62
Business Market
Be an Entrepreneur
Marketing strategy is a method of focusing an enterprises energies
and resources on a course of action which can lead to increased
sales and authority of a targeted market.
A marketing strategy combines
PRODUCT DEVELOPMENT,
PROMOTION,
DISTRIBUTION,
PRICING,
RELATIONSHIP MANAGEMENT
and other elements; identifies the firm's marketing goals and
explains how they will be achieved, ideally within a stated
timeframe.
Marketing strategy determines the choice of target Market
Segments, Positioning, Marketing Mix, and Allocation of
Resources. It is most effective when it is an essential component of
overall firm strategy, defining how the organization will successfully
engage Customers, Prospects, and Competitors in the market
arena.
Marketing Strategy 23
63
Always do your best. What you
plant now, you will harvest later.
-Anonymous
Be an Entrepreneur
Selling is similar to playing a game. Every game has its own set of
rules and regulations to ensure fairness amongst the players.
Guidelines are also provided to prevent players from breaking the
rules and playing unfairly.
No matter which industry you are working in, there are rules to
guide each player in a fair and reasonable way.
In order to perform well, there is a need to follow some rules.
Anyone who is unclear of the rules of the selling game will definitely
get eliminated by competitors. In selling, these are some golden
rules to know and master, in order to stay competitive in the long
run.
The rules are:
Practice the proper sales knowledge, techniques, mindset and
skills
Never say no to constant learning and strengthening yourself
in all aspects to stay competitive
Practice what you have learnt and perfect it.
Only this can help become a big winner in a sales game.
Sales techniques that focused on the customer's needs or building
customer relationship are
1. Attention: One has to get the attention of the prospect through
some advertising or prospecting method.
2. Interest: Build their interest by using an emotional appeal such
that it reminds them and stimulate to buy.
Selling Techniques 24
64
An entrepreneur tends to bite
off a little more than he can
chew hoping hell quickly learn
how to chew it.
-Ratan Tata
Be an Entrepreneur
3. Desire: Build their desire for exclusive product by showing
them its features and letting them sample or experience it
4. Conviction: Increase their desire for elite product by
statistically proving the worth of the same. Compare it to its
competitors. Use testimonials from happy customers.
5. Action: Encourage the prospect to act. Ask for the order. If
they object, address their objections.
There are excess of selling techniques that range from direct to
indirect in-between. Some of these include:
A Direct Close:
Simply asking for the order when you are sure your prospect is
ready.
A Deal/Concession Close:
Using this technique gives the prospect the feeling that they are
making a smart choice and saving money
A Time-Driven Close:
This one works well with statements like, "prices are going up next
week, so you should go ahead a let me place your order today."
A Trial Offer:
Let the prospect use the product at no risk for a trial period. This
works well if the selling products that makes people's lives easier.
They aren't likely to give it back if it has saved them a lot of time
and effort during the trial period. If they haven't had the experience
with product that was told them they would then probably take a
chance.
65
Before you start some work,
always ask yourself three
questions-Why am I doing it,
what the results might be and
will I be successful. Only when
you think deeply and find
satisfactory answers to these
questions, go ahead.
-Chanakya
Strategist and writer: 350 BC-275 BC
Be an Entrepreneur
Customer relationship management (CRM) is a widely-
implemented strategy for managing a company's interactions with
customers, clients and sales prospects. It involves using
technology to organize, automate and synchronize business
processes - principally sales activities, but also those for marketing,
customer service and technical support.
The overall goals are to find, attract and win new clients, nurture
and retain those the company already has, entice former clients
back into the fold and reduce the costs of marketing and client
service.
A customer (also known as a client, buyer, or purchaser) is usually
used to refer to a current or potential buyer or user of the products
of an individual or organization, called the supplier, seller, or
vendor. This is typically through purchasing or renting goods or
services.
However, in certain contexts, the term customer also includes by
extension any entity that uses or experiences the services of
another. A customer may also be a viewer of the product or service
that is being sold despite deciding not to buy them.
The general distinction between a customer and a client is that a
customer purchases products whereas a client purchases services.
It's a well known fact that no business can exist without customers.
In the business, it's important to work closely with your customers
to make sure your business is for them and is as close to their
requirements as you can manage. Because it's critical that you
form a close working relationship with your client, customer service
is of vital importance. Make your customers feel valued, wanted
and loved.
Customer Relationship
Management 25
66
Look at the sky. We are not
alone. The whole universe is
friendly to us and conspires
only to give the best to those
who dream and work.
-APJ. Abdul Kalam
Be an Entrepreneur
CUSTOMER SATISFACTION:
In Business, the term customer satisfaction is a measure of how
products and services supplied by a company meet or surpass
customer expectation. It is seen as a key performance indicator
within business and is part of the four perspectives of a Balanced
Scorecard.
CUSTOMER DELIGHT:
An effective CRM brings new customers for more. It causes new
customers to come. It takes to out of the realm of being the same
as all the others and places you clearly at the top. It distinguishes
you from the rest. It allows you to sell your product or service for
more money than the competition. It allows you to make more
return on your investment. It allows you to reward your employees.
In this article let us see what different people say to achieve
customer satisfaction and customer delight.
CUSTOMER SATISFACTION - DISTINGUISHED
APPROACH:
1. ENCOURAGE FACE-TO-FACE DEALINGS:
It's important to meet your customers face to face at least once or
even twice. A client finds it easier to relate to and work with
someone they've actually met in person, rather than a voice on the
phone or someone typing into an email or messenger program.
When you do meet them, be calm, confident and above all, take
time to ask them what they need. A potential client spends over half
the meeting doing the talking and well on the way to a sale.
Respond to Messages Promptly & Keep Your Clients Informed.
This goes without saying really. We all know how annoying it is to
wait days for a response to an email or phone call. It might not
always be practical to deal with all customers' queries within the
space of a few hours, but at least email or call them back and let
them know you've received their message and you'll contact them
about it as soon as possible. Even if you're not able to solve a
problem right away, let the customer know you're working on it.
67
Do not say, It is morning, and
dismiss it with a name of
yesterday. See it for the first
time as a newborn child that has
no name.
-Rabindranath Tagore
Yeah maam, youre my customer
and Ive a gift for you.
Be an Entrepreneur
2. BE FRIENDLY AND APPROACHABLE:
It's very important to be friendly, courteous and to make your
clients feel like you're their friend and you're there to help them out.
There will be times when you want to beat your clients over the
head repeatedly with a blunt object - it happens to all of us. It's vital
that you keep a clear head, respond to your clients' wishes as best
you can and at all times remain polite and courteous.
3. HAVE A CLEARLY-DEFINED CUSTOMER SERVICE
POLICY:
This may not be too important when you're just starting out, but a
clearly defined customer service policy is going to save you a lot of
time and effort in the long run. If a customer has a problem, what
should they do? If and all the first option doesn't work, then what?
Should they contact different people for billing and technical
enquiries? If they're not satisfied with any aspect of your customer
service, who should they tell?
There's nothing more annoying for a client than being passed from
person to person, or not knowing who to turn to. Making sure they
know exactly what to do at each stage of their enquiry should be of
utmost importance. So make sure your customer service policy is
present on your site and anywhere else it may be useful.
4. ATTENTION TO DETAILS (ALSO KNOWN AS 'THE LITTLE
NICETIES'):
Have you ever received a Happy Birthday email or card from a
company you were a client of? Have you ever had a personalised
sign-up confirmation email for a service that you could tell was
typed from scratch? These little niceties can be time consuming
and aren't always cost effective, but remember to do them.
Even if it's as small as sending a Happy Holidays email to all your
customers, it's something. It shows you care; it shows there are
real people on the other end of that screen or telephone; and most
importantly, it makes the customer feel welcomed, wanted and
valued
68
There is nothing either good or
bad, but thinking makes it so
-William Shakespeare
Be an Entrepreneur
5. ANTICIPATE CLIENT'S NEEDS & GO OUT OF WAY TO
HELP THEM OUT:
Sometimes this is easier said than done! However, achieving this
supreme level of understanding with your clients will do wonders
for your working relationship.
6. HONOR YOUR PROMISES:
It's possible and is the most important for any business to thrive.
The simple message: when you promise something, deliver. Keep
in mind the delivery dates. Clients don't like to be disappointed.
Sometimes, something may not get done, or you might miss a
deadline through no fault of your own. If you fail to deliver on time
a quick apology and assurance is necessary.
69
Thinking is the hardest work
there is, which is probably the
reason why so few engage in it.
-Henry Ford
Be an Entrepreneur
The present age is the age of industrialization. Large industries are
being established in every country. It is very necessary to arrange
finance for building, plant and working capital etc. to establish of
these industries. How much of capital will be required, from what
sources and how will it be invested are the matter of financial
management.
Financial management is that managerial activity which is
concerned with the planning and controlling of the firm's financial
resources.
Financial management is the effective & efficient utilization of
financial resources. It means creating balance among financial
planning, procurement of funds, profit administration & sources of
funds.
OBJECTIVES :
Financial management is concerned with procurement and use of
funds. Financial management provides a frame work for selecting
a proper course of action and deciding a viable commercial
strategy. The main objective of a business is to maximize the
owner's economic welfare, ie Profit Maximization and Wealth
Maximization.
PROFIT MAXIMISATION :
Profit earning is the main aim of every economic activity. A
business being an economic institution must earn profit to cover its
costs and provide funds for growth. No business can survive
without earning profit. Profit is a measure of efficiency of a business
enterprise. Profits also serve as a protection against risks which
cannot be ensured. The accumulated profits enable a business to
Financial Management 26
70
Everything that can be counted
does not necessarily count;
everything that counts cannot
necessarily be counted.
-Albert Einstein
Be an Entrepreneur
face risks like fall in prices, competition from other units, adverse
government policies etc. Thus, profit maximization is considered as
the main objective of business.
WEALTH MAXIMIZATION
Wealth maximization is the appropriate objective of an enterprise.
When the firm maximizes the stockholder's wealth, the individual
stockholder can use this wealth to maximize his individual utility. It
means that by maximizing stockholder's wealth the firm is
operating consistently towards maximizing stockholder's utility.
A stockholder's current wealth in the firm is the product of the
number of shares owned, multiplied with the current stock price per
share. This objective helps in increasing the value of shares in the
market. The share's market price serves as a performance index or
report card of its progress. It also indicates how well management
is doing on behalf of the shareholder.
IMPLICATIONS OF WEALTH MAXIMIZATION :
There is a rationale in applying wealth maximizing policy as an
operating financial management policy. It serves the interests of
suppliers of loaned capital, employees, management and society.
Besides shareholders, there are short-term and long-term suppliers
of funds who have financial interests in the concern. Short-term
lenders are primarily interested in liquidity position so that they get
their payments in time.
AREAS / SCOPE OF FINANCIAL MANAGEMENT :
Financial management, at present is not confined to raising and
allocating funds. The study of financial institutions like stock
exchange, capital, market, etc. is also emphasized because they
influenced under writing of securities & corporate promotion. Some
of the functional areas
DETERMINING FINANCIAL NEEDS :
A finance manager is supposed to meet
financial needs of the enterprise. For this
purpose, he should determine financial needs of
the concern. Funds are needed to meet
promotional expenses, fixed and working capital
needs.
71
Capital as such is not evil; it is
its wrong use that is evil.
Capital in some form or other
will always be needed.
-Mahatma Gandhiji
Be an Entrepreneur
The requirement of fixed assets is related to types of industry. A
manufacturing concern will require more investments in fixed asses
than a trading concern. The working capital needs depend upon
scale of operations. Larger the scale of operations, the higher will
be the needs for working capital. A wrong assessment of financial
needs may jeopardize the survival of a concern.
CHOOSING THE SOURCES OF FUNDS :
A number of sources may be available for raising funds. A concern
may be resort to issue of share capital and debentures. Financial
institutions may be requested to provide long-term funds. The
working capital needs may be met by getting cash credit or
overdraft-facilities from commercial bands. A finance manager has
to be very careful & cautions in approaching different sources.
FINANCIAL ANALYSIS AND INTERPRETATION :
The analysis & interpretation of financial statement is an important
task of a finance manager. He is expected to know about the
profitability, liquidity position, short term and long term financial
position of the concern. For this purpose, a number of rations have
to be calculated. The interpretation of various ratio is also essential
to reach certain conclusions on financial analysis and interpretation
has become an important area of financial management.
1. COST-VOLUME PROFIT ANALYSIS :
This is popularly known as "CVP relationship". For this purpose,
fixed costs, variable costs and semi variable costs have to be
analyzed. Fixed costs are more or less constant for varying sales
volumes. Variable costs vary according to the sales volume. Semi-
variable costs are either fixed or variable in the short term.
Moreover, a firm will have to generate an adequate income to cover
its fixed costs as well. The financial manager has to find out the
breakeven point that is, the point at which the total costs are
matched by total sales or total revenue.
2. WORKING CAPITAL MANAGEMENT :
Working capital refers to that part of firm's capital which is required
for financing short-term or current assets such as cash, receivable
and inventories. It is essential to maintain proper level of these
assets. Finance manager is required to determine the quantum of
such assets.
72
Limitations live only in our
minds. But if we use our
imaginations, our possibilities
become limitless.
-Anonymous
Be an Entrepreneur
3. DIVIDEND POLICY:
Dividend is the reward to the shareholders for investments made
by them in the shares of the company. The investors are interested
in earning the maximum return on their investments whereas
management wants to retain profits for future financing. These
contradictory aims will have to be reconciled in the interests of
shareholders and the company. Dividend policy is an important
area of financial management because the interest of the
shareholders and the needs of the company are directly related to
it.
4. CAPITAL BUDGETING:
Capital budgeting is the process of making investment decisions in
capital expenditures. It is an expenditure the benefits of which are
expected to be received over a period of time exceeding one year.
It is expenditure for acquiring or improving the fixed assets, the
benefits of which are expected to be received over a number of
years in future. Capital budgeting decisions are vital to any
organization. Any unsound investment decision may prove to be
fatal for the very existence of the concern.
5. CAPITAL STRUCTURE:
The term capital structure is used to represent the proportionate
relationship between debt and equity. Equity includes paid-up
share capital, share premium and reserve and surplus (retained
earnings).
Capital structure refers to the mix of sources from where the long-
term funds required in the business may be raised. A demand for
raising funds generates a new capital structure a decision has to be
made to the quantity and forms of financing.
BREAK EVEN POINT (BEP)
Someone who is trying to start a new business often wonders, at
what point will I break even? A breakeven point (BEP) is the point
where the costs are exactly equal to sales/revenue. At this point,
the business makes no profit and yet doesnt suffer from loss
either. The breakeven point indicates the level of sales needed to
just to cover costs. Sales above this point will result in profit, vice
versa.
73
Doing your best means never
stop trying
-Benjamin Franklin
Be an Entrepreneur
To calculate breakeven point we basically need to consider several
factors,
Average per unit sales price,
Average per unit variable cost, and
Average annual fixed cost.
Fixed costs are constant expenses that dont change no matter
how many units of products are produced. While variable costs will
increase as the unit of production goes up. This is why variable
costs are often stated on a per unit basis.
The break even analysis, of course, is oversimplified. In most
cases, it is almost impossible to determine the exact breakeven
point due to the companys many customers, the companys many
products, and the interaction between price and sales. These many
factors will complicate the break even analysis. But it is still a useful
tool that could provide some insight as to how profit and loss
change as sales level decrease or increase.
A Working Example:
A designer mug costs Rs. 10 to buy. The variable costs are Rs.6
per mug which makes the contribution to fixed costs Rs.4 per unit.
The total fixed costs are Rs. 12,000. The BEP point is calculated
as follows:
Fixed costs / contribution per unit 12,000 / 4
Fixed costs / price - variable costs = BEP = 300 units
Or in terms of value
BEP in units x price per unit 300 x Rs.10 = Rs.30,000
This is a simple and straight-forward technique that is widely used.
It will show the profit or loss made at different levels of output, the
BEP at different prices and the effect on the BEP and profit if costs
change.
The BEP analysis is often used as a tool in price setting. A
company can produce several variations of this chart to compare
the revenue, total cost and BEP for different price scenarios. Whilst
it wont give an absolute answer it will highlight the options that
should be avoided. The major disadvantage with break-even
analysis is that demand is assumed to be inelastic. It suggests that
74
The expectations of life depend
upon diligence; the mechanic
that would perfect his work
must first sharpen his tools.
-Confucius
Be an Entrepreneur
a higher price will make the revenue curve steeper and therefore
lower the BEP. However in reality there will often be a maximum
price that customers will pay.
This will vary by customer and be dependent on many factors
including the cost of switching and the availability of alternatives.
The BEP is therefore more about whether a company can sell
enough to break-even rather than about what volume they can
expect to self.
Analyzing the BEP can help to determine whether a new product
has enough critical mass to make a profit and is feasible to be
launched. It can also be used to support business cases where
funding is needed by demonstrating that a product can be made
and sold profitably. As a result, we can see that BEP analysis
should be used for evaluation purposes rather than to base
decisions on.
FINANCIAL LEVERAGE
The use of fixed-charges sources of funds, such as debt and
preference capital along with owners equity in the capital structure
described as financial leverage gearing or trading on equity. The
use of the term trading on equity is derived from the fact that is the
owners equity that is used to raise debt; that is, the equity that is
traded upon.
Financial leverage is defined as the ability of a firm to use fixed
financial charges to magnify the effect of change in E.B.I.T on the
firms earning per share.
The financial leverage occurs when a firms Capital Structure
contain obligation of fixed charges. The fixed financial charges do
not vary with the operating profit. They are fixed and are to be paid
irrespective of level of operating profit. The ordinary shareholders
of firm are entitled to residual income i.e. earning after fixed
financial charges.
The financial leverage employed by a company is intended to earn
more on the fixed charges funds than their costs. The surplus (or
deficit) will increase (or decrease) the return on the owners equity.
The rate of return on owners equity is levered above or below the
rate of return on the owners equity.
75
Sometimes its the smallest
decisions that can change your
life forever.
-Richard Branson
Be an Entrepreneur
FAVOURABLE AND UNFAVOURABLE FINANCIAL
LEVERAGE
Financial leverage may be favourable or unfavorable depending
upon whether the earning made by the use of fixed interest or
dividend bearing securities exceeds the explicit fixed costs, the firm
has to pay for the employment of such funds or not.
The leverage will be considered to be favorable so long the firm
earns more on the assets purchased with the funds than the fixed
costs of their use. Unfavorable leverage occurs when the firm does
not earn as the funds costs.
SIGNIFICANCE OF FINANCIAL LEVERAGE
Financial leverage helps in deciding the appropriate Capital
Structure. One of the objectives of planning an appropriate Capital
Structure is to maximize the return on equity shareholders funds or
maximize the earning per share.
Financial leverage is double-edged sword.
On one hand, it increases the earning per share and on the other
hand it increases the financial risks. High financial leverage means
high fixed financial cost and high financial risk i.e., as the debt
content in Capital Structure increases, the financial leverage
increases and at the same time the financial risk also increases i.e.,
risk of insolvency increases.
The finance manager is required to trade-off between risk and
return for determining the appropriate amount of debt.
76
Be an Entrepreneur
Price is the quantity of payment or compensation given by one
party to another in return for goods or services. One of the major
elements is price. Pricing is an important calculated issue because
it is related to Product Positioning. Furthermore, pricing affects
other marketing mix elements such as Product Features, Channel
Decisions, and Promotion.
While there is no single method to determine pricing, the following
is a general sequence of steps that might be followed for
developing the pricing of a new product:
Develop marketing strategy - perform marketing analysis,
segmentation, targeting, and positioning.
Make marketing mix decisions - define the product,
distribution, and promotional tactics.
Estimate the demand curve - understand how quantity
demanded varies with price.
Calculate cost - include fixed and variable costs associated
with the product.
Understand environmental factors - evaluate likely competitor
actions, understand legal constraints, etc.
Set pricing objectives - for example, profit maximization,
revenue maximization, or price stabilization (status quo).
Determine pricing - using information collected in the above
steps, select a pricing method, develop the pricing structure,
and define discounts.
Pricing must take into account the competitive and legal
environment in which the company operates. From a competitive
standpoint, the firm must consider the implications of its pricing on
Pricing, Costing, Profit 27
77
Let everyone try and find that
as a result of daily endeavors
he adds something new to his
life, something with which
nothing can be compared.
-Mahatma Gandhiji
Be an Entrepreneur
the pricing decisions of competitors. For example, setting the price
too low may threat a price war that may not be in the best interest
of either side.
Setting the price too high may attract a large number of competitors
who want to share in the profits. And here for new products, the
pricing objective often is either to maximize profit margin or to
maximize quantity (market share). To meet these objectives, skim
pricing and penetration pricing strategies often are employed. Skim
pricing; attempts to "skim the cream" off the top of the market. By
setting, a high price and selling to those customers who are less
price sensitive.
Penetration pricing pursues the objective of quantity maximization
by means of a low price. The pricing objective depends on many
factors including production cost, existence of economies of scale,
barriers to entry, product differentiation and rate of product
diffusion, the firm's resources and the product's anticipated price
elasticity of demand.
78
Planning without action is futile,
action without planning is fatal.
-Anonymous
Economy Penetration
Skimming Premium
H
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Low
Pricing Strategies Matrix
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Quality
Be an Entrepreneur
Accountancy is a branch of mathematical science that is useful in
discovering the causes of success and failure in business.
Accounting is the art of recording, classifying, and summarizing in
a significant manner and in terms of money, transactions and
events which are, in part at least, of financial character, and
interpreting the results thereof.
Today, accounting is called "the language of business" because it
is the vehicle for reporting financial information about a business
entity to many different groups of people.
Accounting; that concentrates on reporting to people inside the
business entity is called administration accounting and is used to
provide information to employees, managers, owner-managers
and auditors. Accounting is concerned primarily with providing a
basis for making management or operating decisions.
The basic accounting equation is
Assets = liabilities + stockholders equity.
Accounting is way of keeping financial records of an entity to keep
track of its day-to-day transactions for tax purposes, as well as for
growth and financial security.
The government uses accounting as a way to determine the
economic conditions and growth of the nation. Even in the lives of
individuals, accounting practices are used every day to assess
their financial stability. Can you imagine never balancing cheque
book, keeping a budget or knowing how or where you spend your
money? You use accounting to show your net worth for insurance
Accounting & Legal Aspects 28
79
The best preparation for good
work tomorrow is to do good
work today
-Anonymous
Be an Entrepreneur
purposes, to help you save for the future, and to keep order in your
finances.
Accounting costs in a business, records the expenses of
production. A deficit in production lets a company know that in
order to be more productive a change may be needed. Most
businesses have an accounting cycle that can chart the
performance of a company. The accounting cycle makes sure the
company records are accurate and the company complies with
state laws and regulations for tax purposes.
A successful company will remain to strict accounting policies. A
proprietor of a company relies on the accounting department for
accurate records, correct balance sheets and performance charts
to share with the stockholders or investors.
All functions of a company are related to the accounting
department in some way. As an accounting professional, there are
many opportunities for work and advancement within a company.
Accounting software has even added more efficiency and ease in
the bookkeeping or payroll departments.
Bookkeeping is the recording of financial transactions.
Transactions include sales, purchases, income and payments by
an individual or organization. Book keeping is usually performed by
a bookkeeper. Bookkeeping should not be confused with
accounting. The accounting process is usually performed by an
accountant. The accountant creates reports from the recorded
financial transactions recorded.
DEBITS AND CREDITS:
These are the backbone of any accounting system. Understand
how debits and credits work and you'll understand the whole
system. Every accounting entry in the general ledger contains both
a debit and a credit. Further, all debits must equal all credits. If they
don't, the entry is out of balance. Out-of-balance entries throw your
balance sheet out of balance.
ASSETS AND LIABILITIES;
Balance sheet accounts are the assets and liabilities of a firm.
When we set up your chart of accounts, there will be separate
sections and numbering schemes for the assets and liabilities that
make up the balance sheet.
80
Diligence is the mother of good
luck.
-Benjamin Franklin
Be an Entrepreneur
IDENTIFYING ASSETS
Simply stated, assets are those things of value that your company
owns. The cash in your bank account is an asset. So is the
company car you drive. Assets are the objects, rights and claims
owned by and having value for the firm.
Since your company has a right to the future collection of money,
accounts receivable are an asset, probably a major asset, at that.
The machinery on your production floor is also an asset. If your firm
owns real estate or other tangible property, those are considered
assets as well. If you were a bank, the loans you make would be
considered assets since they represent a right of future collection.
There may also be intangible assets owned by your company.
Patents, the exclusive right to use a trademark, and goodwill from
the acquisition of another company are such intangible assets.
Their value can be somewhat unclear.
Generally, the value of intangible assets is whatever both parties
agree to when the assets are created. In the case of a patent, the
value is often linked to its development costs. Goodwill is often the
difference between the purchase price of a company and the value
of the assets acquired (net of accumulated depreciation).
IDENTIFYING LIABILITIES
Think of liabilities as the opposite of assets. These are the
obligations of one company to another. Accounts payable are
liabilities, since they represent your company's future duty to pay a
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The brave may live forever, but
the cautious do not live at all
-Richard Branson
Be an Entrepreneur
vendor. So is the loan you took from your bank. If you were a bank,
your customer's deposits would be a liability, since they represent
future claims against the bank
We segregate liabilities into short-term and long-term categories on
the balance sheet. This division is nothing more than separating
those liabilities scheduled for payment within the next accounting
period (usually the next twelve months) from those not to be paid
until later.
OWNERS' EQUITY
After the liability section in both the chart of accounts and the
balance sheet here comes owners' equity. This is the difference
between assets and liabilities. Hopefully, its positive-assets exceed
liabilities and we have a positive owners' equity.
INCOME AND EXPENDITURE
Further down in the chart of accounts (usually after the owners'
equity section) come the income and expenditure accounts. Most
companies want to keep track of just where they get income and
where it goes and these accounts tell you.
LEGAL ASPECTS
An indispensable part of a successful business environment in any
economy is its legal aspects. Every enterprise must take into
account this legal set up while framing the basic aims and
objectives of its company. This is because; it is necessary for
efficient and healthy functioning of the organization and helps it to
know about the rights, responsibilities as well as the challenges
that it may have to face.
In India, the most important law which regulates all aspects relating
to a company is the Companies Act, 1956. It contains provisions
relating to formation of a company, powers and responsibilities of
the directors and managers, rising of capital, holding company
meetings, maintenance and audit of company accounts, powers of
inspection and investigation of company affairs, reconstruction and
amalgamation of a company and even winding up of a company.
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Our job is to wake up the
consumers. If we become
predictable, thats not waking
them up.
-Philip Kotler
Be an Entrepreneur
People fail in business because they make avoidable mistakes.
Start-up entrepreneurs are possessed with enthusiasm and
confidence but too often are unaware of potentially fatal business
potholes that lie before them. All it takes is a single mistake, one
false step, and a business can be history. Here are the top most
commonly made mistakes:
7 BIGGEST MISTAKES OF BUSINESS STARTUPS:
Your first year of running a new business will chart a steep learning
curve. No matter how careful or knowledgeable you try to be,
mistakes will happen.
Still, if you keep an open mind and heed voices of experience, you
can dodge many of the more common missteps. Here are the
seven most frequent mistakes that newbie's make with business
startups and some advice about how to jump the caves.
Mistake 1: DRIVING A FIRE ENGINE WITHOUT A ROUTE:
You always hear how entrepreneurs need "passion" to succeed,
the so-called fire in the belly. Well, enthusiasm can be overrated.
To fan startup flames, you need more than high energy. You need
a plan.
Take the time to thoroughly investigate your market and target
customers, the competition and other basics, with a sound
business model. Focus on answering one deceptively simple
question: How will you make money? Is there a chance of rising
up? Is this the time to decide up on?
Lesson: Don't quit your day job without a plan.
Business Mistakes 29
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Happy customers tell 4 to 5
others of their positive
experience. Dissatisfied
customers tell 9 to 12 how bad
it was.
-Warren buffet
Be an Entrepreneur
Mistake 2: SELLING WAY TOO CHEAP:
Ask a child to choose between 12 rhinestones and one diamond
and she'll go for the rhinestones every time. Startup owners are just
like that. They fall for the false belief of quantity over quality. They
figure rock bottom prices will fuel skyrocketing sales and they'll
become millionaires. But it doesn't work that way.
"New entrepreneurs are notorious for pricing their goods and
services too low," says Linda Hollander, author of Bags to Riches,
a small-business handbook for women. "This dooms them to a life
of always worrying about money. Heck, even when they get orders,
they aren't happy because they aren't making enough profit on their
sales."
Before pricing products, do the math. Calculate fixed and variable
costs. Do research market and competitive price points. Develop
your distinct marketing edge (some call it "USP," for unique selling
proposition). Figure the margin you need to walk away with dollars
in your pocket.
Lesson: Don't sell diamonds for the price of a rhinestone.
Mistake 3: STARTING A BUSINESS JUST FOR THE
THRILL OF IT:
Entrepreneurs tend to be big-picture types , visionaries, risk-takers,
thrill seekers. The longer they must sweat the details, the jumpier
they get. So they often engineer a crisis, just to get back in the
game and feel the rush of adventure. "Entrepreneurial boredom is
the stealthy killer of seemingly healthy small businesses," says
Ralph Warner, author of How to Run a Thriving Business. The
purpose of a business is to make money. If you come alive only by
jumping off a cliff, take up bungee jumping.
Lesson: Don't start a business to find life on the edge.
Mistake 4: CLUELESS ABOUT MARKETING:
Startups rarely plan or budget for marketing because new owners
think marketing is an unnecessary expense. Or, compounding the
error, they confuse marketing with sales.
"Marketing worries about sales tomorrow. Sales closes sales
today," explains Rob Gelphman, who runs a marketing
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Dreams are often most
profound when they seem the
most crazy.
-Sigmund Freud
Be an Entrepreneur
communications company in San Jose, Calif. "You cannot go from
engineering to sales and skip the marketing step."
Underlying this mistake is a lack of experience about the drawn-out
process of a typical sales cycle. Entrepreneurs usually hire
salespeople first. But the initial hire, whether contracted or project
help, should be a marketing expert to get out the world. Then it's
time to send out the sales force.
Lesson: Don't try to close deals before getting out your message.
Mistake 5: BEING A PAL INSTEAD OF A BOSS:
At the opening of a new business, everyone works three or four
jobs, seven days a week. There seems little reason to pull rank or
worry greatly over management procedures.
"When people first start a business, processes are created by
accident or in an ad hoc manner," says Jay Arthur, author of Six
Sigma Simplified Training. "Problems are fixed by using common
sense and trial-and-error as the business grows. But at some point,
the ability of these two methods to solve more mysterious and
complex problems begins to fall off. Eventually, they stop working
altogether."
Without defined policies for job performance, hiring and firing,
vacations, sick leave, benefits, compensation, promotions and the
rest, your fledging company is vulnerable to legal problems and low
morale. Ultimately, business will suffer. A company handbook can
be as simple as a one-page memo.
Lesson: Don't abdicate authority.
Mistake 6: BLOWING THROUGH YOUR CAPITAL:
"New business owners grossly underestimate their financial
needs," says Mr. Ramasamy, president of Hospitality Works, a
food-service consulting firm based in Mumbai. Typically,
inexperienced owners overspend at the outset, buying more
furniture, technology and office supplies or hiring way too many
executives or experts than they really need to get up and going.
New owners also don't realize that few customers pay promptly. So
even when sales are immediate, cash is often tight. When
managing cash flow, it helps to have an analytic accounting
program.
85
Decisions we invested in
uncompromising integrity that
helped us take difficult stands in
some of the most difficult
business situations
-Azim Premji
Be an Entrepreneur
After developing personal and business budgets that can sustain
the company for the time you think it'll take to get to break even,
add at least 50%, suggests Mr. Manohar, a management
consultant who specializes in growth. "That's managing your risk."
That commitment isn't yours alone. You need ongoing buy-in from
family and friends. Make sure your time and money also is spent
on family or a significant other.
Lesson: Don't let a launch cause lifelong regrets.
In the end, many missteps occur because new owners insist on
doing everything themselves. Instead, review what you do best and
try to delegate or outsource the expertise you lack. And when the
inevitable errors do arise, remember the old adage: Learn from
your mistakes.
Mistake 7: WAITING FOR TIME AND EXCUSE:
Learn to manage your time correctly. Work will always be there
tomorrow. Working 20 hours a day is not bad for as it is your
business you will responsible for everything, but sometimes is very
unhealthy too, though one should be adoptable.
That is time away from your business cannot help you to refocus
and remind you of what you're working for.
Lesson: Time is everything
86
I have no special talents. I am
only passionately curious.
-Albert Einstein
Be an Entrepreneur
Just make up your mind at the very outset ..
that your work is going to stand for quality...
that you are going to stamp a superior quality upon everything
that goes out of your hands...
that whatever you do shall bear the hall-mark of excellence.. . .
It was not too long ago that the field of entrepreneurship was
considered little more than an applied trade as opposed to an
academic area of study. There was no "research" to be
accomplished because it was thought that those who could not
attend college would simply "practice" the concept of new business
start-up.
Yet our economy, on the other side, is actually based upon
entrepreneurship and history has proven that with each economic
downturn, it is the entrepreneurial drive and persistence that brings
us back.
Whatever work you do, or whatever product or service you provide.
What makes you better than those who also do what you do?
What strives for excellence?
Think about this: can you give three reasons why someone should
engage your company or follow you, or choose your service? If you
cannot answer this clearly, then few changes have to be made for
someone to choose your company / product over some other
company.
Towards Excellence 30
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Be an Entrepreneur
People are given slew of options to choose from and they would
choose someone whose performance stands out.
If you want to gain a really remarkable reputation, stay on your
toes. Like a professional athlete or a famous rock star, you are only
as good as your last game or your last hit. Your clients, customers
or in most everyday cases, peers, competitors won't let you
unconditionally: they will continue to judge you based on your work,
the results and benefits they enjoy from you.
It is with initiating you from known to the unknown.
Influencing ages and tapping the change for,
having always the motto 'Think Big'.
Do not judge this to be simplistic and trite...it is with vivid
incumbents how one utilizes this philosophy not only to live by, but
to spread hope to those who had no hope in life.
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BIG
Think
Strive Excellence