Being an entrepreneur involves immense patience, hard work, and realistic vision. In addition to ambition and deep desire for success, there are other facets of the business that an entrepreneur must focus upon in order to grow into a large and independent company.
It is crucial to chalk out the right strategy at the outset. An entrepreneur must have the ‘big picture' in mind. This will determine what the company intends to achieve, how to put process in place to achieve the set objectives. Undertaking actions in the short-term may not be beneficial and sometimes it even leads to disappointment. It is therefore imperative for entrepreneurs to have absolute clarity on their business plan for a three-five year horizon. The promoter needs to identify customer segments that dominate the sector/category, maintain correct pricing and optimum resource utilisation. Therefore, working towards positioning the company as a market leader in the segment is favourable for growth.
Human capacity building is the next important step. Identifying the right people and setting up a team is not as easy as it may seem. This can, at times, take up to two years or even more. The process could get difficult when there are employees who are highly qualified but not suited for the job and hence new workforce is hired. It involves tough decisions that will change equations with people. Further to hiring, it is important to give the employees autonomy. There may be points in time when the company may suffer as it is only human to make mistakes, but faltering offers essential training. An entrepreneur needs to set targets, provide incentives, create bandwidth, delegate and most importantly de-centralise.
Monitoring performance
Entrepreneurs, even those at small companies, should monitor performance but not micro-manage. Getting the right people, delegating roles, setting up the core team that understands how the company operates will help free up a lot of time for entrepreneurs. It will enable them to stay away from everyday routine tasks and focus their energies on the core business. The trick is to invest in people, allow them to make mistakes, advice them, set targets, and monitor performance.
The third important step is to build a credible business plan, taking into account all the different variables of the business. The plan should start by identifying the financial and sales targets. One needs to determine the kind of market share the company is seeking, and then focus on the pricing in terms of cost structures and managing overheads, among others.
Optimum funding
The most important aspect of the growth plan is funding. Any business requires an optimum level of funding. Cash flow acts as “oxygen to the business”.
The target must be to attain low-cost long-term funding to the extent possible. It must be noted that when a company is growing, cash flow is very important as the entrepreneur needs to manage several expenses such as salaries, overheads, and other maintenance and growth costs. There might be times, when a business needs sudden funding. This is when having contingency funds come to the rescue of the firm. At the time of expansion, fixed costs are always rising and recovery is relatively much slower. An entrepreneur must have the figures for funding right and must accordingly plan for it.
Entrepreneurs should endeavour to excel in all parts of the business.
As an entrepreneur, crucial time is lost in fire-fighting which takes away time from the core business. It is important to understand the business, the customers, the products and human resource practices among others as the company must benchmark against the best for success.
Tech advancements
Entrepreneurs must also be proactive in adapting to technological advancements. They must be aware of updates from across the world, their customer-zone and must be mindful of progress in other economies. Internet as a medium can no longer be ignored and thereby corporate presence on the Internet is key, even if the company is based out of Tier-II or Tier-III cities.
The pace of growth for companies varies depending on different aspects like entrepreneurial vigour, core business success, strong corporate governance, transparency, and market understanding. Entrepreneurs may excel at any one of these or all of them. Ultimately, their long-term vision, coupled with a strong business plan, consistent growth and above all conviction go a long way in corporate success.
(The author is MD, Sage CapitalViews expressed are personal.)