Story of an entrepreneur

It all started with the Pooja on 22nd April 1999 for the proposed software centre! With twenty three years of corporate experience, I thought it would be a cake walk.

Those were the heady days of the IT boom when every significant corporate ventured into the IT arena. The market was buoyant and SEBI had low barriers for initial public offers (IPOs). The natural process for quick wealth for every new organisation was to take the IPO route.

The project kicked off with a drawing board, a marker pen and a couple of senior executives. The planning process went on for a few weeks after which we started manning key positions. The two slogans we carried at that time were, “Bringing the Market Place to the Work Place” and “Human Capital.”

After going through seven gruelling years with many roller coaster rides and spending some time in the ICU, the following lessons can be drawn, which I would like to share.The various pitfalls that we faced were:

Lack of shared vision: The initial team members right from the CEO to the project leader should have a shared vision for the organisation. There should be virtual ownership of the system. Lack of the above resulted in the team splitting off in the formative years bringing the game to a naught many a time. At the end of ‘01, when we took stock of the retained competencies, we found that it was zilch. I must confess that I have taken at least a few cycles to build and re-build the teams.

The syndrome of abundant resources: The corporate background was haunting me. I was living in a world of comfort assuming abundant resources for the system. The resources that we had assumed would be available, have disappeared like a mirage when we really needed them. This resulted in a financial vacuum. Adding fuel to fire, the market collapsed around the same time.

The uneducated CEO: Lack of knowledge in handling corporate affairs of the company and handling finance related functions are certainly the gaps that have to be quickly compensated. The CEO needs to educate himself on the rights and responsibilities as defined by the Companies Act. He needs to know the consequences of non-conformance to statutory compliance. This is the subtle difference between a business head in a corporate and a chief executive.

Real owners: The employees and investors are just as responsible for pulling the shutters down on the dot com companies as the market conditions. The promoters and employees are usually expected to nurture the organisational growth. This may not be always true. The short lived interest of the employees and the lack of bandwidth of the promoters to operate a hi-tech company leaves the CEO fending for himself.

Assessment of business risk: Often techies tend to be optimistic about a project’s success. One has to realise the importance of working capital requirements, payment terms and acceptance criteria, the actual capacity / reputation of the client to pay, that too, on time, and the organisation’s capability to meet deadlines and deliver quality products.

Getting the payment on time is the key as otherwise the system bleeds. The golden formula is that costs are committed and are an inevitable reality whereas incomes are not “realities”. Keep in mind that some part of the income is ‘virtual.’

Chewing more than what can be digested: Take calculated risks commensurate with the size of your business. Don’t overstretch yourself! Determine your horsepower effectively and properly. Don’t assume the capacity of a motorboat when you are sailing a yacht.

Yes, there are certain ways to make it a success too. We will take a look at them in the next issue.

(I) Turning into a businessman from a techie:
This transformation is the most critical one A techie looks at a project from a software development life cycle point of view. He feels a project is completed when a project is signed off. However, a businessman assumes a project is complete only after he receives the last instalment which could be a year after the completion of the project.

(II) Aim at building core competence:
The CEO has to come out of the syndrome of his personal / professional core competence. His competence for establishing the business is like a passport. The real core competence of the system has to be built brick by brick. The competence of the project lead, the software engineers who develop and interface with the client/customer are of importance. A chain is as strong as its weakest link.The CEO should come out of the syndrome of “X” years of experience behind him. A clean slate approach needs to be taken.

(III) Keeping costs under control is the key:
Keeping costs under control is necessary for the survival of any organisation. Thanks to the opening of the telecom and airline sectors, the costs of communication and travel have considerably reduced when compared with those during the mid 90’s.

This has given a fillip to the SME sector and has increased the geography that can be addressed. Hitherto, what was restricted to the boundaries of the home state, probably, has got expanded.

(IV) Task of culture building:
Bear in mind that only those graduates who are not employed by other bigger corporates are employed by the small and medium enterprises(SMEs). They may be from rural backgrounds and may lack good communication and interpersonal corporate skills.

But do not write off such employees. At times, they can be very good in their attitudes and can do extremely well. The situation is analogous to a rural student having studied in vernacular attending a corporate/public school in a city, but working doubly harder than the city students.This will be an ongoing process that needs to be anchored by the senior management team.

(V) Developing Competencies:
In developing competence, an organisation has to start at the lowest step in the value chain. Often the assignment will be in support, maintenance, training and such other peripheral activities. Some times, you are assigned a task unfinished by some other organisation. The challenge in such cases is that you are starting with a handicap of correcting an earlier situation for which you are not responsible! As repair is more difficult, its better to start afresh. Literally the organisation when given a chance has to start from mopping the floor.

(VI) Building a deliverable organisation:
To build a deliverable organisation is a tough challenge. The organisation like a child takes time to be self sufficient. It certainly takes a few years before the organisation can start delivering. We had our own share of woes especially, when we worked for a pittance and the customer after making us toil for a year, refused to pay as the software did not meet his expectations or requirements.

As we enter the eighth year of our operation, we have established a few strategic business units (SBUs) with competencies in a couple of domains and technologies.

And the story goes on: we continue our quest to build a brand. Now I am more confident than ever before that we will grow from strength to strength in the next few years.

(The author is the MD and CEO of eSoft Consulting and eSecure B2B)