Do You Have It In You?

Do You Have It In You?

There is no single sure-shot recipe that makes an entrepreneur, but if you answer a confident 'yes' to most of these questions, then you have high chances of making it

1. Can you bear great financial risk?

Willingness to take risk is one thing, being able to bear it is another. Do you have enough savings stacked up to pay your bills in case the business does not take off? Does your spouse have an income you can fall back on?

2. Do you have a unique service or product?

What you offer need not be 'new', but it should have a value proposition in terms of time, money, or quality over existing products. In other words, even an improvement over previous products can be successful.

3. Are you passionate enough?

If you don't believe in what you are doing, chances are you will never make it. Self-belief and faith in your idea are among the key factors that make a difference to a business. Many real-world case studies confirm the power of passion.

4. Do you have adequate resources?

Can you sustain yourself till profits start rolling in? Make an estimate of probable costs and worst-case scenarios and see whether you can handle them. If you do not have the money, can you borrow it? 

5. Do you have the necessary experience?

You should start your business in an area where you have experience. This isn't mandatory, but crucial if you are starting on a small budget and cannot hire external help. Else, get someone with the required experience.

6. Are you willing to sacrifice your lifestyle?

Any business usually takes a while to succeed. You must be prepared to lead an extremely frugal life for at least a few years. This might mean few vacations, little eating out and even spending less time with the family.

7. Do you like all aspects of running a business?

Running a business means doing all the unglamorous work—from paying utility bills to running around and negotiating with people who might not be particularly excited about your idea. Are you ready to go?\

8. Are you comfortable making decisions on the spot?

With a new business, you call all the shots—and there are a lot of decisions to be made without any guidance. This instant decision-making ability is vital for success.

9. What's your track record of executing your ideas?

Examine your past objectively to see whether you have assumed leadership roles or initiated solo projects. This will give you a clear idea of where you stand when it comes to taking initiative.

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How Much Money Do I Need?

Start-up capital means money needed till your business starts earning revenues. Assume expenses would be incurred under these heads for between six months to a year. Add 15-20 per cent for unplanned expenses.

1. Preliminary expenses Expenses incurred on initial surveys or for setting up a website

2. Professional expenses To hire professionals like chartered accountants

3. Cost of goods sold To develop a product or service or total income earned minus the profit

4. Selling and distribution expenses Expenses during the sales process

5. Marketing expenses Mainly advertisements or promotions

6. Cost of technology On mobile phones, computer hardware and software, Internet

7. Administration expenses Postage, stationery, rent, telephone and insurance

8. Salary and bonus Founders usually go without salaries for the first few years

9. One-time expenditure Permits, licenses, starting inventory, housing, among others

10. Monthly expenses Telephone bills, rent, wages and salaries and cost of advertisements

Source: www.smartentrepreneur.net

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The Tight Fist

When you have a small budget, you have to make each penny count. Here is how

Running Your Office

• Work out of home, use existing infrastructure like laptops and phones—don't buy new ones.
• Buy cheap PCs and try for good deals on laptops. Don't fall for expensive warranties.
• Look for cheaper hosting and domain plans.
• Use Skype to save on phone bills.
• Take your time while selecting cell phone and Internet plans, review them on a monthly basis.
• Watch your utility bills—switch off the lights, AC, fans and other appliances when you leave.
• Print double-sided and in economy mode with lower tones to save toner; use cheaper paper.
• Rent your non-critical office equipment like ACs, photocopiers, coffee machine.
• Instal an electric hand dryer in your toilet to save on more expensive paper towels.
• Watch stationery costs—take free stationery from conferences or vendor (but don't steal!).
• Recycle scrap—keep pins, rubber bands and clips that you get in the mail.
• Instal open-source operating systems or use free cloud computing software.

Business Travel

• Stay with friends or relatives. If you must stay in a hotel, look for cheap options close to meeting locations. Share rooms with colleagues.
• Use air-miles if you have any.
• Take afternoon flights: they are cheaper.
• If you can, get a hotel industry association discount card. You can then get discounts.
• Plan travel in advance: look for deals. Try to club meetings in a particular city or part of a city.

Hiring People

• Hire people at less than market rates. Hire only if work can't be done by existing employees.
• Hire interns, freshers and train them.
• Find contacts to assist you with legal work, finances etc., instead of outsourcing such work.
• Don't outsource. Founders should have the core skill-sets to build and sell products. If not, get a person with the skill-set on board.

Managing Expenses

• Don't invest too much for future needs: think up to one year ahead.
• Change lifestyle to match cash flows.
• Create monthly budgets for expenses. Document all expenses.
• Analyse expenses on a 1-2 week basis and see what can be reduced further.
• Negotiate deals with vendors or customers to give you discounts for later benefit.
• Use the Internet extensively for advertising.