Start-up village in Kochi (file photo)The initial euphoria on start-up companies seems to be wearing off. Many companies started by young kids barely out of college, are on the verge of disaster. It's a long story waiting to break. Many parents who happily invested for their children's ventures are now learning a bitter lesson.
Some of these young investers just out of teens did not believe in the rule to start small and then grow big. They started big by setting up their offices in posh private IT parks. Some of them even pledged the house, they lived in, to banks to get a hefty loan. Now with the business in tatters without generating even a single rupee in revenue, some of them are facing nothing short of eviction from the banks.
A prominent businessman who is now CEO of a multi-million dollar home-grown IT company says he started with a table and a lap top on the veranda of a government building. He was a one-man company making building software for a govt.firm. Now his company employs thousands. But the new boys want to start big, and dream of being taken over by the likes of Microsoft for a hundred million dollars. They dream of laughing all the way to the bank, just like those crooks in James Hadley Chase style thrillers. In most of the cases the company fails to meet the demands of customers and lose orders. Then the fight between partners start. You know the rest.
Many of these young entrepreneurs know nothing about costing. Even if you set up office at home, make sure the rent of the room, which you have converted in to office must be taken in to account in costing. Work in that room with a discipline as if you work in an office. See that your mobile phone, bike or car and laptop expenses are counted. Give yourself a decent salary. If the revenue justifies these expenses your business is worth continuing.
If you have an office outside, then cleaning, security, transport must be hired from agencies. Never buy that expensive car in your dreams with the loan taken for business. Hire only those who are competent to meet the company objectives. If reccomendations for hiring come, make doubly sure that they are suitable-says G.Vijayaraghavan who was the first CEO of Tecnopark. Also don't hesitate to pack them off if found unsuitable.
Never take a loan from cut-throat private money lenders. Ensure that the funds are sourced from legal channels or from friends. Generally, a company would need additional funds two years after inception.
Also make sure that you have all the permits and licences for starting the business, if it's VAT registration or customs licence so be it. Never end up on the wrong side of the law. Get salaried employees to hobnob with government babus, if that is an essential part of your business. If you try it yourself, then there wouldn't be any time left for business. The liason people should ensure all the government help. Experienced businessmen advise to avoid taking government land. It invariably ends up in complications. If you own your own office or land, then even if your business is in doldrums, then that asset is enough to tide over the crisis.
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