Taking the plunge into entrepreneurship

Many enthusiastic and enterprising youngsters dream of being their own bosses, working at their own pace, and not being employed in a desk job. Many of them are capable of carving out their own path, work hard, and make a success out of a start-up.

To determine how serious and capable a particular candidate is, ask: “What field will your enterprise be working in? What would be the capital outlay, and how would you finance it? What expertise is required, and where will you acquire it? What is the competition in the field, and how do you hope to overcome it?” They give a clear idea of whether the person is only dreaming or is truly capable of making a venture successful.

The first aspect to be considered is that college studies (in any field) are primarily theory-oriented. While a degree from a reputed institution lays a good foundation, will the entrepreneur handle issues like angry customers, cash crunch due to bad debts, attrition of employees who jump ship without warning, unexpected competitors who try to undercut, and government inspectors? These skills can be attained only when one works in a commercial enterprise, preferably a small one and not an MNC.

What to study?

Hence, we must explore what courses or studies prepare a youngster to be successful self-employed and the challenges or dangers of this path. Does the entrepreneur have to have expertise in technical skills, finance, marketing, human resource management or administration? There is no fixed answer to this question.

Statistically, more engineers have been successful than those from other streams—but this is more likely because the brightest students opt for engineering, and a four-year professional course does give a wider awareness and confidence to tackle projects. Even top B-schools have an overwhelming number of engineers cracking the entrance exams.

Hence, we return to selecting the most appropriate degree courses. Any degree should be equally good if a student has a wide outlook, out-of-the-box thinking, and a willingness to work hard beyond fixed working hours. A degree in that subject would be advantageous if the proposed enterprise deals with a specialised field.

These days, we hear mostly about start-ups in IT or IT-enabled services (ITES); they seem to be the most alluring, but that is not true. Innumerable start-ups in hospitality, pharmacy, e-commerce, healthcare, agriculture, retailing, and construction, to name just a few, are equally profitable. One needs to be very focused on the field being taken up and stick to it even if there is a prolonged struggle during the initial years.

Some reputed B-schools offer postgraduate courses in entrepreneurship management, which can be helpful. Similarly, those who take up internships in small firms or start-ups get practical exposure and a reality check on what to expect.

First jobs

Know that working in a small organisation is a far superior experience since employers extract the maximum from the candidate compared to those coming in for a short period for an internship. The selection of organisations to work for must be done by evaluating the learning possibilities and not by getting enamoured with the company's name and fame.

Some youngsters tie up with their peers who complement their skills so that broad expertise is available. This is beneficial, but care should be taken to ensure the partners are mentally and emotionally compatible.  I have seen many successful start-ups collapse because of differences between the promoters.

Business is essentially about the ‘bottom line’, i.e. the fund flow and profits. Those who do not have any funding to fall back on can fail just when they are picking up, but the money runs out. While many angel funders initially back up good business ideas, very few back up the same enterprise if it runs into cash flow problems.

Commercial acumen, the ability to handle customers and suppliers, and the ability to convince stakeholders to support through ups and downs are essential attributes of an entrepreneur.

It is always better to err on the safer side, i.e., postpone plunging into a start-up until you know you can handle all the challenges and have stand-by resources to take you through bad patches. If you are not fully confident, there is no harm in working as an employee for a longer period, gaining all-around expertise, testing out a unique and promising project, and then taking the plunge.