CA V. B. Prabhu Verlekar
- 102, Govinda Bldg, M.G. Road, Panaji, Goa, India, 403001
942 244 6638 0832- 222 5456
How to run a Successful Enterprise – What I know for sureGoa Chamber Bulletin- November 2019
I have seen many young entrepreneurs with dreams in their eyes start their enterprise with great enthusiasm, ideas and passion. But they stumble mid-way. Instead of rising with renewed vigour and strategies, they just crumble and disintegrate with permanent scar of failure with heavy debts.
Main reasons for this are lack of in-depth knowledge of the industry, familiarity with its stumbling blocks, absence of business experience, ignorance of the market, technology, cost of production and not knowing the scale at which they need to operate to break even. All this ultimately results in mismanagement of finance, delays in payment of Government taxes, labor dues, payment to suppliers; thereby affecting the working of the operating cycle and failure to meet commitments in time.
From the practical experiences I have come across, I wish to share with you some of the things entrepreneurs should do to run their enterprise successfully.
- Never venture into a business on your own unless you have honed proper skills by working hard in tough conditions under a hard task master and learned ropes of the trade.
- Don’t get trapped in campaigns like “Make in India” unless you have acquired essential skills to start and run a business and have prepared business plan with your own expertise vetted by a knowledgeable person in the field.
- Your first priority should be to engage an accountant, well versed in accounting, with basic knowledge of various taxes and business laws such as GST, Income Tax, Labour laws, etc. for carrying out necessary obligations in time.
- Do not start a business till you have understood basics of book keeping, significance of profit and loss account, balance sheet, working capital, fixed costs, variable cost, break- even, productive assets, non-performing assets, stock turnover, administrative cost, cost of production, finance cost, budgetary controls. If you are passionate about business and have common sense, understanding these concepts are easy.
- Complete your project in time otherwise your financials will go haywire, shattering your dreams. To achieve this, use all the resources at your command to get work done in time by bureaucrats- use sweet talk; persuasions; pleadings; threats; political connections and if nothing works using speed money. Do not take their assurances for granted. Persistently pester bureaucrats for approvals, permits, sanctions, registrations till they relent. These tactics works formidably.
- Reduce idleness of machines and workers by properly planning and scheduling workflow with timely material supplies, maintenance of machinery and clear-cut instruction to workers.
- Delight your customers by giving more than their expectations in terms of service, quality, discounts, and courtesy.
- Treat every visitor to your establishment (not necessary your customer) with courtesy, respect and service attitude.
- Avoid arguments with customers at all costs. They can damage your reputation though you may be absolutely right.
- Do not fail on your commitments on delivery, service and payment dues.
- Build reputation for service to customers even if it is loss. This will benefit you in the long run.
- Don’t remain isolated. Find latest information about your industry and the products to keep abreast with the time. Expand your network of acquaintances for business growth.
- Pay all Government and labor dues within time at any cost. Slightest delay can result in heavy interest, penalties, legal costs and time-consuming litigations.
- Do not indulge in financial gymnastics by over- trading, over- expansion, and fund diversions. Kite flying through cheque discounting with different banks or use of multiple credit cards should be avoided. A day will come when everything will be blown off with resultant consequences.
- Keep distance from politicians and political parties to avoid back lash from opposition and ruling parties.
- Till you make super profits, do not use your funds to acquire non-performing assets like posh offices, interiors, lounges, landscaped gardens, personal vehicles. They affect your bottom-line due to interest and maintenance costs without any contribution to the revenue. Never use short term funds for purchase of fixed assets.
- The real profit is not the figure you see at the bottom of revenue statement but profit arrived at after deducting invisible cost of your unsecured risk capital which has deemed interest costs higher than market borrowings. Regular cash flows are important to run your business.
- Build a cohesive team of your employees who could be new and fresh. Educate and train them step by step for each task by giving them power and responsibility. Don’t do the tasks which you can delegate. Prepare Manual of Instructions to follow. They should be able to work on their own in your absence. This is the way for growth and balanced life.
- Keep in regular touch with your tax and legal advisors for guidance and compliances especially in the matter of law and taxes. Don’t act on your own unless you are very sure. A small lapse can put you in serious trouble.
- Periodical set-backs for innumerable reasons are integral part of a business venture. To overcome this, strategies with new level of thinking should be in place after carrying out potential risk assessment exercises.
- Entrepreneurship is 24x 7x 365 days job with passion, commitment and smart work.
This is success mantra of successful people. As it is said, winners don’t do different things. They do things differently.
Goa Chamber Bulletin- November 2019