BY SATYA RAO
When you're an entrepreneur you're always straddling this thin line between penury and survival. Early on, my common quip when people asked me what I did for a living was: "I'm an entrepreneur," and then I would add seriously, "hurtling down penury lane."
My response would elicit laughter often of the unbridled kind. It would help camouflage my own reaction which said: "No really, I mean it."
Entrepreneurship is like that. There are highs and lows and they come in different shapes and sizes. Because you wear different hats the outlook depends on how quickly you switch hats. If you dwell long enough on the one hat, you're sure to eventually take a deviation down 'Negativity Lane.'
It is part of the entrepreneur's DNA. You're always looking for something to go wrong. When things are actually stable (they're never hunky dory), you walk around with this fear writ large on your face -- 'Something must be wrong!' On occasion you actually feel relieved when a crisis arrives. At least the expectation of doom evaporates for a brief while.
But what keeps you going is the tremendous support you get from people around you. It's the time-honoured humane tradition of helping the underdog that takes precedence over all other motives.
You also need to shamelessly reach out to those who can help you. Your experience is enriched because you encounter so many who are willing to help out without any expectation in return. The support could be just waiving a charge for a service 'or' actually offering up valuable time to guide and advice you through a crisis or a problem.
That makes the whole experience much more rewarding. It also sets the stage for you to be a better human being and in turn find ways to give back to the community (of entrepreneurs) later on in life.
Family support is the maker or breaker of the whole idea of entrepreneurship. All other problems will take care of themselves if you have strong support from your family. I have always enjoyed terrific familial support. If you have a founding team, familial support is essential all around.
If your co-founders walk into work everyday without this support, your business takes a few steps back. It's not a bad idea to meet family members of the founding team and seek their support. It's time well spent.
It's also imperative that your partner/spouse is employed/earning and keeps the home fires burning. Why? Because it is not a given that you'll earn anything substantial for some time to come. It helps if you and your team have some funds put away for the rainy day.
If you are pumping all those rainy day funds into your business and you don't have a partner who works, it'll test your resolve as a team and as individuals.
Above all you feel humbled by all the unquestioning support that you get. You hope you'll get a chance to pay back someday. But there are no guarantees. So you wonder how to show your gratitude in the interim.
I often find myself rehearsing a speech I'm going to make someday to this growing posse of unquestioning believers where I name out each one of them and acknowledge their contribution. Or in the acknowledgements to a book I might write to share my experiences.
And then it occurred to me that I could begin this right here and right now. The list, however, is a rather long one. So let's dive right in.
The Tinkerer: I never assembled or built a thing in my life. And I find myself heading a product innovation company, a veritable tinker shop. I owe it to my father, the quintessential tinkerer.
He was a mechanical engineer, but toss him anything broken and he would use the most rudimentary of tools and common sense to fix things. That's a life lesson I don't forget. I take it to work everyday.
Innovation doesn't mean an ever-expanding budget. The constraints bring out the best in a person.
The IBM'er: We never met when we both lived in North America. He had worked with IBM for 30 years before returning to India. I met him through the Gaijin I talk of next!
But the relationship we struck was special. When I told him I was going it on my own, his eyes said it all -- "I'm gonna make 'you' successful!" A month into our experiment, he took me to the office of the chairman of a well known company.
They were friends from their childhood days in Lahore. He proclaimed that I was his son and demanded that his friend give our company some work. That got us off in the right direction. The IBM'er is not with us today. But on days when I have questioned the proposition I remember him and that fateful day, and tell myself: "Gotta make it count!"
The Gaijin!: The first time we met was in Tokyo. He spoke Japanese more fluently than I could ever hope to. He would speak passionately about our business with his network of friends and investors, Japanese and other, like he knew it inside out. He didn't! But he was a true believer.
He was also a door opener par excellence. Nothing touched me more than watching him make late night calls after a long day's work to help me out.
Some of our early breaks are purely due to his bull headed-ness and can-do attitude.
The Venture Capitalists: It's not a given that a believer who happens to be a venture capitalist will fund you. But help you they will. I've lost count of the number of times I sought help from friends and believers in the investment fraternity.
They truly gave meaning to the expression '2 degrees of separation.' Time and again in our early days, I would read articles in the press and reach out to them and others in the circuit and, voila! within a couple days I would have the name of a person to go after.
The Bean Counter: A finance head in a well known company, the Bean Counter would spend late nights helping me with our business plan. He set me up with a bank and a small line of credit when we had no financials to show yet.
A phone call is all it took. He then proceeded to set me up with a company affairs expert par excellence who was a believer in his own right. Much later when we did go in for venture funding, the due diligence was much easier thanks to this upfront groundwork.
The Energizer: A management consultant, he would walk into our team sessions and turn things upside down. We would think we had the discussion going in the right direction and he would begin by questioning the very basis.
Several 'why's' later we would have the proverbial light bulb going off. He also taught us some early hard lessons about learning to see things through and the true meaning of ownership.
The Real Entrepreneur(s): The Real Entrepreneurs are those who provided unquestioning financial support. The worst thing an entrepreneur can carry to work is this albatross of denying his/her kids the little things or the knowledge that he/she's taking a plunge which might put the family in jeopardy.
When I was battling with business issues my wife's ability to support the family was pivotal.
Neither can I forget the small but significant infusions from several other believers in our early days. They didn't really ask much about the proposition. It was all about belief.
Above all, entrepreneurs need to find that balance between positivity and objectivity. Believers provide that balance. When you're down on yourself and questioning the whole thing, they bring in that air of positivity that pulls you up. When you're getting carried away, they bring in the objectivity to ensure you stay on track.
It's a fine trapeze act in itself and if you're planning to be an entrepreneur, you can start by putting up a banner outside your home: 'Wanted a Band of Believers!'
Believe me, they'll come.
Satya Rao is founder and CEO of Axiom Consulting, a product innovation company
Thursday, October 9, 2008
TIPS TO BE RICH
No matter which life stage you are in, you have a future ahead of you and you should not leave it to chance- you must plan for it. So what are your financial goals?
Here's a tip: "making a lot of money fast" is not necessarily a reasonable goal. Look ahead and think of when would you incur major expenditures.
When you think of your goals, you should think about your hopes and dreams, for yourself and your family. What do you hope to achieve in life? Possibly buy a home and send your children to college?
Or maybe you'd like to retire early and travel the world? And now compare the future dream with the current reality. Here are a few tips for planning for a secure future:
1. What you earn, what you spend
The first part of allocating your investments is to figure out what's there to allocate. You need to estimate both your net worth and your net income/expenses. Your net worth, what accountants call a balance sheet, compares your assets (what you own) with your liabilities (what you owe).
This will help you see your monthly disposable income -- the income you have left over after paying all necessary expenses. And that tells you how much you can afford to contribute to your financial goals each month.
2. Set your goals
Financial professionals often counsel investors to write down their goals. Their intention is not to make you ponder the meaning of life, but to help you create the best plan to reach those goals along the way.
There's another benefit that comes from identifying your goals. Saving and investing just for the sake of getting rich might work for some people.
But for most others, though, giving up Rs.5000 every month can put a strain on their wallets - until they look at a photo of their children and remember that the Rs.5000 they're investing now will go toward helping pay their kids' higher education fees later.
3. Budget for it
After you identify your goals and how much you need to reach them, you should begin setting aside money on a regular basis to invest in your plan. Saving on a regular basis is the key to reaching your goals; no matter how little the amount you start out investing.
Don't be discouraged if your goal seems large and unreachable - remember that even a leaky faucet can fill your sink with water, drop by drop. Making investments on a regular basis, even if you can only set aside a small amount each month, can eventually build a sizable portfolio.
Many people think that they can't spare any cash to start an investing plan. These people probably have not learned the importance of paying yourself first. Setting aside a small amount for your long-term investing plan each week or each month before you pay any other bills or expenses is all you have to do.
4. Spread your money
It's rarely a good idea to have all your eggs in one basket. Depending on your goals and attitude to risk, you should invest your money over different investment options such as Stocks, Mutual Funds and Bonds.
You may also want to diversify within each of these categories. With stocks, for example, a mutual fund will invest your money in a variety of companies but you may want to ensure you have a range of industry sectors too.
5. Make sure your money grows
Should you leave it in the savings bank account and earn a meager rate of return? Or should you invest it in the PPF? The fact is that investing your money in the so-called safe fixed income instruments like Fixed Deposits, PPF, NSC, etc. is simply not enough.
This is due to the low rate of return on such instruments and high inflation rate in the economy. It is your hard earned money and you should invest it in instruments, which will make it grow over time and thereby build capital for your future.
Stocks is known world over for its potential to increase in value over time and provide your portfolio with the growth required to help you meet your long-term goals. Mutual Funds have given investors a whole new avenue for investment as per your risk appetite and expected returns.
6. Keep track of your track record
After you invest, you'll want to keep track of how your investments do. This doesn't mean you need to watch your returns on a daily basis (doing that can be like weighing yourself every day when you're trying to lose weight -- it won't help you judge long-term results, and you can drive yourself crazy doing it).
Instead, establish a regular timeframe for checking your investments to see if they are matching or beating your goals. For example, you may decide to review your returns investments once every three months, or twice a year.
While benchmarks aren't the only way to judge the strength of your investments, these tools can help you gauge how your investments are doing compared to similar investments. You may use the following benchmarks:
Market indices -- such as Sensex, Nifty. This will help you compare your performance with the overall returns of the market
Mutual fund benchmarks -- AMFI (Association of Mutual fund in India) has certain benchmarks for various categories of mutual funds.
Personal benchmarks -- you can set an overall goal -- for example, for your investments to outpace inflation by 5 percent over a period of five years -- and use it as a benchmark.
Be sure to set a reasonable timeline over which to compare your investments to a benchmark. You want to know how your investments perform through market ups and downs, so a longer timeline is more telling than a shorter one. For example, a five-year comparison will tell you more than a six-month comparison.
If you find one of your investments under-performs over the short term (for example, under-performed its benchmark over the last three months), don't be hasty to sell it earlier than you planned unless you've lost confidence in its long-term potential.
7. Don't lose your balance
You've established a portfolio with an asset allocation that suits you, and are reviewing your investments' performance on a regular basis. Think your work is done? Not quite.
You should still sit down periodically -- such as once a year -- to review your goals, finances and asset allocation. After all, goals can change. Time and circumstances can shift your priorities and your comfort with risk, changing your ideal asset allocation. When this happens, you may need to make changes to your portfolio.
Even if your ideal asset allocation hasn't changed, review your portfolio to make sure your existing asset allocation is still what you planned. Sometimes your asset allocation will change through no action on your part due to market movements. When this happens, your portfolio is out of balance -- which can expose you to more risk than you intended.
How can you fix it? You might sell investments in one asset class or buy extra shares of investments in another class.
When should you be on the lookout? If you're like most people, once or twice a year is probably often enough to see if the asset allocation in your portfolio is still what you'd planned.
But be sure to also check when you go through a major life change, such as getting married, having children, changing jobs or retiring. When you go through a big change, examine both your existing and your planned allocation to make sure both are right for your new lifestyle and risk tolerance.
Just keep these seven steps in mind and you should be able to achieve all your goals. Happy saving!
Here's a tip: "making a lot of money fast" is not necessarily a reasonable goal. Look ahead and think of when would you incur major expenditures.
When you think of your goals, you should think about your hopes and dreams, for yourself and your family. What do you hope to achieve in life? Possibly buy a home and send your children to college?
Or maybe you'd like to retire early and travel the world? And now compare the future dream with the current reality. Here are a few tips for planning for a secure future:
1. What you earn, what you spend
The first part of allocating your investments is to figure out what's there to allocate. You need to estimate both your net worth and your net income/expenses. Your net worth, what accountants call a balance sheet, compares your assets (what you own) with your liabilities (what you owe).
This will help you see your monthly disposable income -- the income you have left over after paying all necessary expenses. And that tells you how much you can afford to contribute to your financial goals each month.
2. Set your goals
Financial professionals often counsel investors to write down their goals. Their intention is not to make you ponder the meaning of life, but to help you create the best plan to reach those goals along the way.
There's another benefit that comes from identifying your goals. Saving and investing just for the sake of getting rich might work for some people.
But for most others, though, giving up Rs.5000 every month can put a strain on their wallets - until they look at a photo of their children and remember that the Rs.5000 they're investing now will go toward helping pay their kids' higher education fees later.
3. Budget for it
After you identify your goals and how much you need to reach them, you should begin setting aside money on a regular basis to invest in your plan. Saving on a regular basis is the key to reaching your goals; no matter how little the amount you start out investing.
Don't be discouraged if your goal seems large and unreachable - remember that even a leaky faucet can fill your sink with water, drop by drop. Making investments on a regular basis, even if you can only set aside a small amount each month, can eventually build a sizable portfolio.
Many people think that they can't spare any cash to start an investing plan. These people probably have not learned the importance of paying yourself first. Setting aside a small amount for your long-term investing plan each week or each month before you pay any other bills or expenses is all you have to do.
4. Spread your money
It's rarely a good idea to have all your eggs in one basket. Depending on your goals and attitude to risk, you should invest your money over different investment options such as Stocks, Mutual Funds and Bonds.
You may also want to diversify within each of these categories. With stocks, for example, a mutual fund will invest your money in a variety of companies but you may want to ensure you have a range of industry sectors too.
5. Make sure your money grows
Should you leave it in the savings bank account and earn a meager rate of return? Or should you invest it in the PPF? The fact is that investing your money in the so-called safe fixed income instruments like Fixed Deposits, PPF, NSC, etc. is simply not enough.
This is due to the low rate of return on such instruments and high inflation rate in the economy. It is your hard earned money and you should invest it in instruments, which will make it grow over time and thereby build capital for your future.
Stocks is known world over for its potential to increase in value over time and provide your portfolio with the growth required to help you meet your long-term goals. Mutual Funds have given investors a whole new avenue for investment as per your risk appetite and expected returns.
6. Keep track of your track record
After you invest, you'll want to keep track of how your investments do. This doesn't mean you need to watch your returns on a daily basis (doing that can be like weighing yourself every day when you're trying to lose weight -- it won't help you judge long-term results, and you can drive yourself crazy doing it).
Instead, establish a regular timeframe for checking your investments to see if they are matching or beating your goals. For example, you may decide to review your returns investments once every three months, or twice a year.
While benchmarks aren't the only way to judge the strength of your investments, these tools can help you gauge how your investments are doing compared to similar investments. You may use the following benchmarks:
Market indices -- such as Sensex, Nifty. This will help you compare your performance with the overall returns of the market
Mutual fund benchmarks -- AMFI (Association of Mutual fund in India) has certain benchmarks for various categories of mutual funds.
Personal benchmarks -- you can set an overall goal -- for example, for your investments to outpace inflation by 5 percent over a period of five years -- and use it as a benchmark.
Be sure to set a reasonable timeline over which to compare your investments to a benchmark. You want to know how your investments perform through market ups and downs, so a longer timeline is more telling than a shorter one. For example, a five-year comparison will tell you more than a six-month comparison.
If you find one of your investments under-performs over the short term (for example, under-performed its benchmark over the last three months), don't be hasty to sell it earlier than you planned unless you've lost confidence in its long-term potential.
7. Don't lose your balance
You've established a portfolio with an asset allocation that suits you, and are reviewing your investments' performance on a regular basis. Think your work is done? Not quite.
You should still sit down periodically -- such as once a year -- to review your goals, finances and asset allocation. After all, goals can change. Time and circumstances can shift your priorities and your comfort with risk, changing your ideal asset allocation. When this happens, you may need to make changes to your portfolio.
Even if your ideal asset allocation hasn't changed, review your portfolio to make sure your existing asset allocation is still what you planned. Sometimes your asset allocation will change through no action on your part due to market movements. When this happens, your portfolio is out of balance -- which can expose you to more risk than you intended.
How can you fix it? You might sell investments in one asset class or buy extra shares of investments in another class.
When should you be on the lookout? If you're like most people, once or twice a year is probably often enough to see if the asset allocation in your portfolio is still what you'd planned.
But be sure to also check when you go through a major life change, such as getting married, having children, changing jobs or retiring. When you go through a big change, examine both your existing and your planned allocation to make sure both are right for your new lifestyle and risk tolerance.
Just keep these seven steps in mind and you should be able to achieve all your goals. Happy saving!
Save the Economy, Save the Planet
A new politics of climate change for recessionary times.
By Eric Pooley Posted Wednesday, October 8, 2008 - 2:19pm
Even before the financial markets fell into cardiac arrest and Dr. Paulson prescribed his $700-billion adrenaline shot, the economic crisis had become the only issue that really mattered in the presidential election. Sure, the McCain camp was talking about some other crucial stuff—sex education for kindergartners, porcine cosmetology—but Iraq, health care, and especially climate change were and still are lost in the economic glare. That's understandable, but for Americans who began the year feeling hopeful that climate action was finally becoming inevitable, it has been a sobering summer. And now there's fear that a deep recession could drive global warming off the next president's agenda altogether.
The evidence of impending climate catastrophe keeps piling up, and both candidates support a declining cap on greenhouse-gas emissions. Yet they rarely find time to talk about it. (Each gave the subject a polite nod during the Clinton Global Initiative.) Obama and McCain know that at this moment of deep economic distress, warnings about future climate impacts aren't going to help them carry Ohio. That much has been clear since June, when $4-a-gallon gasoline helped snuff the Lieberman-Warner Climate Security Act and the nation's hopes and dreams began shifting from save the planet to "drill, baby, drill." Opponents of Lieberman-Warner claimed it would jack up energy costs, throw people out of work, and kill the U.S. economy; supporters responded that its impact wouldn't be that bad. Not that bad is not that good a strategy, and green leaders realized then that if they were ever going to break the political logjam, they had to drive home a more optimistic economic message.
Today, that message is coming into focus, and what looked like obstacles to climate action in June may soon be seen as opportunities. Hard times didn't stop Reps. John Dingell and Rick Boucher from releasing a long-awaited climate bill this week, and hard times could actually help propel the climate debate next year, because the steps needed to deal with global warming can also help deal with America's shaky economy and dependence on foreign oil—and even raise money for jobs and infrastructure. Obama's climate adviser, Jason Grumet, mused about the possibilities at an energy conference held recently at Harvard. "To the extent that climate change [legislation] is the next big American stimulus package," he said, "that brings forward a different kind of dialogue."
By Eric Pooley Posted Wednesday, October 8, 2008 - 2:19pm
Even before the financial markets fell into cardiac arrest and Dr. Paulson prescribed his $700-billion adrenaline shot, the economic crisis had become the only issue that really mattered in the presidential election. Sure, the McCain camp was talking about some other crucial stuff—sex education for kindergartners, porcine cosmetology—but Iraq, health care, and especially climate change were and still are lost in the economic glare. That's understandable, but for Americans who began the year feeling hopeful that climate action was finally becoming inevitable, it has been a sobering summer. And now there's fear that a deep recession could drive global warming off the next president's agenda altogether.
The evidence of impending climate catastrophe keeps piling up, and both candidates support a declining cap on greenhouse-gas emissions. Yet they rarely find time to talk about it. (Each gave the subject a polite nod during the Clinton Global Initiative.) Obama and McCain know that at this moment of deep economic distress, warnings about future climate impacts aren't going to help them carry Ohio. That much has been clear since June, when $4-a-gallon gasoline helped snuff the Lieberman-Warner Climate Security Act and the nation's hopes and dreams began shifting from save the planet to "drill, baby, drill." Opponents of Lieberman-Warner claimed it would jack up energy costs, throw people out of work, and kill the U.S. economy; supporters responded that its impact wouldn't be that bad. Not that bad is not that good a strategy, and green leaders realized then that if they were ever going to break the political logjam, they had to drive home a more optimistic economic message.
Today, that message is coming into focus, and what looked like obstacles to climate action in June may soon be seen as opportunities. Hard times didn't stop Reps. John Dingell and Rick Boucher from releasing a long-awaited climate bill this week, and hard times could actually help propel the climate debate next year, because the steps needed to deal with global warming can also help deal with America's shaky economy and dependence on foreign oil—and even raise money for jobs and infrastructure. Obama's climate adviser, Jason Grumet, mused about the possibilities at an energy conference held recently at Harvard. "To the extent that climate change [legislation] is the next big American stimulus package," he said, "that brings forward a different kind of dialogue."
Subscribe to:
Posts (Atom)
