Herald: How to run a successful enterprise, what I know for sure

How to run a successful enterprise, what I know for sure

29 Oct 2018 06:29am IST
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29 Oct 2018 06:29am IST

I have seen many young entrepreneurs start their enterprise with great enthusiasm, ideas and dreams, 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, is lack of business experience, not studying the market, technology, cost of production and not knowing the scale at which they need to operate to meet costs. All this ultimately results in mismanagement of finance, delays in payment of government taxes, labor dues, payment to suppliers thereby affecting working operation cycle.

From the practical experiences I came across, I share with you some of the things entrepreneurs should do to run the enterprise successfully.

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Never venture into business on your own unless you have honed proper skills by working hard in tough conditions under hard task master and learned the ropes of the trade.

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Don’t get trapped in ‘Make in India’ campaign 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.

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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. 

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Do not start business till you understand 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.

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Complete your project in time otherwise your financials will go haywire, shattering your dreams. To achieve this, use all resources at your command to get work done in time by bureaucracy- sweet talk; persuasions; pleadings; threats; political connections and if nothing works using speed money. Do not take assurances for granted. Persistently pester bureaucrats for approvals, permits, sanctions, registrations till they relent. These tactics works formidably.

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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. 

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Delight your customers by giving more than their expectations in terms of service, quality, discounts and courtesy.

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Treat every visitor to your establishment (not necessary your customer) with courtesy, respect and service attitude.

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Avoid arguments with customers at all costs. They can damage your reputation though you may be absolutely right. 

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Do not fail on your commitments on delivery, service and payment dues.

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Build reputation for service to customers even if it is loss. This will benefit you in the long run.

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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.

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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.

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Do not indulge in financial gymnastics by over-trading, over-expansion and fund diversion. Kite flying through cheque discounting with different banks or use of multi credit cards should be avoided. A day will come when everything will be blown off with resultant consequences.

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Keep distance from politicians and political parties to avoid back lash from opposition and ruling parties.

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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.

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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. 

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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 task 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.

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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 unless you are very sure. A small lapse can put you in serious trouble.

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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.

This is success mantra of successful people. As it is said, winners don’t do different things. They do things differently.

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