Do You Have what it Takes to be A Business Owner?

While no set of personality traits assures success in business, all of us have the following traits in some measure. Take this quiz to help you define yourself and your potential partners.

This quiz is part of a post on finding partners for yourself in your business.

Personality Traits – Aligned.These are personality traits that Business Partners need to share in equal measure. Imbalance in these traits often leads to conflict.

Scoring: Choose the statement that describes you best. If you are a 1 or a 2 in any area, get partners who are a 1 or a 2 in those areas and vice versa.

CAN YOU ACCEDE CONTROL FOR THE COMMON GOOD?

1. Absolutely. I realize that others might be better at some things than me
2. Yes. If I'm convinced
3. It's difficult  for me to do
4. Nope

ARE YOU COMFORTABLE WITH AMBIGUITY?

1. Yes. Life is shades of grey
2. Don't like it, but I can deal with it
3. As long as I have 90% of the facts
4. Hate it!

CAN YOU BE DESCRIBED AS TENACIOUS?

1. Yes. I never give up. EVER.
2. Sure, as long as there's light at the end of the tunnel
3. Well, sometimes the odds are stacked against you...
4. If it's not happening, might as well do something else

ARE YOU A FAST LEARNER?

1. Gimme 2 months and I'll learn Korean (fill in some other language if you ARE Korean :) )
2. I've mastered what I do at work everyday
3. I have to work really hard at it
4. I already know everything I need to.

HOW OPTIMISTIC ARE YOU?

1. The silver lining is so big I can hardly see the cloud!
2. I'm up beat more than 90% of the time
3. I think I'm what's called a realist
4. I'm not learning anything from this quiz

Personality Traits – Opposed.These are personality traits that business partners need to have in complementary quantities. For example, if you are very pragmatic, your partner should be more idealistic, for the good of the business.

Scoring: Choose the statement that describes you best. If you are a 1 or a 2 in any area, get partners who are a 3 or a 4 in those areas and vice versa.

HOW PRAGMATIC ARE YOU?

1. I pride myself on being level headed
2. Most of the time
3. I prefer to see possibilities rather than realities
4. My wife/husband/friend/brother is the down-to-earth one in the family

ARE YOU DETAIL ORIENTED?

1. Extremely. I am a perfectionist
2. Yes, but I realize that the last 10% consumes 90% of effort.
3. Hate it but I can knuckle down to it when required
4. I prefer to delegate

CAN YOU BE DESCRIBED AS AGGRESSIVE?

1. Absolutely. I have HUGE goals and limited time
2. I am more aggressive in thought than in action
3. I prefer the word assertive. Aggressive is, well,...too aggressive
4. I hate aggressive people. Just let me be

ARE YOU GREGARIOUS?

1. Haha. I'm the life of the party. ANY party
2. I have 800 friends on Facebook and I know them all personally
3. I can smile at people I don't like but there better be a good reason
4. These people on Facebook with 800 friends are so FAKE!

WOULD PEOPLE CALL YOUR REBELLIOUS?

1. You really think you can slot me into some kinda box with your stupid quiz?
2. Deep down I have pink hair and a ring on my nipple
3. I'm comfortable with the system and I can manipulate it
4. People with pink hair and nipple rings are FREAKS!

HONESTLY, ARE YOU CHARISMATIC?

1. When I talk to a room full of people they listen with mouths open
2. I am generally able to build consensus in a group
3. Charisma can be learned
4. Why do I always end up doing things I didn't want to?

go to the blog post on finding your ideal business partner

or take the quiz on essential Business Owner Skills


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Find a Business Partner

When I started Ushtara , in 2002, I started it as a Proprietary Concern. At the time, it seemed the best thing to do, because, I had complete independence to do anything I wanted. I was the lord and master.

But I realized after a while that the business could grow much faster if there were other people involved.
some of my reasons for feeling this way were;

a) Running a business is a multi-skill undertaking. Although a business owner needs to have a wide range of skills, from finance to product/service expertise to HR, there are times when you will need people with special expertise in some of these areas.

b) It is physically impossible to run a business single handed. It is a 24-hour-a-day, 7-day-a-week job.

c) Brainstorming with competent people of varied specializations, brings out better ideas than you can generate, by yourself.

What most new business owners, when they want to bring in another person into the business, is to approach their closest friend, to become their business partner.

I decided to go a different route.

FIND A PARTNER AND MAKE HIM YOUR FRIEND
I decided that the business' and my own best interests would be served best if I could find a business partner, who had all the skills I lacked.

I met my business partner, Ajay Fernandes, in 2004. He is a perfect fit for me and for the business.
Soon after we found each other, we became very good friends in addition to being equal partners in the business. Together, we have grown as individuals, grown as a company and grown as friends over the course of almost a decade.

I feel fully confident that we will continue to be friends as well as business partners for the rest of our lives.

When I tell people this story, they tell me that I'm very lucky to have found a great business partner/friend.

I Agree.

But I don't think it's all down to luck. I followed a systematic process to find a business partner. And so can You.

ANALYSE YOUR STRENGTHS AND WEAKNESS AS A BUSINESS OWNER
When I was looking for a business partner, I first had to look inside myself to find out what I lacked.
Have you ever played Tetris?

Well Business Associates are like that. Each of them has some some high points and some holes. The high points are like your strengths and the holes are like your weakness. When the right business partners meet, they compliment each other perfectly (they might have to re-orient themselves sometimes, again, just like Tetris).

When this happens, you and your business move to the next level.

Take this Business Owner Skill Set Quiz. It will help you analyze who you are, in terms of being a Business Owner.

Remember that your strengths and weaknesses change over time and so do your business partners. So you will have to carry out this analysis over and over, periodically over the course of your business career.

MAKE UP AN AD FOR YOUR IDEAL BUSINESS PARTNER
Now that you know who you are, you know who you are not.
Finding your ideal business partner just got one step easier.

Finding yourself a spouse, has never been  easier. Just write up an advertisement, describing the ideal person, personality, physical traits, ethnicity...
Then post this ad on any or all of a hundred different dating and matrimony sites and hey presto! specialized algorithms find your ideal life partner.

That might be a little optimisitic :), but the advantage of writing an advertisement is that it forces you to think about EXACTLY what you want.

Finding a business partner is similar to finding a spouse. With the same kind of close interactions and potential conflicts. This is why I recommend that you write out an ad for your ideal business partner.

Once you have made up the ad, tell EVERYBODY about it. Your friends, family and acquaintances. Put it up on Facebook and Linkedin. EVERYWHERE.

In the due course of time you will find your ideal business partner.

PARTNERS CONNECT ON MANY LEVELS
In addition to core business skills, the personalities of the business associates and the interaction of these personalities is critical to the success or failure of  a business.

You can never have enough of certain personality traits in a business, like tenacity and optimism. It is advisable that all the business associates have loads of these traits. If not, all of the associates should have these traits in the same measure. When these traits, that I call Aligned Personality Traits are very different in the associates,  conflict is frequent.

On the other hand another set of personality traits, the Opposed Personality Traits, work differently. These traits should occur in complementary pairs, for example, two business partners, both highly pragmatic, can ruin a business by being overly concerned about day to day realities.

Take the Business Owner Personality Quiz, to see what your business personality is like and what your partners should be like.

A STORY ABOUT SKILL SETS AND PERSONALITIES
In 2007, we bought another company called Nuetech CNC Machining Solutions Pvt. Ltd. The company was in a similar line to us and the selling price was low, so it made sense to buy the company.

The company was owned by 3 guys, who used to be peers at Hindustan Machine Tools. They had resigned their jobs to start the company.

Within 6 months of starting in business, they started squabbling. Within 2 years, the situation had become so bad because of their internal strife that business had come down to zero. So they decided to sell the business.

So intense were their hatred for each other that they couldn't even come together for the purpose of selling the company, and the sale had to brokered by a third party.

Why did this happen?

They had exactly the same skill set. They were all Engineers with a background in machine tools, from the same organization. None of them knew anything about other aspects of business like Finance or the Law.

They had opposing personalities where aligned personality traits are called for like tenacity and ability to learn.

They had similar personalities where opposed personality traits are called for like, pragmatism and attention to detail.


Their downfall was inevitable.

Till Next Time

Sunil

Business Owner Skill Set Quiz

A particular set of skill or personality traits in a business owner does not guarantee success in business. However, any business NEEDS a certain number of specific skills. Working with what you have, you can then partner with others to complete the multi-skill team required to make your business a high-flyer.

These are some skills that all businesses need. It is impossible for any one person to have expertise in all of these areas. However, it is important for any business owner to have to have a working knowledge of all of them. An ideal business, should have at least one expert in each of the below areas, with all of the associates having a thorough comprehension of every area.

This quiz will help you define yourself and your potential partners.

This quiz is part of a post on finding partners for yourself in your business.

Scoring: Choose the statement that describes you best. If you are a 1 or a 2 in any area, get partners who are 3 to 5 in those areas and a 1 or a 2 elsewhere. Simple!

               HOW GOOD ARE YOU AT YOUR CORE PRODUCT OR SERVICE?

1.     I am an acknowledged expert on the subject

2.     I have worked in a business in a similar industry

3.     I have some knowledge of the the product/service

4.     Still learning

5.     Don't know don't care. My expertise is different.

               HOW WELL DO YOU KNOW FINANCE?

1.     I am a chartered accountant. I know even the loop holes

2.     I have an in-depth understanding of finance even though I have no formal training

3.     I am able to work with an accounting package and understand credits and debits

4.     I can balance my check book

5.     Finance is for nerds. My expertise is different.

               HOW CONVERSANT ARE YOU WITH LAWS RELEVANT TO YOUR BUSINESS?

1.     I am a lawyer with years of experience in business law and contracts

2.     I am able to independently draft, review and ratify contracts 

3.     I have an understanding of relevant laws but I am no expert

4.     I don't know any thing about the law

5.     Laws and legal matters are scary for me. I prefer to avoid anything to do with them

               WHAT DO YOU KNOW ABOUT HR?

1.     I am an HR professional. I have created hiring processes, contracts, the whole deal

2.     I have worked in an HR role, hiring people, but I am not an expert

3.     I have worked in a leadership role, often participating in HR activities

4.     HR is about people. What's not to know?

5.     I don't want to work with people. My interests lie elsewhere

               HOW MUCH DO YOU KNOW ABOUT MARKETING?

1.     I have independently created the design and implementation of successful marketing plans involving a large number of people and resources

2.     I have been a part of a team implementing successful marketing strategies

3.     I have done some marketing as an individual

4.     I realize that marketing is different from sales

5.     Marketing is just another name for lying. I do something else really well

               WHAT IS YOUR LEVEL OF EXPERTISE WITH NEGOTIATION AND SALES?

1.     In my previous job role, I successfully institutionalized negotiation and sale across a large team

2.     I have successfully negotiated and created win-win situations on large deals

3.     I have closed sales, but I'm not good at negotiation

4.     I am very poor at sales

5.     My product / service is so good, it sell itself

               CAN YOU DO CUSTOMER RELATIONS?

1.     I have created customer relations processes involving both statistical control and soft skills across a wide variety of industries and products

2.     I have been part of a team planning and implementing customer relations processes

3.     I have successfully retained disenchanted customers through my own skills

4.     I know that customer relations are important to my business' growth

5.     Customers come and customers go. I don't care

                   HAVE YOU DONE INVESTOR MANAGEMENT?

1.     I have successfully brought in and retained large investors into a business for years

2.     I have brought in some investors but I don't really know what works in keeping them

3.     I have created business cases and plans, but not got in any investors yet

4.     I have talked to many bankers and investors and I know how they assess businesses

5.     My business doesn't need investors

                   CAN YOU DESIGN AND IMPLEMENT BUSINESS PROCESSES?

1.     I have headed the business process implementation and team of a large organization

2.     I have worked in a team implementing business processes across functions

3.     I am able to envision processes as flow charts while being aware of the fact that they depict people 

4.     I have a feeling that having processes can improve my business

5.     What processes? We make the product and customers buy it. That's all my business is about

go back to the main post finding your ideal business partner

Or take the Business Owner Personality Quiz

Keep Your Day Job and Start A Business

When the Entrepreneurial Urge takes you, its easy to get washed away in the waves of optimism and euphoria and quit your job. This could be worst mistake of your business career.

A break even analysis of your business will tell you approximately how much time it will take for you to start generating money. You should be prepared to stay in your job while running your business, for at least 3 times this period Why 3 times? Because for start-ups, projections are inevitably wrong.


In the early years, your business is almost synonymous with YOU. You will have to carry it on your shoulders, until it becomes mature enough to support itself. 

Unless you have limitless funding, which includes a salary for you, don't quit your job before your business starts making enough money to support itself and you.

IF YOU GO BROKE, YOUR BUSINESS WILL DIE
Asymmetric was an advertising consultancy in Bangalore. It's owners, Ryan and Angelo, were perhaps the most talented individuals I have ever met. 

After some years at other advertising agencies, the two decided to strike out on their own. They quit their jobs and opened Asymmetric  The orders came flooding in and two months into the new venture, they had to hire more people.

Within a year, the company was closed and Ryan and Angelo had gone back to jobs. What happened?

THEY RAN OUT OF MONEY.

Here's something that new business owners don't realize about Business: there's a lag between delivering your product or service and getting paid for it. And in that interval, you still have to keep running the company, keep running your life. The money required to keep going until you get paid is called Working Capital.

In the early stages of your business, when everything depends on you, your salary will act as your personal working capital.

The Buddha once said, that you can not follow Dharma on an empty stomach. 

Remember, that being a business owner, is a higher calling. A person who is waging a daily struggle for survival, can not be an effective business owner. 

If you are unable to meet your rent, food and other basic needs, you will not be able to run your business.

YES, YOU WILL HAVE TO WORK MORE HOURS
In case you were wondering. You will have to work like a demon. Putting in 8 hours at your job and then working at least 8 hours at your business.

How do you do this? You just do.

there's no simple solution. You just have to harden your heart and soul. Make the new year resolution of the century and just do it.

When I started Ushtara, I had to keep my days free for my new business, so I got a night shift job at Mphasis BPO. I worked all night at the call center and all day on my business. 

I slept 4 hours a day. For 3 years. 

That's the price you have to pay.

YOU WILL BE MAKING COMPROMISES AT BOTH
If you thought you could get the highest grade in your appraisal at your job while trying to run a business during your non-job hours, forget it.

If you think your business is going to do really well, with a founder-leader who also works another job, to stay afloat, Not gonna happen.

This is is the reality. Face it. You are going to be doing half justice to both aspects of your life. 

But think about it, isn't running a business with a lot of compromises better than not doing it at all? 
Isn't it better than running your business for a few months and then shutting it down simply because you weren't able to pay your electricity bill and buy food?

As you become a business owner, one thing you will realize, is that again and again  you will have to make compromises. Get comfortable with that.

GET A JOB THAT GIVES YOU FREEDOM TO RUN YOUR BUSINESS
Many jobs don't require you to be at a certain place (read "office") for a fixed number of hours (9-5). Some examples include sales representative and field technical expert. 

In such jobs, your boss will not know at any given time, where you are. As long as you meet your assigned targets, he won't even care.

Some jobs at companies like IBM, allow you to work from home. There are certain conditions like getting your work done on time and not working for any other company. Since your long term goal is to be a business owner, you need not be overly concerned about these conditions.

Think how much of your day in the office is wasted, doing nothing productive between bursts of activity. With a flexible job, you could now divert all of that wasted time toward your new business enterprise.

MAKE YOUR EMPLOYER YOUR CUSTOMER 
Many successful business owners start their business in an industry related to their job.

A friend of mine worked in a bank. His role in the bank is to source collection agencies that can collect payments overdue to the bank.

He decided to start a collection agency. He knew the opportunities, he knew the ropes. And when he had to outsource the juiciest collection cases, guess which agency he chose?

After 3 years being a customer to himself, he quit the bank and is now running the collection agency full time. He supplies collection services to his old employer as well as other banks who need them.

There are often legal issues like conflict of interest, when you decide to run a business that caters to your employer. Seek legal counsel and talk to your boss before taking up this strategy.

Till Next Time

Sunil

First Steps in Business

Taking that first step from being an employee to being an business owner can be really REALLY scary. People will come up with almost any excuse, to not have to take that last step off of the cliff.

I have to take care of my wife / parents.
I'm too young / too old to do this
I don't have enough money
I don't have time
The bank won't lend me money
I'm  waiting for the killer idea
I'm waiting for the economy to improve
I can't afford to lose my job
I don't have enough knowledge

here are some things you can do to help you get over those last few obstacles and take off in your new avatar as a business owner.

TELL EVERYBODY YOU MEET ABOUT YOUR UPCOMING BUSINESS
And I mean EVERYBODY. At work, at home, at a party, literally everyone you talk to.
Why do this?
While your ideas are bottled up inside your head, they are nothing but day dreams. When you let them out, they become somehow more solid, more substantial, more real.

Here's the thing, not everybody will be sympathetic to your ideas. In fact many people will find you boring and some people will ridicule you outright.

You can take strength from this and start and run a successful business just to prove them wrong.

The vast majority of people however, will be curious about what you are trying to do and mildly envious that you are about to embark upon an adventure that they themselves would never have the guts to.

Telling EVERYBODY about your business also has another bonus advantage, you just might run into someone who will actually be able to help you get your business of the ground.

BECOME AN EXPERT IN YOUR LINE
Before I started Ushtara, I spent 3 years understanding and learning everything about manufacturing.

Even before I started, I knew a great deal about
CNC Machining
Computer Aided Machining
Computer Aided Design
Metallurgy
Casting
Forging
Surface Treatment
Heat Treatment
Machining tolerances

and so on.
This knowledge would serve me in good stead once my business was up and running.
It helped convince investors that I knew what I was doing. It helped my first customer to believe that I could actually execute their order.

Perhaps most importantly, it was the one firm rock in the shaky path that of starting a new business.

TALK TO PEOPLE WHO ARE WHERE YOU WANT TO BE
I realize this can be daunting, but it's something I've actually done.
Here's the way to carry out this activity.

Find business that are offering a similar service or product to what you want to offer.  Preferably they should be close to your geographical location. A search on Google should bring up some results.

Find out who founded the organization. You can take a look at the company website to find these details.

Call up the company and ask to speak with the founder. Ninety percent of the time, you won't be able to speak to her, but it doesn't matter, because you only need to speak to about 15 people. If you are able to get through, make an appointment to meet them.

Here's what most people don't realize about successful people. THEY LIKE SHOWING OFF.

When I was starting out, I would visit at least one successful business founder, whom I admired, a week. I would say something like "In twenty years, I want to be where you are, so tell me how did you do it."

The reminiscences and pride would flow like an unstoppable stream and all I had  to do was listen.

Carry a notebook and pen and keep jotting whatever you feel is important. Remember I said you only need to speak to about 15 people? That's because when you speak to that many people, you'll start seeing patterns.

Keep in mind that many of the successful business owners will not want to waste their time talking to you, but the many of them will.

Once you start seeing the patterns, you will be better prepared for your own business venture.

PRACTICE PITCHING YOUR PRODUCT OR SERVICE
You are convinced that your discount voucher business is the best thing that ever happened to mankind.
You know that once you set up your business, customers will come streaming in.

But before you take the Big Step, why not take the concept for a trial run?

Pick a fake name for your company and cold call 50 of your potential customers. See how many of them are excited by your offerings. See how many actually take the bait and are willing to pay good money in exchange for your services. Obviously you don't deliver anything because your business is not up and running yet.

Granted, what I am suggesting is a little wrong, selling a service that you can't deliver. But don't worry, compare the wrongness with the amount you will learn about the business you are going to get into and it's totally worth it.

By practice pitching your product or service, you can fine tune not just your offering but also your marketing model and business model.

TAKE A DEEP BREATH AND DIVE IN
So you've talked to everybody about you business idea.
You've become a subject matter expert on your product or service offering
Talked to people in the industry that you admire and
practice pitched your product

So what next?

Go for it. Just leave behind your fears and take the plunge into the exciting world of business.

Till Next Time
Sunil

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Continue on to the Next Chapter

Running a Franchise to learn Business

Sam Walton's book Made in America, is a book that anybody wanting to start a business MUST read.

Before going on to start Walmart, Sam Walton was many things, including a newspaper boy and an army officer. Walton knew from an early age, that he wanted to be in the retail business, running successful retail stores.

How could an army veteran with no background in retail selling, go on to found a retail empire and one of the biggest companies in the world?

When Sam left the army he had,

no contacts,
no knowledge of the retail industry,
limited capital
no idea how to run a Business
no mentors
no big investors

Sound like anyone you know?

Understandably he was hesitant to risk his entire life savings on a retail shop, that he had no idea how to run. Yet he wanted to learn how to run a retail business successfully.

What he did next through design or accident was the best decision of his life.

HE GOT HIMSELF A FRANCHISE

In 1945, soon after the second world war, Sam Walton met Butler Brothers. Butler Brothers was a successful retail company in southern USA. They ran a chain of retail stores called Ben Franklin, which they were franchising for a moderate franchising fee, with certain conditions.

Walton decided to take on a Ben Franklin franchise and put up a store in Newport, Arkansas.

Everything Sam Walton learned about the retail trade, was pretty much because of the Ben Franklin experience.

Running a Ben Franklin store taught him,

How to source stuff cheaply and efficiently
How to display merchandise in such a way that it would be attractive to the customer
How to keep overheads down and maximize profit
How to treat customers so they would keep returning

The franchise also taught him;
Accounting and finance: with no other knowledge of accounts and finance, Walton continued to use the Ben Franklin accounting formats even after he had stopped being a franchisee and started the Walmart Stores.

Processes: Walton was able to see first hand, that strong processes lead to scalability. He used many of the processes from Ben Franklin in his Walmart stores.

Moral of the story:

GET A FRANCHISE THAT DOES THE SAME THING YOU WANT TO 

Granted, every industry does not work on the franchising model, but chances are some where in the world, some one is doing what you want to, and is willing to franchise it.

Apart from the ones you have probably heard of, McDonalds, Subway, Dominos, there are others in every possible industry;

White Tiger, a laundry service

Paradise Juice, a juice and smoothies franchise

Novatech, an education and training franchise

and on and on. This site will show you a number of companies that want to franchise their business model.

Looking back, I wish I had taken this route, before setting up Ushtara. This would have saved me a lot of time and effort learning stuff which others have already figured out. The franchising fee is the price you pay to reduce your own learning time

But remember that Franchising has its limitations. You will have to keep paying the royalty as long as you are a franchisee.  There are also other restrictions like the kind of products or services you offer, where you can source your input materials from and so on. A little research will show you which is the best franchise for you.

LEARN THE BUSINESS AND THEN GET OUT
Continuing to be a franchisee once you've learn the business, doesn't make sense. Treat your franchisee experience as a paid apprenticeship where you invest a small amount to learn the ropes faster. But your end aim must be to get out, once you've finished learning.

Being a franchisee can never get you to the really big stakes game. For that to happen, you must break out on your own.

Who knows, one day your successful business model might be one that franchisees are willing to pay a royalty for.

Till Next Time,

Sunil

Continue on to the Next Chapter

Which Type of Company is Best for You

After deep thought, you have decided what your business is going to sell. You have decided how much you will charge for it, and how much money it will make for you in a year. You have even decided what your company is going to be called.

Now you just need a bank account to cash the checks. 

Now you could just tell you customers to write the check in your name, but you start considering various question like, 

Would my business look like it's just a one-person show? 
What if I want to make my friend a partner? Would she be OK with the checks being in my name?
Would customers be more comfortable dealing with a professional sounding 'company' rather than a person?
What if I want to have more than one company, all doing different things?
What if I need funding? Would investors be happier investing in a company rather than an individual?

You my dear, budding business owner have just had an epiphany;

A BUSINESS IS SEPARATE FROM IT'S OWNERS

Now that's not always strictly true in a legal sense, as you'll see in a bit, but the thing is if you cash checks in your own name, that makes you self-employed, not a business owner.

Take a look at this video in which the Rich Dad Poor Dad guy defines self-employed and business owner;

http://www.youtube.com/watch?v=RfWPnftm2kQ

Basically there are 3 types of business entities that most (civilized) countries in the world have.

They all have important advantages and disadvantages. At different stages in your business, one or the other business entity might be appropriate for you. 

In the course of my business life, I have started all of these entities.

PROPRIETORSHIP OR SOLE PROPRIETORSHIP

This is  the simplest type of business entity. Simply put this type of business is not different from its owner in a legal sense. 

With this type of company, you as the business owner would be solely responsible for all decisions taken in the company. You would have a right to all the profits that the business made.

You would also have to bear all the loss that the company made and be personally responsible for repaying any debts that the company incurred.

It is really difficult to get any type of funding into this kind of entity and impossible to take on more partners. On the other hand, the good thing is that the paper work involved and regulation of this type of enterprise is minimal.

Probably the only thing you will do with a proprietary concern is cash checks in it's name.

This page gives you the documents you need  to open a bank account in the name of a proprietorship.  This is pretty much the same for every other bank.

Assuming that you have the proof of identity and proof of address, the only thing you will need is to get certificate of registration under the shops and establishments act.

That's really simple too.This form is for the applying for registration under the shops and establishments act in Karnataka, but every other state has a similar form available on it's department of labor website. Just fill up the form, submit it along with any fees to the labor officer closest to your address. He will give you a certificate of registration of shops and establishments.

For any new business owner, a Proprietorship is probably the best kind of entity and this is the one I would recommend you start with.

PARTNERSHIP FIRM

If you want to form a business along with someone else, like your friend, wife or husband, you may want to start a partnership firm.

This page will tell you a lot in terms of what a partnership firm is. A partnership firm, like a sole proprietorship, is the same as it's partners in the eyes of the law. So you will be personally responsible and liable for repaying any money owed by the firm. Not just that, you will also be responsible for any actions of your partners.

A partnership firm needs to have a minimum of 2 partners and can have a maximum of 20 partners. 

Like a proprietorship, a partnership is easy to form and has minimal regulation from the government. Also, like a proprietorship, a partnership is not perpetual and ceases to exist in certain situations, like the death of a partner.

Although not mandatory, a partnership firm usually has a Partnership Deed, which lays down the rights, duties, profit share, etc. of each partner.

You might want to engage the services of an advocate to draft the partnership firm. I would recommend that you use this one, which is my sisters company law firm. They can give you the legal advice you need to draft the appropriate partnership deed. 

The partnership deed is registered with the Registrar of Firms and societies. This deed is also required to open a bank account.

A partnership is ONLY required if you want to bring in someone else into your business. My advice would be to avoid this kind of entity all together. Start out with a proprietorship, and then go on to form a limited liability company which I talk about below;

LIMITED LIABILITY COMPANY

Eventually when your business grows, you will want to form a company. Basically a limited liability company is an organization where the owners' liability is limited.

For example in a private company limited by shares (Called a Private Limited company in India), no matter what the company owes, you only stand to lose what you have invested in the company. Your personal assets, like your house or car can not be taken away by your creditor.

In the eyes of the law, the company is a separate entity from its owners. It has rights and duties similar to a person. If that concept is difficult to understand, you are not ready to form a limited liability company yet. Read up some more starting with the Wikipedia page.

Talk to a chartered accountant or an advocate who deals with company law. 

This is the type of company that get really REALLY big, like the ones listed on the stock exchanges. This is the type of company that will eventually make you very rich but it comes at a price.

Limited Liability are subject to a LOT of government regulation. There are also a lot of procedures that need to be followed to setup a company. This page will help you get started.

You should also be ready to have your accounts, ownership details and everything else looked at by ANYBODY, because all of this stuff will be up on a website that anyone can see.

Anyway, to round things up start your business as a sole proprietorship, and when things start getting serious and the money starts flowing, setup a limited liability company.

Till Next Time

Sunil

Continue to the Next Chapter

EVERYTHING You Need to Know about Business

In 2004, I quit my job with Mphasis. 

Enthused by seemingly glorious life of a business owner ahead of me, I took the plunge. My last salary been credited into my account. And true to my resolve I lived frugally.

How hard can it be? I thought to myself. People who I know to be dumber than me are running successful businesses. So it shouldn’t be a huge deal for me to make money out of mine. I gave myself 6 months. (Turns out it took 3 years.)

Frugal though I was, my money ran out.
First my spending money.
Then my savings.
Then my investments.
All gone.

The end of 2005 and was probably the worst period in my life, financially speaking. 

I didn’t have any money at all. Literally.

I hadn’t paid my house rent, I hadn’t paid my cell phone bill. I was about to run out of food in a week.

What I did to survive and what happened to me have taught me pretty much everything that I know about business today. And here are those lessons.

SURVIVAL INSTINCT IS THE MOTHER OF CREATIVITY

I needed to come up with a plan quickly. Or I was going to sink. My landlord would throw me out of my house and I would starve.

At this point, I was on the verge of begging my old employer to take me back. What stopped me? Just my pride I guess. Instead I decided to ignore that option completely. I decided to think like a businessman.

I decided to come up with a business that met these criteria;

a) What can I offer RIGHT NOW?
b) What can I offer with no investment at all?
c) What can I offer that has a reasonably large market?
d) What can I offer that will earn me money NOW?

I had been a corporate trainer for GECIS, the first BusinessProcess Outsourcing Company in India. I trained fresh hires to do their job. At the cost of sounding immodest, I was rather good at it.

I decided to approach companies that were hiring fresh graduates vigorously and sell them on the idea of a College to Corporate transition training. Basically I would train them on the etiquette of working in a corporate environment. How to communicate, how to get ahead by acing your appraisal, how to make a professional looking presentation and so on.

If I hadn’t been in such a tight spot, would I have been able do something like this? Maybe not.

YOU DON’T NEED MONEY TO START A BUSINESS

My cell phone bill had been due 3 days ago. The woman from collections would call me twice a day to ask if I had paid it. Twice a day, I would lie to her that I had. I knew that the good folks at Tata Indicom would cut off my outgoing calls ten days after the due date on the bill. I had seven days to make a sale or starve.

I wrote a pitch and started dialing numbers. I picked out companies that were looking for fresh graduate on the monster.com. I figured if they were hiring, they probably needed to get those hires trained.

I would call the company and talk to the training manager then send them a follow up email pitch.

It took me five more days to make a sale. LogicaCMG hired my services for 8 sessions, with the option of 8 more, of the College to Corporate Transition Training.

Must have been something about my desperate situation, but those were some of the best sales pitches I ever made. Billy Mays Ha! You ain’t seen nothin’.

I learnt an important lesson: not only do you not need money to start a business, it’s probably better that you don’t have any.

As Ushtara grows, I hope that I never forget this lesson. The only way to run a business is as if your life depended on it.

When people tell me that they aren’t starting a business because they don’t have money, I just smirk at them. You don’t need money to start a business. You need desperation.

BUSINESS IS A JIGSAW PUZZLE

In December 2005, a Bangalore girl was raped and killed by her driver. 

By March of 2006, the outrage had risen to fever pitch. Employers and employees alike were  clamoring that something needed to be done.

I decided that my training company would run a short self defense course for women. In the first part of the training, we would talk about how to avoid getting into a bad situation in the first place. In the rest of the training the trainees would learn easy to master  martial arts  moves that they could use if they got into a bad situation anyway.

I created an email pitch and started sending it out to the security managers of every company in Bangalore. The interest generated was tremendous, but every company wanted to witness our training first hand before they would hire our services.

How could they witness our training when we weren't even running it?

I hired a psychologist and a martial arts trainer on a paid-per-training basis under the condition that their first session would be free of cost to prove  their abilities.  

I then told LogicaCMG, to whom we were already supplying other training services, that I would run one session free-of-cost for their employees if they would let some guests sit-in.

I invited the training and security managers of half a dozen companies to sit through the program. After seeing the program, 3 companies hired our services for 4 to 5 sessions each.

I offered a can of pepper spray to every participant free of cost and then built the cost of the pepper spray into the cost of the training.

If you think about it, any business operates only amalgamating a whole host of things, People, Money, Products, Services and so on. When even one of these pieces is missing, there's nothing. When they all come together, it turns into something beautiful.

MARKETING IS A MUST-HAVE SKILL
When I was marketing to the self-defense training to corporates, I wrote an email pitch, as a follow-up to cold calls. 

Instead of writing about the training, I wrote about the feeling of helplessness that a victim of mindless feels. I looked inside myself, to understand what value I was really offering through the training.

The pitch vibed strongly with the market. It helped us differentiate from a host of companies offering similar trainings. Even though we were slightly higher priced than every one else,  our customers perceived us as being the best choice to fulfill their needs.

I learned a very important lesson: You might have the best product or service in the world, but the only way you can get your customers to buy it, is if they see it as fulfilling their unique needs. This is a skill that can be learned and honed. I will talk about this again and again in other posts.

FINANCE IS THE LANGUAGE OF BUSINESS
When I closed my training company in 2008, I had achieved something which most people would consider impossible;

With essentially no money invested, no employees on the rolls, no physical building, no investment in intellectual property, working an hour or two a week, I was generating nearly $50,000 dollars in revenue a year with a net profit margin of approximately 60%.  

Sweet right? So you ask, why did I close the company?

2 reasons;

a) It was not scalable. My analysis showed that to achieve each 20% growth in revenue, the  contribution margin per training would need to be 10% higher to offset the additional overhead. This would impact our competitiveness. 

b) A DuPont analysis to analyse the return-on-revenue achievable from the training company vs. investing the same money in Ushtara revealed that Ushtara would be better in terms of asset turnover ratio, profitability, tax efficiency and leverage. So my money and time was better invested in Ushtara.

If you don't know what those things mean,  don't worry about it. I didn't either, until someone taught me.

Why do you think they speak Pashto in Afghanistan and Albanian in Albania?

I think it's because the language that people speak in, has evolved to meet the one-of-a-kind requirements of its speakers.

Finance is the language that business people speak in. If you want to be a business person, you MUST learn this language 

Till Next Time

Sunil

Continue on to the next chapter