10 Books for Start-ups and Small Businesses

For someone who loves books and dislikes naming favourites, it’s tough to quickly make a list of only 10 must-read books. There are so many valuable books an entrepreneur can learn from that this list is only a starting point, rather than “the Top-10”. But, then, one of the most important things an entrepreneur can do is to overcome his or her own resistance at some of the most inconvenient times. So here goes!

  1. Good to Great (Jim Collins) – this book delves into some fundamental strengths that entrepreneurs need to seed into their business fairly early. Interestingly some of the companies listed in the book may no longer be called great (a weakness with most management books quoting specific examples), but I believe the principles stand the test of time.
  2. The Tipping Point (Malcolm Gladwell) – some small things do become big. Every entrepreneur and start-up would love to know how and why; Gladwell’s book offers a different perspective – from epidemics to better governance. Much learning for the start-up and the small business owner.
  3. Losing My Virginity & Screw It, Let’s Do It (Richard Branson) – one autobiography is usually enough for most people – trust Richard Branson to not fit into that mould. I’ll count them as one. As an entrepreneur who went from selling records to creating one of the most diverse brands covering airlines to telephone services, Branson will certainly have something for everyone. The books offer a view into his struggles as much as his successes.
  4. The High Performance Entrepreneur: Golden Rules for Success in Today’s World (Subroto Bagchi) – if for nothing else, read it for the first chapter: “How Do I Know if I Am Ready”. Of course, once you’ve gone through that chapter, it is remarkably easy to go through the rest of the book, which offers guidance from Bagchi’s own deep experience as an entrepreneurial manager and as an entrepreneur.
  5. Fortune at the Bottom of the Pyramid (C. K. Prahlad) – who says you have to have millions in the bank and service only rich customers to be a successful entrepreneur? I must admit I came very late to this book, and am yet to complete it, but it is an excellent reference source for case studies of innovative and very large businesses being grown in markets that are typically treated as poor or low value, environments that many Indian entrepreneurs can relate to.
  6. Made to Stick: Why Some Ideas Survive and Others Die (Chip Heath, Dan Heath) – Inspired by the Tipping Point, the Heath brothers describe what it takes to get your ideas across, and make a lasting impact. A must for entrepreneurs looking for funding, to hire great people and keep them motivated, and to capture lasting customer relationships.
  7. It Happened in India: The Story of Pantaloons, Big Bazaar, Central and the Great Indian Consumer (Kishore Biyani) – there are too few books about or by Indian entrepreneurs, so this is one growth story in desi style that many start-ups would be able to relate to. It is not as polished as most other entrepreneurial autobiographies, but valuable nevertheless.
  8. The New Business Road Test: What Entrepreneurs And Executives Should Do Before Writing A Business Plan (John Mullins) – an someone who turned from corporate life to academics and further to being involved with entrepreneurs, Mullins provides a great framework to help the entrepreneur filter and refine his concept of the “next big thing” into a real business.
  9. Venture Capital Funding: A Practical Guide to Raising Finance (Stephen Bloomfield) – while written from a UK and European perspective, it is a valuable reference for anyone looking for external funding. A practical guide to the whys and the wherefores, the jargon and the structures of venture funding written for an entrepreneur.
  10. And last but not the least – pick your favourite philosopher or guide. No matter whether we are overtly spiritual or completely agnostic, there are times, many times in an entrepreneur’s life, when we need to step beyond the intellectual construct of business, look beyond plans and strategies, and next year’s targets. Depending on how you are feeling and what you need at that particular time, this book (or these books) can be versatile in offering you guidance for your next steps, direction to correct your course, or simply a platform to stabilise yourself.

The thing about lists is that even if you find one item on the list that makes a substantial difference to you, the list has been useful. Among the above, I believe you will find more than one that will create such an impact. Happy reading!

Column written for The Economic Times, 13 November 2009

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Why Start-Ups Fail

The Economic Times had an interesting list of reasons for failure that start-ups and entrepreneurs need to be aware of, and to avoid. Here’s the “deadly” list by Tim Draper, Founder and managing director of global venture capital firm Draper Fisher Jurvetson.

  1. They run out of money. Usually, they are too optimistic about when their product is going to be accepted by the market.
  2. Founders don’t have complete faith in each other. They fight instead of delegating, trusting and verifying with each other.
  3. CEO hires weak team members. Strong CEOs sometimes try to carry everyone with them rather than hiring people who stand up on their own.
  4. They want to do too much. Usually, a successful start up figures out a narrow niche that they can dominate and then expands from there.
  5. They go after too small a market.
  6. They don’t charge enough from their customers to survive. These often think their mentors/investors are their customers, and think that a nice sale is all they need to make to get more money.
  7. They hire too many people up front. Too many mouths to feed too early can sink a company. Keep a low burn until you have your business model in place.
  8. They get unlucky. Broad-sided by competitors, new technologies, big companies changing direction, etc.
  9. They don’t work hard enough or fast enough or smart enough. All those little decisions add up to an outcome. Awareness of the subtleties of their market dynamics is needed.
  10. They don’t take enough risks. Some start-up entrepreneurs think that they should operate as though they are big companies. This is wrong. They will never beat Microsoft or Google at their own game. They must get creative and do things differently, even at the risk of embarrassment.

Good stuff to think about. And if you can relate even 3 out of 10 factors with your start-up, it is time for a serious re-think on the business.

(Add on comment: The original list seems to have been removed from the ET website. Here’s his colleague Mohanjit Jolly’s take on the list from March: http://in.reuters.com/article/idINIndia-38552920090317)

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Seed a million

intent provides the seed of potential and hope provides the energy for a better future.We are passionate about turning entrepreneurs into winners and we believe that the environment and market in India is just right for this to happen.

India’s economy is transforming and demonstrating sustained growth, even as countries around the world are going through a painful economic cycle. New businesses are being and will be launched – many of them small at the inception – that will have a critical role to play in this growth.  There is now a greater stress on work quality, an increased awareness of entrepreneurial possibilities and the courage to look beyond traditional employment avenues in the professional class.

We also believe that India’s economic growth story is still being addressed incompletely.

The Planning Commission of the Government of India estimates an existing massive backlog of job shortfall of 35-40 million, and this will grow by an additional 10 million each year.

Creating entrepreneurial opportunities is the quickest, most productive and self-sustaining way of harnessing this potentially explosive energy for the economy.  By its very nature, entrepreneurship creates chain reactions that lead to increased employment and new entrepreneurs.

The last boom during the dot-com era brought in a flood of venture funds as well.  However, these mainly foreign funds used Western yardsticks to judge the suitability of investment.  Since Indian costs can be one-fourth or less of Western costs, most Indian projects were not “big” enough to attract venture-funding and consequentially the funding pattern of most Indian “venture funds” resembled that of Western private equity funds which invest in mature companies.  This is still true today. The funding needs in the Indian business environment are usually below the threshold investment limits for venture capital funds operating in India – for every VC-invested company there are usually 9-10 good companies that are rejected because their investments needs are too small for a VC.

In more developed markets, angel investment provides a stream of VC-investible companies. In the US the number of angel investors is estimated at over 250,000. In India there are very few angel investors, and in some cases there may even be conflicts of interest between the existing businesses of potential angels and companies that are looking for investment.

Given the relative immaturity of this market in India, there is a need for enablers and accelerators (like PVC) to help companies grow from a seed or an early stage to a level where they can attract and fully utilize VC investments.

We strongly believe that high growth companies need multiple forms of capital at their early stages, money alone is not the solution.

The right mix of “human capital” within the company and “relationship capital” in the ecosystem will allow an early-stage business to leverage amounts as small as Rs. 1 million and achieve disproportionate results.

Talk to us if you need help in growing your seed for a business. Talk to us if you want to pitch in and help us in planting these seeds and helping them grow.

[Edit, 8 August 2016: if you’re interested in our new framework, head over this way.]

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On Decay: Bad or Good

You may ask, “How much process should we depend on, and how prescriptive or restrictive should we make them?” You may also point out that processes start off with very good intention, but with time – and often distance from head office – the processes decay.

And you would be right.

Even in bureaucratic organisations, adjustments are made to fit people or situations, and that causes the process to mutate.

Sometimes the change is temporary, at other times the process may change completely and permanently. If changes happen passively and are not channelled the existing process will decay.

I use the word “decay” carefully. While the process change itself may be good at a point (e.g. responding to a customer need), the organisation as a whole may not learn much from it, or the change may affect one part of the organisation and not others. If that happens, the organisation and its systems will become dysfunctional at some point.

For instance, it could be the little leeway that the purchase head provided to some managers that erupts into an uncontrolled working capital epidemic across the chain. Or a margin adjustment with a vendor at a certain point in time becomes a deadly norm.

So, back to evolution: mutations are a fact of life. Adaptations are happening because of the changes in the environment. Managers need to critically question: does this change meet a current ongoing need or provide an ongoing advantage, and can it apply to the rest of the business? If the answer is no, ask people to read the rule-book (the process manual).

If the answer is yes to both, change the rules, and make sure the new process is implemented quickly and smoothly across the organisation.  Then it will be “adaptation” rather than “decay”.

After all, the conclusion that Darwin, Wallace and many others have given us is this: it is not the strongest, the biggest, the fastest, but the most adaptive who survive.

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On Process: Passing On the Genes

Although small businesses are always looking for growth, the new environment can bring such a surplus of opportunities that, in the helter-skelter growth the learnings are quickly lost and the business may actually go off the tracks.

The challenge for the smaller businesses now is to pass on their genes down the generations; for the management to ensure that the newer stores and the newer recruits gain from the learning and the adaptations already in the organisation.

At an entrepreneurial stage, the core team handles critical activities and is on call to guide others. The team is knit quite tightly, and located geographically close together. “Knowledge” is inherent in the way you do things, guided rather than taught.

Previously I have stressed culture and organisational personality, the “people” end. At the early stage of the business, very often, that is all there is. But growth needs replication and predictability.

Biology gives us a great lesson in how to replicate learnings and functionality: genes (DNA) provide the template for cell functions, and are reproduced almost faithfully from previous generations.

In a business, such replication comes from well-designed processes incorporating the intent, the activities and the desired outcomes. For growth, processes are a must; they are the genetic code of the business. Processes provide the design for how a customer would interact with the business, how the business would interact within itself, and how the organisation would interact with other external agencies (vendors, partners etc.).

Yet, are processes always good? Hold that thought till the next post. 🙂

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