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The Entrepreneurship Process: An introduction

*By Bhasker Assoldekar

Almost two years ago an aspiring businessman from Margao phoned me. He wanted to discuss his new venture of suppling freshly made rotis to Goan households. Apparently he had done a detailed home work. He was so convinced of the success of it that by the time he talked to me he had already paid advance towards purchase of an automatic roti making machine worth Rs 25 lakhs. The plant was to be located at Nessai (St. Jose de Areal Industrial Estate) .

The aspirant’s enthusiasm was so catching that within a fortnight when I was in Goa it was right on my priority list. During the three hour long meeting I posed him various questions like, how did he decide to go for roti manufacturing? What is the capacity of the machine and how many does he plan to make every day?

The aspirant had ready answers. He said that he saw the machine at Saibaba Saunsthan-Shirdi and was quite impressed. The machine was completely automatic made from stainless steel with kneading to rolling out rotis and packing, all in one go. The man did a Goa market survey and came to the conclusion that there are a total of four lakh households of which at least 40 per cent households (1,60,000)  consume rotis at least once a day.

A market share of even 10 per cent meant sales of 64,000 rotis per day (assuming each family purchases four rotis). Plan was to sell the rotis at Rs five each and after considering all expenses including admin costs, electricity, salaries, wages, transportation,  etc., the profit would be Rs one per roti as net profit which is Rs 64,000 per day.

“In less than 45 days I will be able to absorb the cost of machine” said the potential businessman. Now he was just waiting for his machine to get delivered  and commissioned at the site.

My subsequent questions however  put him off guard and made him put the plan on hold. They were. Where are the customers to buy 64,000 rotis located? Will you limit the market to cities and towns, if so, then which ones and why?  How will you reach the customers and when( time of the day) will you deliver them?

Will you undertake home deliveries like pao or will you make them available from just one location in a town?  Who will man these shops? In fact I had about 10 more of similar pertinent questions.

During my regular visits to Goa during the last 5 years, I have met several prospective Goan entrepreneurs faced with wide range of issues and at different stages of their enterprise but with hurdles varying in nature and dimension. Some of the lucky ones were stuck up at the ideation stage itself while the others not so fortunate had already invested hard earned money in an enterprise and didn’t really know how to go beyond.

Statistics tell us that out of 100 enterprises registered only seven to eight per cent survive the first three years of their life! And this is despite substantial support from EDC and other organizations.

It is very essential that in today’s highly competitive scenario, an enterprise needs to be started with a clear vision and mission . This would help “start ups” sustain their business and provide clarity on the path that entrepreneurs would want to pursue in the long run.

Gut feeling, hunch, self confidence are necessary but these alone should not be guiding forces and they alone cannot ensure success. Modern business demands vision, knowledge, skill, aptitude and whole hearted devotion.

To summarise all of above, a prospective entrepreneur therefore would do well not to get carried away with ideation alone.  Would be entrepreneurs” who are unable to name their customers are not ready to start a business. They have only found an idea but not yet identified the market need. Success of an enterprise depends on positive cash flow, growth and value creation. And that can happen only when you meet the “market need” or “create a want” for your “value added” product.

The author is M.Sc.(Tech.),MBA (IIMA) and runs his own company Vibha Natural Products Ltd, Mumbai

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