It is definitely great to start off on your own and become your own boss. As you begin planning how to start your own business from home, you begin listing down what you want to do and what you can do. You decide on what you can do. But then, you ask yourself, “What skills do I really need to have to succeed as a home-based entrepreneur?”Today’s market is a very competitive one. To succeed in this competitive, dynamic and fluid market one must have lots of courage and character. In addition, one must have some basic skills to become an entrepreneur and make success out of a new venture. To start your own business, you will need a broad array of business skills to succeed and make your mark in today’s competitive and ever changing market. You must possess basic skills necessary to enable you to start,develop, finance, and market your own home business enterprises.
There are a number of qualities and skills you need to have, including personal attributes, business skills and management capability. While you may not have all the skills at the moment, it is essential to develop them over time if you plan to run your own business. Listed below are the most important and critical skills for any entrepreneur. Let’s read and understand them one by one.
i.Marketing and Sales
Sales and Marketing are two separate terms but they are used interchangeably.As an entrepreneur these are the most important skills you must have when you plan to start your own business. A business is truly successful, if it manages to get customers and more importantly sustain them for future business. To have revenues and profits, you first need to have customers. To get customers, you must be able to market your business and possess the skills to close the sale. You will need to highlight the key features of your products and also tell the customers why your product is better than most available in the market.
Marketing means the process of planning to sell service or a product by understanding your customer’s needs. It includes:
a. Identification of customer or consumer and their needs
b. Profiling of target market – Segmentation, Targeting and Positioning (STP)
c. Planning sales pitch – Product, Price, Place, and Promotion (4Ps)
By using variations of these four Ps you have the ability to reach multiple consumers within your target market.
Sales, as the word suggests, means offering a service or a product to a customer who requires it to an extent where he is willing to pay money for it. Sales include:
a. Distribution and Logistics: It means physical movement of product or delivery of service by some means at a certain price.
b. Collection of money: The sales process is incomplete unless you recover value(in terms of money) for the service or product that you are selling.
Note: Sales is never complete without realization of money. In such case where money is not recovered for the product it is termed as distribution of product and not sales.
Sales Process: The important thing to note here is that Sales Process is incomplete unless Buyer makes Payment to the seller.
ii. Financial Management
Money is the key aspect of every business. You should always keep this in top of your mind that you are in business to make money. Therefore, the most important skill you must have is the ability to handle money well. This includes knowing how to put minimum possible resources to the best possible use to get maximum output for the benefit of business. This will ensure maximum returns.
You also need to identify the best pricing structure in order to get the best returns for your products or services.
There are a number of qualities and skills you need to have, including personal attributes, business skills and management capability. While you may not have all the skills at the moment, it is essential to develop them over time if you plan to run your own business. Listed below are the most important and critical skills for any entrepreneur. Let’s read and understand them one by one.
i.Marketing and Sales
Sales and Marketing are two separate terms but they are used interchangeably.As an entrepreneur these are the most important skills you must have when you plan to start your own business. A business is truly successful, if it manages to get customers and more importantly sustain them for future business. To have revenues and profits, you first need to have customers. To get customers, you must be able to market your business and possess the skills to close the sale. You will need to highlight the key features of your products and also tell the customers why your product is better than most available in the market.
Marketing means the process of planning to sell service or a product by understanding your customer’s needs. It includes:
a. Identification of customer or consumer and their needs
b. Profiling of target market – Segmentation, Targeting and Positioning (STP)
c. Planning sales pitch – Product, Price, Place, and Promotion (4Ps)
By using variations of these four Ps you have the ability to reach multiple consumers within your target market.
Sales, as the word suggests, means offering a service or a product to a customer who requires it to an extent where he is willing to pay money for it. Sales include:
a. Distribution and Logistics: It means physical movement of product or delivery of service by some means at a certain price.
b. Collection of money: The sales process is incomplete unless you recover value(in terms of money) for the service or product that you are selling.
Note: Sales is never complete without realization of money. In such case where money is not recovered for the product it is termed as distribution of product and not sales.
Sales Process: The important thing to note here is that Sales Process is incomplete unless Buyer makes Payment to the seller.
ii. Financial Management
Money is the key aspect of every business. You should always keep this in top of your mind that you are in business to make money. Therefore, the most important skill you must have is the ability to handle money well. This includes knowing how to put minimum possible resources to the best possible use to get maximum output for the benefit of business. This will ensure maximum returns.
You also need to identify the best pricing structure in order to get the best returns for your products or services.
Funds Management: Managing inflow and outflow of money: Inflows are revenue earned by selling services and products. Outflow is expenditure on inputs needed to provide that service or produce that product.
To become a good money manager you must understand the importance of managing money judiciously for the benefit of your business. The key to success is:
a. Control over costs: Current Expense Vs Capital Expenditure
b. Cost benefit analysis: How much am I spending and what I would get in return?
There are certain basic questions that need to be answered for better management of funds.
For example,
Which is a tax deductible expense and which one is not?
On which kind of expense there would be a tax exemption allowed?
How much capital expense should I make?
How to prepare budget to set-up a small business?
Let’s take-up an example of a chilling center.
Suppose as an entrepreneur you intend to set up a chilling center and you have got a project outlay of Rs. 80lac. Government provides tax deduction on the 10% of the plant and machinery cost. Banks offer loan at 1% lower rate of interest if the cost of machinery constitutes more than 25% of the total project outlay. Also,government offers 5% tax rebate if you employ more than 10 people from local population etc.
Considering this scenario you need to prioritize various expenses like how much you need to spend on plant and machinery (capital goods) e.g. compressor,chiller, land and building. How much you want to spend on manpower, meeting statutory obligations etc. by keeping in mind principle of cost-benefit analysis.
Project Outlay – 80 lacs
Self finance – 20 lacs (25% of total plan outlay)
Bank loan – 60 lacs @ 12% per annum*
Duration – 5 years
Planned machinery cost – 18 lacs
Machinery cost 25% of the total outlay – 20 lacs
The difference in total investment in plant and machinery to avail 1% interest rebate on the principle amount is 2 lacs. By spending 2 lacs extra you would get two benefits:
a. You will be able to save approx. 60,000 per annum which translate into 3.0 lacs over a period of 5 years.
b. You will get benefits of increased depreciation which in turn would add to net profit.
*Note: Interest is taken as simple interest for the purpose of easier understanding of the example.
As an entrepreneur one must take utmost care in managing payables and receivables to efficiently manage liquidity and working capital requirements.
Accounts receivables should not go beyond industry norms under any circumstances. On payables front one must not stretch them too much that it starts affecting your cost of goods.
For an individual entrepreneur the most important thing in managing funds is to manage payables in such a manner that people respect and trust you for your prompt and timely payments. This goodwill brings in indirect benefits like getting better prices from the suppliers for most of the goods than competitors.
Always focus on the bottom-line. For every penny spent you must earn something.If it does not give any return then it does not make sense to incur that expense.
iii Self Motivation and Self Discipline
This is one of the most important traits of a successful entrepreneur. If you want to be a successful entrepreneur then you need to have tons of self motivation and self discipline. In your business you are your own boss. There is nobody to tell you or remind you of your duties or responsibilities. You must have that extra self drive that propels and motivates you to overcome inertia and makes you a self-starter. Over and above this one must be willing to live in uncertainty rather it should be uncertainty from where you draw your motivation to propel in business.
If you want to be your own master then thrive in uncertainty and make it your food for improving everyday.As an owner of the business the responsibility starts from you and ends at you.
You can not blame others for the undesirable outcomes of your decisions. If you succeed credit is yours but at the same time onus of failure lies on your shoulders.
iv. Time Management
Managing time effectively is one key step towards entrepreneurial success. Time is always a scarce commodity for an entrepreneur. The ability to plan your day and manage time is particularly important for a home business. A to do list can help you plan your day well in advance. Especially if there is a need to multi-task,you must be well aware at the beginning of the day on how many tasks and how fast you can finish them. You simply have to know how to manage time and prioritize your tasks. There would always be many unfinished tasks at the end ofthe day everyday.
Time management and self discipline go hand in hand. If you are disciplined in your day to day work then it would help you in utilizing your time efficiently and effectively. Self discipline automatically makes you a good time manager.
Another important aspect of time management is to decide and draw your plan of action about when to start and when to stop. There needs to be an adequate balance between your personal life and your business life. One needs to manage both fronts effectively.
Follow some key points given below to manage your time effectively:
1.Before starting your day, plan and list (to-do list) down all your works in order of priority.
2. Allocate adequate time for each work.
3. Do not overburden yourself by writing too many tasks for the day which you could never do at the end of the day despite your best efforts.
4. Strictly adhere to the timelines set for each task.
v. Administration
Most start-up entrepreneurs need to manage the administration of their work area themselves. Few have the luxury of hiring help for such purposes. Therefore it calls for a great deal of administration skills. Tasks like billing, printing invoices,collecting payments, man management and managing your receivables etc. become an inevitable part of your administration function.
Arranging every small item yourself, dealing with every kind of person and at all levels on your own requires a lot of patience, determination and high level of energy. One must be mentally strong and clear in his mind that as an entrepreneur one need to know how to manage people.
This function deals with softer issues where more than formal education common sense and experience plays a very important role.
Also, not only because of lack of resources one should manage administration but also because of critical nature of this function. This is one of the most critical,tricky and time consuming function for an entrepreneur.
i) Challenges Faced by an Entrepreneur
Entrepreneur is a one man army. He is an all-rounder who has to manage many tasks at a time. He is always in a hurry and running against time. He has to manage internal as well as external challenges. Internal challenges for example managing funds, lack of infrastructure, lack of trained manpower etc. and external challenges for example, pressure from existing players in the market, raw material suppliers, procurement tie-up with a dairy plant etc.
1. Internal Constraints
a. Lack of Resources: The biggest challenge that any entrepreneur faces is availability of adequate financial resources. He has to not only manage finances himself but also raise enough money through various sources to put new venture on its feet. Since he has to start from scratch he has to spend relatively more on every activity like putting up basic infrastructure, recruiting trained manpower, marketing activities, extension activities etc. He needs high initial capital investment to make venture successful by bringing it to a
financially stable stage.
b. Lack of knowledge about the pitfalls in the business: From periphery one can not appreciate the day to day problems faced by existing players who are already into the business. It is only when you get into the business you face many unknown challenges that keep coming up daily. These unknown problems are the biggest bottlenecks for an entrepreneur. The successful entrepreneur is one who overcomes these obstacles.
2. External Constraints
a. Market pressures: There are some inherent entry barriers in every business.
For example in setting up chilling center availability of milk would be a major constraint. Also, finding a suitable land closer to the milk procurement area is very important but difficult to get. Moreover, existing chilling centers would pose an inherent risk in getting desired quantity of milk throughout the year for your center. Even at a new place the investment required to put-up a supply-chain in place and managing logistics would be big constraints.
b. Competitor’s pressure: As an entrepreneur and a late entrant in the field you are at disadvantage with respect to:
i.Access to market information
ii. Pricing pressure
iii. Credit terms to distributors and dealers (Channel Partners)
iv. Getting into marketing tie-up at competitive rate for his produce
c. Raw material constraint: You being new in the market would not have any history. The advantage of good past track record and goodwill earned over the years by successful players would not be with you. As a result you will not get the best trade terms from the suppliers. For example, in case of chilling center very few farmers would come initially to pour milk in your collection centers. You may have to make advance payments or on the spot payments to:
i.attract new customers
ii. give farmers confidence about your financial strength.
Also, you may have to spend on extension activities to overcome resistance from the farmers.
d. Manpower constraint: Day by day market place is becoming more complex.
The latest technological innovations and improvements require continuous learning for an individual to keep himself useful in the marketplace. For entrepreneur it is a big challenge to get good, trained manpower at economical price. Actually it is scarcity of trained manpower more than cost that poses a challenge. In dairy industry also the latest equipments need operators who are open to learning and can upgrade themselves faster to operate these machinery efficiently and skillfully.
To become a good money manager you must understand the importance of managing money judiciously for the benefit of your business. The key to success is:
a. Control over costs: Current Expense Vs Capital Expenditure
b. Cost benefit analysis: How much am I spending and what I would get in return?
There are certain basic questions that need to be answered for better management of funds.
For example,
Which is a tax deductible expense and which one is not?
On which kind of expense there would be a tax exemption allowed?
How much capital expense should I make?
How to prepare budget to set-up a small business?
Let’s take-up an example of a chilling center.
Suppose as an entrepreneur you intend to set up a chilling center and you have got a project outlay of Rs. 80lac. Government provides tax deduction on the 10% of the plant and machinery cost. Banks offer loan at 1% lower rate of interest if the cost of machinery constitutes more than 25% of the total project outlay. Also,government offers 5% tax rebate if you employ more than 10 people from local population etc.
Considering this scenario you need to prioritize various expenses like how much you need to spend on plant and machinery (capital goods) e.g. compressor,chiller, land and building. How much you want to spend on manpower, meeting statutory obligations etc. by keeping in mind principle of cost-benefit analysis.
Project Outlay – 80 lacs
Self finance – 20 lacs (25% of total plan outlay)
Bank loan – 60 lacs @ 12% per annum*
Duration – 5 years
Planned machinery cost – 18 lacs
Machinery cost 25% of the total outlay – 20 lacs
The difference in total investment in plant and machinery to avail 1% interest rebate on the principle amount is 2 lacs. By spending 2 lacs extra you would get two benefits:
a. You will be able to save approx. 60,000 per annum which translate into 3.0 lacs over a period of 5 years.
b. You will get benefits of increased depreciation which in turn would add to net profit.
*Note: Interest is taken as simple interest for the purpose of easier understanding of the example.
As an entrepreneur one must take utmost care in managing payables and receivables to efficiently manage liquidity and working capital requirements.
Accounts receivables should not go beyond industry norms under any circumstances. On payables front one must not stretch them too much that it starts affecting your cost of goods.
For an individual entrepreneur the most important thing in managing funds is to manage payables in such a manner that people respect and trust you for your prompt and timely payments. This goodwill brings in indirect benefits like getting better prices from the suppliers for most of the goods than competitors.
Always focus on the bottom-line. For every penny spent you must earn something.If it does not give any return then it does not make sense to incur that expense.
iii Self Motivation and Self Discipline
This is one of the most important traits of a successful entrepreneur. If you want to be a successful entrepreneur then you need to have tons of self motivation and self discipline. In your business you are your own boss. There is nobody to tell you or remind you of your duties or responsibilities. You must have that extra self drive that propels and motivates you to overcome inertia and makes you a self-starter. Over and above this one must be willing to live in uncertainty rather it should be uncertainty from where you draw your motivation to propel in business.
If you want to be your own master then thrive in uncertainty and make it your food for improving everyday.As an owner of the business the responsibility starts from you and ends at you.
You can not blame others for the undesirable outcomes of your decisions. If you succeed credit is yours but at the same time onus of failure lies on your shoulders.
iv. Time Management
Managing time effectively is one key step towards entrepreneurial success. Time is always a scarce commodity for an entrepreneur. The ability to plan your day and manage time is particularly important for a home business. A to do list can help you plan your day well in advance. Especially if there is a need to multi-task,you must be well aware at the beginning of the day on how many tasks and how fast you can finish them. You simply have to know how to manage time and prioritize your tasks. There would always be many unfinished tasks at the end ofthe day everyday.
Time management and self discipline go hand in hand. If you are disciplined in your day to day work then it would help you in utilizing your time efficiently and effectively. Self discipline automatically makes you a good time manager.
Another important aspect of time management is to decide and draw your plan of action about when to start and when to stop. There needs to be an adequate balance between your personal life and your business life. One needs to manage both fronts effectively.
Follow some key points given below to manage your time effectively:
1.Before starting your day, plan and list (to-do list) down all your works in order of priority.
2. Allocate adequate time for each work.
3. Do not overburden yourself by writing too many tasks for the day which you could never do at the end of the day despite your best efforts.
4. Strictly adhere to the timelines set for each task.
v. Administration
Most start-up entrepreneurs need to manage the administration of their work area themselves. Few have the luxury of hiring help for such purposes. Therefore it calls for a great deal of administration skills. Tasks like billing, printing invoices,collecting payments, man management and managing your receivables etc. become an inevitable part of your administration function.
Arranging every small item yourself, dealing with every kind of person and at all levels on your own requires a lot of patience, determination and high level of energy. One must be mentally strong and clear in his mind that as an entrepreneur one need to know how to manage people.
This function deals with softer issues where more than formal education common sense and experience plays a very important role.
Also, not only because of lack of resources one should manage administration but also because of critical nature of this function. This is one of the most critical,tricky and time consuming function for an entrepreneur.
i) Challenges Faced by an Entrepreneur
Entrepreneur is a one man army. He is an all-rounder who has to manage many tasks at a time. He is always in a hurry and running against time. He has to manage internal as well as external challenges. Internal challenges for example managing funds, lack of infrastructure, lack of trained manpower etc. and external challenges for example, pressure from existing players in the market, raw material suppliers, procurement tie-up with a dairy plant etc.
1. Internal Constraints
a. Lack of Resources: The biggest challenge that any entrepreneur faces is availability of adequate financial resources. He has to not only manage finances himself but also raise enough money through various sources to put new venture on its feet. Since he has to start from scratch he has to spend relatively more on every activity like putting up basic infrastructure, recruiting trained manpower, marketing activities, extension activities etc. He needs high initial capital investment to make venture successful by bringing it to a
financially stable stage.
b. Lack of knowledge about the pitfalls in the business: From periphery one can not appreciate the day to day problems faced by existing players who are already into the business. It is only when you get into the business you face many unknown challenges that keep coming up daily. These unknown problems are the biggest bottlenecks for an entrepreneur. The successful entrepreneur is one who overcomes these obstacles.
2. External Constraints
a. Market pressures: There are some inherent entry barriers in every business.
For example in setting up chilling center availability of milk would be a major constraint. Also, finding a suitable land closer to the milk procurement area is very important but difficult to get. Moreover, existing chilling centers would pose an inherent risk in getting desired quantity of milk throughout the year for your center. Even at a new place the investment required to put-up a supply-chain in place and managing logistics would be big constraints.
b. Competitor’s pressure: As an entrepreneur and a late entrant in the field you are at disadvantage with respect to:
i.Access to market information
ii. Pricing pressure
iii. Credit terms to distributors and dealers (Channel Partners)
iv. Getting into marketing tie-up at competitive rate for his produce
c. Raw material constraint: You being new in the market would not have any history. The advantage of good past track record and goodwill earned over the years by successful players would not be with you. As a result you will not get the best trade terms from the suppliers. For example, in case of chilling center very few farmers would come initially to pour milk in your collection centers. You may have to make advance payments or on the spot payments to:
i.attract new customers
ii. give farmers confidence about your financial strength.
Also, you may have to spend on extension activities to overcome resistance from the farmers.
d. Manpower constraint: Day by day market place is becoming more complex.
The latest technological innovations and improvements require continuous learning for an individual to keep himself useful in the marketplace. For entrepreneur it is a big challenge to get good, trained manpower at economical price. Actually it is scarcity of trained manpower more than cost that poses a challenge. In dairy industry also the latest equipments need operators who are open to learning and can upgrade themselves faster to operate these machinery efficiently and skillfully.
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| Traits of a Good Entrepreneur |
ii) Traits of a Good Entrepreneur
Given below are some important traits of an entrepreneur. He should have:
1. Quick decision making ability: Ability to think on the feet and arrive at a decision quickly with logic is a must-have quality for an entrepreneur. In business having complete information and absolute correctness of the decision is not as important as taking a decision itself. Decision delayed is opportunity lost. Entrepreneur has to make decisions at every step, right or wrong, while doing business because he is the person who knows the best as to what he wants to do and achieve.
2. Risk taking capability and Perseverance: These are must have characteristics of an entrepreneur. He must be a high risk taker since in any start-up business there is a great degree of risk involved due to lack of complete information and high financial commitment. Due to continuous problems from unknown sources he has to be courageous enough to stand up to them, face them head-on and find solutions to them. As has been said - perseverance pays. For an entrepreneur perseverance is the key to success.
3. High energy levels: Entrepreneur must have never say die attitude. As mentioned earlier, entrepreneur is a one man army. He is the owner of the idea, the vision and the enterprise. He is the leader of the ship. He has to marshal all his resources in the right direction to fulfill his objectives. He has to own responsibility to achieve success. He can not sleep at home and feel comfortable that there are people, whom he has employed, would do work for him. He needs to get into details of each and every activity that may affect his business.His success is directly proportional to the effort he puts into the business activities.
4. Self discipline and Self belief: Easier said than done but if entrepreneur lacks these qualities then his success is doubtful. As a leader he has to set example for others. If he himself is not disciplined then the team would be doubly irresponsible and laggard. These traits are even more needed in crises. He must show courage and have self belief to pull the whole team out of crises.If leader loses heart then followers anyway are losers.
5. Logical and Analytical bent of mind: Entrepreneur must think logically. He must have a broader picture in his mind. He must have the ability to see through the things and visualize what others can not even think of. Good analytical skills go a long way in taking sound business decisions.
Given below are some important traits of an entrepreneur. He should have:
1. Quick decision making ability: Ability to think on the feet and arrive at a decision quickly with logic is a must-have quality for an entrepreneur. In business having complete information and absolute correctness of the decision is not as important as taking a decision itself. Decision delayed is opportunity lost. Entrepreneur has to make decisions at every step, right or wrong, while doing business because he is the person who knows the best as to what he wants to do and achieve.
2. Risk taking capability and Perseverance: These are must have characteristics of an entrepreneur. He must be a high risk taker since in any start-up business there is a great degree of risk involved due to lack of complete information and high financial commitment. Due to continuous problems from unknown sources he has to be courageous enough to stand up to them, face them head-on and find solutions to them. As has been said - perseverance pays. For an entrepreneur perseverance is the key to success.
3. High energy levels: Entrepreneur must have never say die attitude. As mentioned earlier, entrepreneur is a one man army. He is the owner of the idea, the vision and the enterprise. He is the leader of the ship. He has to marshal all his resources in the right direction to fulfill his objectives. He has to own responsibility to achieve success. He can not sleep at home and feel comfortable that there are people, whom he has employed, would do work for him. He needs to get into details of each and every activity that may affect his business.His success is directly proportional to the effort he puts into the business activities.
4. Self discipline and Self belief: Easier said than done but if entrepreneur lacks these qualities then his success is doubtful. As a leader he has to set example for others. If he himself is not disciplined then the team would be doubly irresponsible and laggard. These traits are even more needed in crises. He must show courage and have self belief to pull the whole team out of crises.If leader loses heart then followers anyway are losers.
5. Logical and Analytical bent of mind: Entrepreneur must think logically. He must have a broader picture in his mind. He must have the ability to see through the things and visualize what others can not even think of. Good analytical skills go a long way in taking sound business decisions.
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