Apu’s World

Over at Escape from Cubicle Nation, one of my favourite business blogs, Pam Slim has been doing a series of ‘The Price is Right’ interviews (audio) with various entrepreneurs, and covering some interesting topics such as moving from free to paid and identifying the right price for your market. It’s given me a lot of food for thought, and I notice that I’ve been paying more attention to pricing than I did before. As I’ve mentioned earlier, pricing is one of the hardest things I face as an entrepreneur, and sometimes, that means I decide on an arbitrary price and avoid thinking too much about it

Anyways, the increased attention to pricing also means that I’ve been noticing it in ordinary transactions/ interactions that I go through, as a consumer. Recently, I’ve been thinking about visiting my sisters, both of whom live in the US of A - so it seemed like a good idea to check out what air fares and travel deals might be like.

Almost all deals I’ve come across seem to be for group tours - and this is the funny thing - they don’t seem like deals at all! Thomas Cook for instance, prices a 14 day US holiday starting at Rs. 86000 + USD 2975, and most other packages seem to be in the same league. (Note the clever use of Rs. 86000 + USD 2975 - effectively this works out to almost Rs. 200,000 but then, USD 2975 seems like a smaller number!)

Airfares for individual travellers are about Rs. 60,000 return to most American cities, and one can get a reasonable US hotel for $100 per day (that’s approximately another Rs. 75,000 for 14 days, and that’s for 2 people) - so Rs. 200,000 still seems like a lot of money considering that many expenses will be lower when divided among a group of people. (No doubt, Thomas Cook will be getting much, much lower rates from hotels, cruises, local buses, restaurents and so on). In fact, I think that group tours ought to be cheaper than independent travel.

To my mind, group tours have a number of disadvantages - things are pre-planned, you can’t spend more time at a place if it interests you and god help you if you find the group you are stuck with annoying or just not your type. What’s interesting is that Thomas Cook (and presumably other tour operators) are willing to get people to pay higher prices than they should otherwise, and this tell us something about how there is no one “right price” but simply a price that is right for a particular consumer.

Among some of the reasons why people might pay a premium for a group tour that offers little independence or flexibility -

- Everything is taken care of - for those who haven’t travelled abroad before or are unfamiliar with English, or for older people unused to planning over the Internet, this can be a big plus.
- Indian meals - again, particularly important for vegetarians and Jain vegetarians (which explains why Gujaratis are a big part of the group tour circuit)
- Safety - no worries about landing up in a ‘bad’ part of town/getting lost etc.

apu Entrepreneurship, Travel Tales

Does the headline from this article in the Telegraph, UK, “Cherie Blair brings ‘new culture’ to aspiring businesswomen of India” strike anyone else as unnecessarily patronising? (Terms like ‘white man’s burden’ and ‘bringing the light to the natives’ come to mind quite easily).

Of course, one doesn’t blame the Asian Women of Achievement (AWA) Awards team for the ludicrous headline that the newspaper chose to adopt. Still, I am curious as to what exactly Cherie Blair, a patron for the awards, meant when she says, “I gather, actually, that there are awards [in India], but they are not the same as a Pinky award, because if you have got a Pinky award it’s seriously researched and seriously peer-judged, and you are up against great competition – not somebody who knows somebody who knows somebody else. That’s the culture we want to bring over to Mumbai.”

For starters, there is some serious generalisation and condescension happening there. Yes, some awards in India may not exactly be thoroughly researched, some may involve nepotism, some may even involve money changing hands. But to tar all of them with the same brush and assume that Indian industry has no history of professionally done awards is a case of some big-time looking down the nose (and without one’s glasses too).

And to imply claim that they will bring it to Mumbai; well, I suppose hubris knows no limits. If I seem irked, it is because I am - how terrible to bring in an award that proposes to support women, and then do it in such a patronising manner. This is not an example of women’s solidarity; rather, it is a classic example of the We will teach you what you need to know manner that irks activists in non-Western countries.

Blair’s comment made me very keen to find out what exactly the AWA award process is, so I hopped over to the AWA website, which gives you on the process - exactly nothing. The nomination form (PDF) tells you briefly who is eligible, but about the judging process - zilch. Now, of course, I’m not saying they are not seriously researched and seriously peer-judged , but while looking down their noses at local awards, they might consider actually detailing their own process on the website.

And of course, they could also go look at TiE’s Stree Shakti awards, which do indeed mention how they go about it.

(Also, I seem to have missed linking to this - the 8th Carnival of Feminists is up here, with a lot of stuff specifically on young women and young feminists).

apu Entrepreneurship, Women & Feminism

Yesterday I attended the ‘Walk the Talk’ event organized by the Bangalore Business Network, a day long event meant to help entrepreneurs by letting others ‘who’ve made it’ share their own stories. A few readers of this blog will know that I’m working on a new start-up idea (’new’ because one, I hope it offers something new to users, and two, because its also new compared to another idea I was working on but didn’t work out). I hope to announce it here by end September.

So, I thought the event would be useful to me. This is the first paid event of this kind I’ve attended as an independent, and having attended many such events during my corporate career, I was hoping that it wouldn’t turn out to be yet another boring session where people turn up mainly to be seen. Well, it wasn’t.

First, the good bits about Walk the Talk

• It was nice to have an event where the speakers genuinely shared learnings and useful ones at that. Mostly, speakers at such events seem to be under the notion that they are there to talk about how wonderful their company is.
• There was enough time for networking and this is important, because one of the things that sometimes is difficult for small-business entrepreneurs is working alone and not having people one can bounce off ideas with. Networking is also critical to start-ups in terms of meeting potential partners, clients and investors.
• The organizers tried to keep people to the schedule, and almost succeeded.

What could BBN have done better?

• Disproportionate focus on the whole VC funding area, despite some of the VCs themselves stating that very few businesses ever go in for or receive such funding. The first two speakers for instance were both in that area, and so was much of the panel discussion after that.
• I thought it would have helped to have a session on angel investors or funds available for small businesses. I bet the majority of firms operate in that area.
• In terms of logistics, many of the presentations had extremely small fonts and were hardly visible to those sitting at the back (like me) - of course, this is not something the organizers could control, I suppose. But, that’s a minor quibble - in most cases, the talk itself made up.

Some interesting learnings from each speaker

From Ravi Narayan of Mentor Partners (spoke on ‘Turning Ideas into Successful Businesses’):

• Entrepreneurship is all about “understanding and managing risk.” (He went on to talk about the key risks involved).
• Don’t re-invent the wheel when it comes to the funding cycle. It is well defined. First learn what kind of funding you qualify for (at different stages), so that you don’t waste your own time as well as the VC’s.
• More money doesn’t necessarily mean everything. Adopt a milestone-based, incremental approach and ask for the money that you ‘need’ at each stage. (I also got the impression that it can actually be dangerous for an entrepreneur to get too much money too early!)

From Parag Dhol of Inventus Capital (spoke on ‘Early Stage Funding’):

• It’s not just a VC who evaluates the funds-seeker. Entrepreneurs need to evaluate the VC too.

From Arjun Sekri, Founder of Daily Bread (a ‘My Story’ session):

• Your business may have a great idea, but it ‘works’ when there is a customer ready to pay for it.
• Getting into the eco-system is critical, not just building the product. Relationships with suppliers, employees, clients, partners etc can make or break you.

From the panel discussion with Suresh Narasimha of Telibrahma, Samir Kumar of Inventus and Krishna Kumar, Editor of DARE, acting as moderator:

• The recession is actually a great time to start-up - better costs, easier hiring and more flexibility from funders.
• During a recession, the ‘burn-rate’ becomes even more critical, i.e. how soon the business can get on its feet without relying on the funds injected. They said this in a VC context, but I think it applies regardless of where the money is coming from.

From Kartik KS, the Founder/CEO of 24X7 Learning (a ‘My Story’ session):

• Following others or the market blindly can be disastrous.
• Sometimes the business changes dramatically; flexibility and openness to servicing new opportunities is critical.

From Gina Campos Braganza, the Founder/CEO of TrumpIt/Opus (a ‘My Story’ session):

• How you structure your business makes a big impact on the taxes you pay.
• Sometimes, tax may even change the way you do business.
• Focus on cost-management, not just cost-cutting.
• Small businesses often turn a blind eye to compliance requirements and the results can be disastrous (in other words, get a lawyer and CA to advise you, from the beginning).

From Phanindra Sama, Founder/CEO of Redbus (a ‘My Story’ session):

• Creating a business can be fun, but crazy (he didn’t say this, but their own crazy journey towards creating Redbus convinced me!)
• When you actually go ’sell’ your product/service/concept, that’s when reality BITES you.
• Keeping core activities in-house is essential.
• You can partner even with your competitors, sometimes.

Unfortunately, I could not stay for the two panel discussions after that, which promised to be interesting - one on Emerging Markets (sports marketing) and another on Social Media Opportunities. While some of the learnings above may seem like what we call ‘motherhood statements’ (what’s the origin behind that, I wonder!), it was still worthwhile in the context of the stories and discussions, and of course, simple things are harder to actually practise.

apu Entrepreneurship

In Part I of Lessons from Being My Own Boss,  I discussed the transition to becoming an entrepreneur, the issues with project and client handling, and on the long-term value of clients. At which point I realised that I had more things to say, and decided to defer them to Part 2. So, here it is. 

On Pricing 

Contrary to what I imagined, getting work wasn’t the hardest thing I have had to do. Partly this is because I have adopted a scaled-down work schedule and am happy if I am doing good work, even for 30 hours a week and can spend the rest of the time working on other, personal writing. Partly, because of referrals from existing clients. 

Instead, one of the hardest things for me has been to get my pricing right. And I believe I am not alone in this, especially when you are charging for a professional service and not for a product where you can fall back on a cost-plus approach. Whenever I write a proposal, there are always these niggling worries in my head. Am I charging too high? Am I more expensive than what the market is willing to pay? Will this cover my time? Am I under-pricing? Will people not take me seriously if my prices are too low? And of course, what is my time really worth? 

I’m still not entirely sure about how to handle pricing, but I’ve found a few ways to work on it. It helps that I’m not an inherently competitive person where money is concerned and don’t compare my earnings with what batchmate X is making. But, some strategies include:

• Clearly writing down the various elements on a job and estimating how much time each will take. Sometimes, the results can be surprising. 
• Checking the current average market rate for a person with my experience and using that to arrive at a rough cost per hour. (Remember companies offer benefits such as PF, gratuity and insurance - all this should be factored in to the total package). 
• Networking with others in the field and finding out what they charge 

Beyond all this rational stuff, one of the most important things is to be aware of the value you bring and to be unapologetic about it. Initially, this was difficult for me, but I am gradually coming around to realise that a good communication plan is critical to most marketing efforts - and - it is not something everyone can do well. So, even if you are not a rocket scientist, there is no need for you to devalue your own services. 

However, it is ok to sometimes take on a project at a lower cost than you normally would - with a big IF. I’ve told myself that I will take on a project at a lower cost only if I can specify the reason (and benefit) to myself. Typically, this would be one of the following: 

• It will help me acquire a new skill.
• The client is a prestigious one, and listing them on my profile is likely to impress other clients. 
• The project is a long-term one - there is a clear need for further work over a period of time. (Incidentally, clients use this one a lot to get small companies to lower prices - so don’t fall for the generic ‘there’s more to come’ line, unless there is a clear reason to buy it). 

On Doubt and Self-Worth 

In the initial years after starting a business, there is bound to be a lot of upheaval, financially. Plus, if it isn’t a “happening” career (particularly if you’ve been a corporate go-getter), there may be some amount of doubt and even feelings of low self-esteem. There are times when I ask myself, what am I doing? Is this ever going to amount to something big?

Then, corporate perks once taken for granted, are all best forgotten if you are running a small business - air travel, casually booking cabs - everything gets pruned, at least in the initial years. Of course, seeing the indignities that corporate types are being subjected to in the name of the almighty recession, I don’t particularly miss that life! Still, when you see ex-colleagues and old classmates moving up the ladder, it is only human to feel a twinge.

There is only one way out of this - and that is for you to genuinely want to do what you are doing right now. There has to be a clear vision of ‘why am I in this’? It need not always be a burning desire to create your own multi-million dollar business. If your vision is to be able to able to contribute to society in a meaningful way and find enough time for volunteer work, and your business gives you the time to do that - then, it is still successful for you, even if not by the standards of many other people. Similiarly, if your goal is to do exciting work in your field and earn X amount of money doing that work, then so long as you meet that goal, it is fine - even if this X is 20% lower than what peers are making. There are trade-offs to everything, and your 20% less may mean that you have weekends free to spend with your family. On the other hand, there is nothing wrong either with a desire to create a multi-million dollar business, and the work as well as scale of work will vary accordingly. 

For me, I find that what helps is to periodically evaluate myself using a few measures: 

• Are my existing clients interested in working with me again? 
• Am I getting new clients?
• Am I satisfied with the quality of work I did over the last project? 
• Is my client satisfied? Do I have a note of appreciation to show for it? 
• Am I making more money than I did last year? 
• Do I have enough free time to do the other things I want to do? 

I have very little gyan to give on this subject, since my own time management could do with some improvement. When you have to do everything yourself or with a small team, i.e. bid for projects, market your company, do the work (including grunt work that may be done by ‘flunkies’ in a large company), ensure quality checks, hand-hold clients AND manage payments, billing and taxes - it can get crazy. Things tend to be forgotten, especially the ‘boring’ stuff like payments, collections and taxes, all of which can make a big difference to your life. 

apu Entrepreneurship

It is almost two years now since I quit a steady job in Consulting to start-up my own small business as a Communication consultant and writer. Before I quit my job, I had some vague ideas as to what the challenges in running your own business would be. I assumed that not having a monthly pay cheque and managing household expenses would be a significant challenge. I wondered whether working by myself would get lonely; no coffee-breaks to share office gossip, no going out in the evening with colleagues. 

While on some of these my expectations were accurate (yes, it is difficult not being able to anticipate exactly what the 1st of each month will bring you), some were not (no, I don’t mind working by myself, so long as I meet clients from time to time). I thought it would be worthwhile putting down some of my learnings from these 2 years; it could help other people in the same boat or those looking at taking the plunge into entrepreneurship. 

On turning Entrepreneur 

Each individual’s temperament and ability to take risk varies. If you are a person who doesn’t have a very large appetite for risk, it may make sense turning entrepreneur in stages. Yes, we’ve all heard that you must ‘jump in’, ‘take the plunge’ etc, but I think this really depends on what you can handle and your financial circumstances. There is no point in quitting your job and going solo if the stress is going to give you a heart attack. Not everyone is meant to run their own business. 

When you are sure that you have a great idea in mind, see if it is possible to work on it for some time while you keep your current job. In my case, when I quit my full-time job, I continued consulting for 20 hours every week for a start-up research firm, which allowed me to simultaneously pursue opportunities in communication consulting. Finally, in September last year, I felt confident enough to focus on what I really want to do, which is, work in the communication, content and writing area. 

Keep a Plan B open. What happens if you fail? Do you have ex-colleagues, bosses, acquaintances - who will be happy to refer you for a job? Or, is there an alternative business plan? How long will your finances last while you experiment? It helps if one spouse or partner has a steady job while the other experiments. For single people, this means added risk since they have only themselves to fall back on. While trying your best to succeed, I feel that it is important to be unemotional - failure is a possibility and one has to acknowledge that and be prepared. 

On Project Handling 

When starting fresh, it is sometimes tempting to accept any project that comes your way, especially when finances are running low. I learnt the hard way that some projects are not worth taking on, and in fact, must be turned down. These include unscrupulous clients who will coolly skip payments, clients who want small company rates but expect you to work on ‘only’ their project and projects where the client wants an unspecified ‘high quality’ but is unwilling to spend any time on defining that. It is of course tough identifying such clients before taking on work, but with time, one starts getting smarter!

These are of course issues for project managers everywhere, but for a small company, it is a nightmare. The Rs. 10,000 that a corporation will write off easily as bad debt can pay a good chunk of my monthly household expenses. More importantly, I realised soon enough that I didn’t have the bandwidth for such projects - the time spent on them was making me resentful and unproductive. 

In India at least, projects will always need “just a little bit extra” - clients will invariably remember just that small thing which they forgot to mention when you signed a contract. When I calculate how much time a project will need, I make sure to include a small buffer for such over-runs. At the same time, if the small things get larger and larger, one has to find a way to say no, or bill extra. 

On the Long-term Value of Clients

As for any business, client satisfaction is critical for small businesses. When I turned solo, my first project came through someone I know. After this, most clients have come to me through referrals, and some clients have gone on to become regulars, and eventually, friends. I believe that the long-term value of such clients is, in Mastercard advertising language, priceless.

It isn’t just that they give me regular work and therefore mitigate some of the uncertainty of operating on my own. Nor is it limited to the referrals they can offer. It is more than that. With clients who return to you, you can do some of your most innovative work - you get to know their needs better, you understand the risks they are willing to take and in the process, keep improving your own skills. Plus of course, it is deeply satisfying. 

After I started writing this, I realised that there was more I wanted to say and that this was becoming a long and unwieldy post. For instance, I want to talk about a big bugbear for me - Pricing, and I also want to take about issues of self-worth and doubt. What I’m go to do therefore is label this Part 1 and continue with a (hopefully smaller!) second post, where I’ll be taking about some of those issues. 

Update: Part 2 of Lessons from Being My Own Boss is now up here. 

apu Entrepreneurship