13 May 2015 19:22 IST

Cutting your teeth as an entrepreneur

You learn far more from failures and emerge a success

“Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.” – Johann Wolfgang von Goethe

It took 17 years to be an overnight success. Here is how it began…Coimbatore in the late eighties was one of the most entrepreneurial cities in India; virtually every house would have an assembly line or a lathe or a machine shop to do some bit of job work for a manufacturing unit and which helped in getting additional income. In a sense, outsourcing was a very common feature in Coimbatore as indeed, I suspect, in other manufacturing hubs, like Ludhiana. It had the right eco-system for the manufacture of textiles to engineering products like motor pumps and auto components.

My first venture was to manufacture motor pumps. I invested half of my savings into the venture and it turned out to be a disaster. Some invaluable lessons learnt but at great cost .We did not have a business plan; our objective was to sell 100 pumps. Sell we did, but also lost a lot of money in the process. My friend had the expertise in manufacturing (managing outsourced contracts and assembling them) and I was to look after sales and marketing. We gave ourselves the fancy name of “The Flamingo Group” . Looking back it would have been more appropriate for a night club and possibly more unique and successful. There were a number of pump manufacturers in Coimbatore, our product was not unique. The first lesson that we learnt, therefore, was to make ourselves unique and differentiate ourselves from competition.

Till then, we had learnt about USP (unique selling proposition) in the case studies at business school but now we learnt about translating that to marketplace realities. Simple enough, obvious enough, but many folks in business still make that basic mistake – of not defining the USP of their product or service to differentiate it. Unless you differentiate yourself on a parameter that customers value, you are only competing on price, and that is not an effective or sustainable long-term proposition.

This is a lesson that I learnt the hard way and in all my efforts since innovation (however small that may be) has been the corner stone of what I have tried to do. One has to stop doing all the things that others have done and found out don’t work.

Here are some basic questions that all entrepreneurs need to answer:

What is the unique value that we deliver to our customers?

Who indeed are those customers?

How are we different from competition?

Do customers value the USP that we are highlighting?

All legitimate questions that any serious entrepreneur worth his salt needs to reflect on.

Based on a market survey of customers and dealers that we did ourselves, we found that one of the biggest problems customers of motor pumps faced was the water overflowing from the overhead tanks. And water was a precious resource. We decided to, therefore, innovate. Based on a scan of available product literature and from our own brain storming, we decided to have a sensor at both ends (at both the overhead tank and the ground-level tank) that would sense the availability of water and automatically switch on or switch off the pump. (There were no similar products in the market then). We build a prototype branded it ‘MAGIK”, a great idea, but as we learnt – a great idea is only as good as how well and fast it is implemented and turned into marketplace reality. Our team could not come up with a scalable version of the product for the next six to seven months and by then the space was taken. We lost the first-mover advantage .

However, we did learn some valuable lessons.

Do your own market surveys; nothing like some first-hand face-to-face interaction with your customers . Market research is good but nothing is as educative and illuminating as meeting customers directly

The need for a good development or marketing team who can help implement product development and market development strategies . Strategy is only as good as how well it is implemented.

The imperative to innovate and therefore to be on the look out to innovate continuously, however small.

If you can’t be the first, then do something better. Give yourself the first-shaker advantage.

Most importantly and at the cost of repetition, do not settle to be a me-too product. Your offering must be valued by customers.

Meanwhile, we got an order for about 100 pumps from a customer in Delhi. We were elated; it was our largest order to date and here was the opportunity to meet our targets and we jumped at it. It took us about six months to recover the money; the amount of time and effort that it took to get our money back ensured that we actually lost money in the deal. It also taught how important it is to evaluate customers, to check their credibility and ensure that there are fool-proof mechanisms to ensure timely collection or at least limit the extent of exposure. Bad customers and bad debts are the sure way to a failed business.

Eight months later, I decided to move on. I saw no future in the business. I was lucky to get back half of my invested capital and a hundred per cent return on experience and knowledge.

Recommended for you