Cash flow is underestimated by most people – the amount of cash flow. If it is possible, be a little overcapitalized. There are lot of CEOs who are good product guys, they are good operations guys. But they don’t know finance at all. In times of advertises, these are the people who suffer the most. I think being financially savvy is a required part of the business.
Never have equal partners. You start off as equals, but then one does more, one does less, one is the public face, the other is not, and then slowly the whole thing disintegrates.
So there should be ‘first among equals’, who has a slightly higher equity share. That’s what I advice my clients now. Also, there shouldn’t be too many partners. Two or four partners is okay, but ideally not more than four.
Have the staying power, the emotional staying power. Business will not be as per what you had planned, there are going to be hardships. I have seen a lot of business close up because after a lot of hardships, at that key point, we have never thought, “Oh, it is worth?” We just kept going on.
But if you are working at Hindustan Lever or any such organization, worried about status, worried about house in south Bombay and all that, the choice is then very tough. I think the loss of status is what really hurts.
Very few people speak about it but there is a clear change in the social status. Entrepreneurship is messy compared to what things would be if you were working for an MNC bank.
When you are the CEO and shareholder, you want to avoid raising money because your equity goes down. When you wear only the CEO’s hat, all you want is to grow as fast as possible.
We always differentiate between a plan and an aspiration. There is always a short term plan, but there are always long term aspirations.
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