Yes, INDUS was certainly helped by attaining 8A
certification, particularly in obtaining contracts with the U.S. government.
But had he not been eligible for such status, we have no doubt he would have
Discussion: How does a small business owner think big?
Answer: Any sales person will tell you that
it can take as much effort to close a small sale as it does to close a big one.
The length of the suspect-prospect-customer pipeline does not vary by size of
order. You have to identify the potential customer (suspect), make contact
(prospect) and make the sale (customer). As business owners we should identify
suspects among the largest companies and governments who would benefit from our
service. Why? First, larger companies have bigger needs which translate to
bigger orders. Large companies often are more stable and more likely to
continue in business, meaning recurring orders. Also, many large companies
actively look for ways to buy more products and services from small businesses
in their communities. Often, their biggest problem is finding you!
involvement is a great way to meet people from large organizations. Get
involved with your local Chamber of Commerce and your citys office of
economic development. Small Business Development Corporations, available,
throughout the country, are another great conduit to large companies. Watch the
local newspaper for procurement fairs, where large companies set up booths to
meet with small suppliers. Join trade organizations and attend national
conferences. Trade organizations exert a lot of effort in increasing
members revenue and much of that effort is targeted at larger
about it. Are you selling your product or service to large companies and
transcript / Overview
Key Idea #2: Be Willing to Start
Small to Prove Yourself. Shiv and Meena didnt start INDUS with fancy
offices. Shiv needed a telephone, a computer and a printer, all of which he
kept in his apartment, to deliver his first product to his first customer. He
had no office and he had no employees.
Discussion: If you have a good idea for a business, and you want to give it
a try, what do you really need?
Answer: First, you need to be able to
communicate with customers and potential customers. That means you need a cell
phone and e-mail. You probably already have both. Then, you need the raw
materials, the capital assets and the inventory you have to have to deliver the
product or service you will sell. Depending on the lead time to acquire these,
you may very well be able to delay the purchase until you have your first
purchase order from a customer. Finally, you need the labor. In Shivs
case, he provided the labor for the first few jobs. He didnt need
employees to do the work nor to support the organization. If you cant do
the work yourself, perhaps you can attract some qualified individuals on a
contract basis to assist you. You can be looking for those individuals at the
same time you are hunting for that first customer.
about it. Do you have a good idea for starting your own business? How much
money do you really need to obtain and deliver that first sale? What are you
transcript / Overview
Key Idea #3: Take Advantage of
Leadership Opportunities. Imagine how Shiv felt when he came to the
realization, I can do this. What an inspiring (and frightening!)
moment that must have been! Service companies sell what they know as much as
they sell what they do. Shiv saw the opportunity to couple his engineering and
technology skills to solve problems others had left unsolved.
Discussion: Once we recognize the opportunity to do something really
special, as Shiv and his INDUS team have done, how do we take advantage of
Answer: Shiv had some great advice for
business owners and we would all be wise to remember his words. Focus. Focus.
Focus. Thats what he said. Know your key competencies and your key
customers. Focus on those. Dont try to be all things to all customers.
Concentrate on what you can deliver well to a customer who finds what you
deliver solves a business problem of his. It seems so simple, doesnt it?
Yet, so many of us take the shotgun approach to selling. Instead of delivering
only what we do well to someone who needs it, we have a tendency to chase
revenue dollars. Its hard to turn a sale down and if we have to
opportunity to make that sale, then we go for it.
that if we stay focused, the money will take care of itself. We have heard this
same sentiment, over and over again, from many successful entrepreneurs we have
showcased here at Small Business School. Shiv knew he could successfully start
his own business when he saw the match between his engineering and technology
skills with the needs of his customers. When we see that match, we, too, need
to capitalize on the opportunity, and not permit ourselves to be sidetracked by
the isolated sales opportunity.
about it. Are you focused on delivering a few key products or services to a
few key customers or industries?
transcript / Overview
Key Idea #4: Find the Good in
People and in Situations. Meena tells us that she always knew that Shiv
would be successful because he is such a positive person that he could not
fail. Shiv tells us that when he was concerned about the economic risk to his
family if he started his own business, Meena told him to go for it. So it seems
that we have two positive people here, and they make a great combination.
Discussion: Whats the benefit of a positive outlook to a business
owner? What does it have to do with success?
Answer: Business is fraught with risk and
theres probably nothing easier to talk yourself out of than starting your
own business. If you dwell on everything that might go wrong, you can generate
quite a list for yourself. And Murphys Law will prevail; some things
inevitably will go wrong. Youll wind up delivering a poor product or
service on occasion and youll have to make amends, youll make some
hiring errors and have to deal with a disgruntled and/or inept employee, some
customers will make unreasonable demands and some customers wont pay you,
some suppliers will promise delivery and then fail to deliver or deliver a
substandard product, your cash flow will be tight on occasion and youll
wonder how you are going to meet payroll. These are things that happen to
virtually all small business owners at one point or another.
What do you
do when something goes wrong? You fix it. What do you do when you fail? You
pick yourself up, dust yourself off, and try again. Positive people can do this
-- negative people cannot. If you see the glass as half-empty and the sky as
partly cloudy, then business ownership is probably not for you.
about it. Are you a positive person and have you surrounded yourself with
other positive people?
transcript / Overview
Key Idea #5: Find and Depend Upon
Mentors. Shivs grandfather had an enormous influence on him. For 60
years, he worked with the children of mothers who had lost their husbands. The
children came and lived with him and he educated them. Shiv witnessed first
hand, at a young and impressionable age, the enormous influence his grandfather
had on his students and the respect those students had for his grandfather.
Discussion: Were business owners, not teachers. Is education really
Answer: You bet! Education positions us for
success by broadening our minds, empowering us to be creative and innovative.
Education goes way beyond the reading, writing and arithmetic skills we first
acquire, and past the formal education we receive, regardless of the level. If
we dont keep learning, we get ripe and rot! All business owners need
mentors. It may be a relative, a trusted friend, even a customer or supplier.
Mentors force us to think strategically long range, not just operationally in
the day-to-day running of the business.
How much do I
want to grow my business and how quickly? Is the business I have the business I
want to have five years from now? What additional products and services can I
add to my arsenal to expand my offerings to my customers? These are just a few
of the questions that might be topics for discussion between you and your
mentor. Some business owners formalize their mentoring process through the
establishment of a Board of Advisors. A Board of Advisors is very different
from a Board of Directors, which has authorities, such as the firing and hiring
of the CEO, which most small business owners are not prepared to relinquish. A
Board of Advisors is a Board of Mentors, where a collective body of
intellectual capital nurtures the spirit and creativity of the owner in
about it. Do you have a mentor? Do you meet with him or her often? Are you
thinking strategically in your discussions with your mentor?
transcript / Overview
Key Idea #6: Mentor Others -
Start a Mentor-Protégé Program. Just as you need a mentor,
you need to establish mentoring relationships within your own business and
consider mentoring outside of the business as part of your community service.
Mentoring is a form of giving, and when we give of ourselves we give the
greatest gift we have.
Discussion: Why are mentoring relationships important within a
Answer: Mentoring in a business environment
is a form of coaching and nurturing. Nurtured employees develop to their full
potential, have strong loyalties to their employer, and maintain a strong work
ethic. Mentoring is not cross-training or providing employees with new skills.
Just as you reserve your precious time with your mentor to think strategically,
to concentrate on the forest and not the trees, the time the
Mentor-Protégé within the business spend together is focused on
the strategic plan of the employee and how it fits with the strategic plan of
relationships within a company may be informal, formal, or both. Informal
mentoring relationships should be fostered between all supervisor-subordinate
relationships throughout the company, regardless of its size. We should
communicate with those who report to us as mentors. This means nurturing the
employee by the manner in which we speak to him or her, praising them for a job
well done, and correcting them, when necessary, in a constructive manner.
mentoring relationships, where a mentor is assigned a specific individual to
mentor, may also be appropriate in your business, particularly if you have a
key employee nearing retirement age (perhaps you) and an heir apparent within
the company for the same position. Establishing a mentor-protégé
relationship now forces the pair to spend some time together outside of their
respective operational functions and reporting lines. It puts the corporate
imprimatur on conversations between the two about the challenges of the senior
position, the opportunities for enhancing its role and responsibilities within
the company, and a myriad of topics that might otherwise never come up.
Providing the heir apparent an appropriate venue for mining the intellectual
capital of the executive about to retire will reap enormous benefit when the
heir is on his or her own.
about it. What kind of mentoring relationships do you see in your business?
Should you be doing more to encourage mentoring among your employees?
transcript / Overview
The Lightbulb Key Idea #7: Make Sure Someone on Your Team Is a People Person. Shiv is
certainly a people person and we can see how his goodness and charm have
contributed to his success.
discussion: Why does a small business need a people person at the helm?
Answer: Successful businesses operate as a
team and the team has a coach, the CEO. The coach motivates, inspires, and
nurtures the team, but the coach never wins the game, the team does! Most small
business owners are people-people. Theres so much personal contact in
owning your own business, with employees, customers and suppliers, that owning
your own business just isnt very attractive if you dont genuinely
enjoy meeting new people and interacting with them. Occasionally, though, a
person who is more comfortable in the laboratory or in front of a computer has
a marvelous idea for a new business. When that is the case, its a good
idea to find someone else to function as CEO of the company. And thats
OK. People who are not people-people are not bad people. They just arent
suited for the coachs role.
about it. Are you a people person?
transcript / Overview
Key Idea #8: Demonstrate
That You Are Bankable. Shiv was able to found INDUS without financing but
he needed a banking relationship to grow his company. Growing a company by
reinvesting the profits from one sale into the next, often called organic
growth is slow and painstaking. Business owners need cash to fund payroll
while waiting to collect receivables for product or work that has already been
delivered. This gap is often covered by a line of credit from a bank, where the
bank takes a security interest in the underlying asset, the account receivable,
and provides the cash to fund the operating costs that will generate additional
sales and receivables. Shiv was actually able to obtain bank financing based on
a purchase order from a customer. This is very unusual since the loan was
unsecured and banks very rarely make unsecured loans. Shiv was able to
demonstrate to the bank that INDUS had the potential to be a great company and
a great bank customer. INDUS still banks at the first bank that provided a loan
to the company.
Discussion: How does a growing business demonstrate that it is bankable to
Answer: Bankers are not risk takers. They
operate on a very slim margin; the differential between their cost of money and
the interest they earn on outstanding loans must cover the cost of bank
operations and provide a reasonable return on investment to the banks
stockholders. If a banker makes a bad loan -- a loan that has to be written-off
-- it is the same thing as when one of our customers doesnt pay us. The
write-off is equal to the sales or revenue amount, the labor and inventory
costs have already been incurred. The loss goes right to the bottom line. All
companies have bad debts. In fact if you dont have bad debts, your credit
policies are too tight and you are losing sales. But companies that operate on
a slim margin, such as banks, have to be particularly careful to minimize
loan with less than a year of operating history and without collateral is very
difficult for a small business owner. You must be prepared to shop and shop
hard. Anticipate rejection and you will not be disappointed. Like Shiv, you are
more likely to be successful at a community or local bank than at an office of
a regional or national bank. Larger banks have stricter internal policies;
smaller banks tend to vest more decision-making authority in the banker.
If you feel
your business loan will be difficult to obtain, before approaching a bank,
prepare a written financing proposal. This proposal should include your
business plan plus the following:
- Projected financial statements
- Resumes of key management
- Current customer list
- Current supplier list
- Amount of financing requested and purpose of
- Demonstration of capacity to repay
everything! You really want your banker to know you and your company. When you
obtain an expression of interest, invite the banker to your business and show
him or her how you operate. Inspire the banker with your passion for business
and your loyalty to your business partners. If the banker believes a risk now
on a small loan will lead to a big customer borrowing large amounts, then he or
she will be much more likely to step outside of conventional bank financing
about it. Could you grow your business quicker with bank financing? Are you
transcript / Overview
Key Idea #9: Create a
Worry-Free Workplace for Employees. Shiv told us that INDUS is in the
business of "deploying intellectual capital from our people to our customers."
He feels very strongly that establishing a worry-free environment for his
employees optimizes their ability to deploy successfully.
Discussion: Why is employee satisfaction so important in a small
Answer: Satisfied or happy workers are
productive workers. As business owners, we need to make sure our employees are
satisfied as part of taking care of our customers. If the employees are
dissatisfied, our customers will not be treated well. How do we keep our
employees level of satisfaction high? We only need to do three things:
- Follow the golden rule, treat all employees
- Provide them with the necessary resources,
capital, financial and human, to meet our expectations and do their jobs well.
- Compensate them fairly.
If we do
these three things, our employees have nothing to worry about. We have
established a work environment that optimizes their chances for success and
positions us to hold them accountable to the highest standard.
about it. Would your employees say they work in a worry-free
transcript / Overview
Key Idea #10: Make Sure
Your Spouse is Your Cheerleader. Shiv could not have succeeded without the
100% level of support provided by Meena. She believed in her husbands
dream because she believed in him. When Shiv and Meena signed on the dotted
line and pledged everything they owned to that dream, you know that must have
been a scary moment. But they took the plunge and never looked back.
Discussion: How does a small business owner gain the support of his or her
spouse for the start-up business?
Answer: First and foremost, communication
is the key. Make sure your spouse clearly understands the risks you are taking
and why you believe the risk is justified. Do not shelter your partner. Share
the challenges and the defeats as well as the victories. Be open and honest
about the facts as well as the fears. Anything less can lead to recriminations
businesses are able to start because one spouse is employed while the other
spouse works without salary in the new business. With a few adjustments in
lifestyle, the family lives on half (or less) of its previous level of income
and the entrepreneur devotes himself or herself full-time (or more) to the new
venture. The employed spouse is very often much more committed to his or her
spouse than to the new business. Thats OK. Not everyone is cut out to be
a small business owner. But never interpret the lack of interest in business
ownership as a lack of interest in the business owner. Empower your spouse to
be your biggest fan by sharing the little things and the big things. Bring the
business home to your spouse and let him or her share in your excitement as you
make your dream a reality.
about it. Is your spouse your biggest cheerleader?
transcript / Overview
Bonus Key Idea: Consider
Global Sourcing. Shiv and Meena have 20 employees in India. With the
difference in time zones, they are able to offer 24 X 7 support, something of
great value to their customers.
discussion: How can global sourcing benefit a small business?
Answer: The World Wide Web has changed our
lives forever. The opportunities to communicate and collaborate without regard
to geographical location are truly mind boggling. Every business, no matter the
size, can take advantage of these opportunities. No longer are we limited to
finding qualified employees in the physical area of our business. If we can
make the tools of our business available to our employees in electronic form,
then the world is our recruiting farm. Databases and data mining techniques are
now user friendly and relatively low cost. Expanding our sales forces around
the world, with electronic product information flowing in one direction and
sales orders with shipping instructions flowing in the other, is a realistic
scenario for the smallest business.
niche businesses are starting every day to assist us in taking advantage of
these emerging technologies. For example, there are several businesses that
offer Web-based board rooms for meetings. Remember that Advisory Board we were
talking about? Your mentors dont have to be limited to your physical
area; you can recruit Advisory Board members from around the world, post
meeting materials in advance, and then meet on line. All for a nominal cost,
far less than the cost of air travel and lodging. We used to say think
globally, act locally but this is no longer the case. Now we need to
think AND act globally to take full advantage of the evolving marketplace.
about it. Are you thinking and acting globally?
We invite your
suggestions and questions.
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